What measures have been put in place to protect the TALF against credit losses and fraud?
The Federal Reserve and the Treasury have structured the TALF to minimize credit risk for the U.S. government to the greatest extent possible, consistent with achieving the program’s purpose of encouraging lending to consumers and businesses. Examples of the structural features of the TALF that minimize credit risk include the following: (1) investors are required to supply risk capital in the form of haircuts; (2) the TALF haircut methodology is risk sensitive across asset class and maturity; and (3) the TALF only accepts collateral that has received two credit ratings in the highest investment-grade rating category or that is fully U.S. government-guaranteed. The New York Fed also has designed a number of measures to discourage fraudulent activity associated with the TALF. The New York Fed has established a compliance framework that includes a borrower acceptance standard, an assurance program related to borrower eligibility requirements, on-site inspection rights related to the borr
The Federal Reserve and the Treasury have structured the TALF to minimize credit risk for the U.S. government to the greatest extent possible, consistent with achieving the program’s purpose of encouraging lending to consumers and businesses. Examples of the structural features of the TALF that minimize credit risk include the following: (1) investors are required to supply risk capital in the form of haircuts; (2) the TALF haircut methodology is risk sensitive across asset class and maturity; and (3) the TALF only accepts collateral that has received two credit ratings in the highest investment-grade rating category or the principal and interest of which is fully U.S. government-guaranteed.
The Federal Reserve and the Treasury have structured the TALF to minimize credit risk for the U.S. government to the maximum extent possible, consistent with achieving the program’s purpose of encouraging lending to consumers and small businesses. Examples of the structural features of the TALF that minimize credit risk include the following: (i) investors are required to supply risk capital in the form of haircuts; (ii) the TALF haircut methodology is risk sensitive across asset class and maturity; and (iii) the TALF only accepts collateral that has received two credit ratings in the highest investment-grade rating category or that is fully U.S. government-guaranteed.
The Federal Reserve and the Treasury have structured the TALF to minimize credit risk for the U.S. government to the greatest extent possible, consistent with achieving the program’s purpose of encouraging lending to consumers and small businesses. Examples of the structural features of the TALF that minimize credit risk include the following: (i) investors are required to supply risk capital in the form of haircuts; (ii) the TALF haircut methodology is risk sensitive across asset class and maturity; and (iii) the TALF only accepts collateral that has received two credit ratings in the highest investment-grade rating category or that is fully U.S. government-guaranteed.
The Federal Reserve and the Treasury have structured the TALF to minimize credit risk for the U.S. government to the greatest extent possible, consistent with achieving the program’s purpose of encouraging lending to consumers and businesses. Examples of the structural features of the TALF that minimize credit risk include the following: (1) investors are required to supply risk capital in the form of haircuts; (2) the TALF haircut methodology is risk sensitive across asset class and maturity; and (3) the TALF only accepts collateral that has received two credit ratings in the highest investment-grade rating category or that is fully U.S. government-guaranteed.
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