There's a new acronym in bailout land: TALF. Officials at the Fed and Treasury Department today outlined the new lending program, which is designed to revive the nation's so-called shadow banking system and generate up to $1 trillion in loans to consumers and small businesses, the Wall Street Journal reports. The Term Asset-Backed Securities Loan Facility is bankrolled in large part by the New York Fed, which is in for $200 billion.
Despite the jargon and the arcane nature of the lending, this could be a big deal, the Journal notes. These securitized loans, which operate outside the traditional banking system, accounted for 40% of all consumer lending before the current crisis. Then they virtually dried up. "There has been somewhat of a collapse of the banking system, but an almost total collapse of the shadow banking system," said a Princeton economist. "Given our reliance on the latter, we need to get that shadow banking system revived."