PREA 2009: TALF should be 'wildly successful'

The US government’s Term Asset-Backed Securities Loan Facility should successfully create clear market prices, but will need the participation of the private sector, according to speakers at the PREA spring conference in Washington DC.

There is no reason that the US government’s Term Asset-Backed Securities Loan Facility (TALF) programme should not be “wildly successful”, said Timothy Ryan, president and chief executive officer of the Securities Industry and Financial Markets Association (SIFMA), during a speech at the 2009 PREA conference.

Under the plan, the Federal Reserve effectively serves as a matchmaker, partnering buyers and sellers of newly issued, top-rated securities backed by a variety of loans including student, small business, auto and credit card loans.

Ryan has previously worked as director of the Resolution Trust Corporation (RTC), which between 1989 and 1995 successfully salvaged the real estate industry from the savings and loan crisis of the 1980s. “The programme (TALF) is exactly what I would put together,” he said.

The major concern real estate investors are looking for TALF to solve is the inability to determine what anything is worth, said Ryan, adding, “We need clear market prices and we haven’t had them.” He believes that TALF will successfully create such clear market clearing prices.

For TALF to be successful, however, it must have private sector involvement, which was an essential component of the RTC’s success, said Lazard Real Estate Partners chairman Bob Larson, speaking on a panel regarding the foundations of recovery.

The RTC spent 50 percent of its budget on temporary government contractors and 75 percent of its employees came from the private sector, said Larson, who added that he believes this must be part of the current recovery efforts as well.