Document Type

Case Study

Case Series

Market Support Programs

JEL Codes

G01, G28


The outbreak of the COVID-19 pandemic in early 2020 caused widespread economic uncertainty, prompting government officials to act swiftly to combat potentially severe fallout. On March 23, 2020, the Federal Reserve announced a series of monetary policy measures and established several emergency lending facilities to assist the US economy. Among these, the Fed revived the Term Asset-Backed Securities Loan Facility (TALF), a Global Financial Crisis (GFC)-era facility that used a special purpose vehicle (SPV) to encourage the issuance of asset-backed securities (ABS). Its main purpose was to restore the flow of credit to households and businesses. TALF II made $100 billion in loans available; each loan had a term of three years, was non-recourse to the borrower, and was secured by eligible AAA-rated ABS. Borrowers could post a wider range of collateral than in the earlier TALF program. Eligible collateral included certain newly issued non-mortgage-backed ABS, certain types of legacy commercial mortgage-backed securities (CMBS), and static collateralized loan obligations (CLOs). After operating for about six months, the TALF was closed by an act of Congress and ceased extending credit on December 31, 2020. Early evaluations of the TALF concluded that its announcement helped to calm markets and normalize interest rate spreads, despite relatively low usage of $4.4 billion.

Date Revised