Fed Extends TALF to Repair Damage

On Monday the Federal Reserve extended its program to loan cheap money to those purchasing asset backed securities (TALF).  Once again, after publicly trashing an entire industry, the securitization industry, the administration has quietly admitted that the industry's health is crucial to the country's health.  The extension of TALF is an attempt to get the securitization process back into gear after public condemnation froze all investors from buying ABSs and MBSs.  Moreover, new regulations threaten further the process (issuers must keep 5% of any deals sold through securization).  The industry would be much, much better off had the administration (I am not using Obama's name any more) and its economic advisors not jumped on the condemnation bandwagon so quickly and trashed the reputation of an industry necessary to the finanical health of the country.  Unfortunately, the TALF has had only very limited success in jump starting the new securitization pools and the dampening effect of the new regulations will not be over come by cheap loan money.  Once again, the administration is trying to play it both ways -- doesn't work.