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Treasury lowers support for crisis loan program

Thursday - 6/28/2012, 2:22pm  ET

AP Economics Writer

WASHINGTON (AP) - The Treasury Department is reducing its support for loans made during the 2008 financial crisis now that a key program is winding down.

The Treasury will lower its credit protection for the Term Asset-Backed Securities Loan Facility, or TALF, to $1.4 billion, down from $4.3 billion.

The reduction is being made because most loans made under the program have been repaid and officials believe there is little credit risk from the $5.35 billion in TALF loans outstanding.

At its peak, the TALF program loaned $71 billion to encourage the issuance of asset-backed securities and commercial mortgage-backed securities. This support helped keep credit flowing for auto loans, student loans and loans to small businesses. The program received support from Treasury and the Federal Reserve.

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