Obama team expected to expand program for auto lending

Obama team expected to expand program for auto lending

Harry Stoffer

Automotive News | February 10, 2009 – 9:59 am EST


WASHINGTON — The next chapter of financial rescue will be more about TALF than TARP.

That still could be helpful to the automobile industry.

The Obama administration today is scheduled to announce a series of new steps to shore the nation’s financial system, including a dramatic expansion of a program aimed at boosting credit for consumers, such as buyers of cars and trucks.

The program is called Term Asset-Backed Securities Loan Facility, or TALF.

The Federal Reserve Board and Treasury Department under the Bush administration announced the program’s creation last November at a level of $200 billion. It has not yet been launched.

President Barack Obama’s Treasury secretary, Timothy Geithner, is expected to announce the program’s expansion today, perhaps to $1 trillion, Reuters reported. The program is intended to boost the issuance and sale of securities backed by consumer loans.

The National Automobile Dealers Association last fall hailed TALF as a positive step for vehicle sales. The association also said it would help dealers get working capital and crucial financing for inventory, called floorplan.

Most public attention has been focused on a separate $700 billion Troubled Assets Relief Program, or TARP. It was created last October, mainly to rescue banks, but it also has been used to commit $24.9 billion in aid to General Motors, Chrysler LLC and their related finance companies.

Automakers and suppliers have been eyeing the TARP fund as the likely source of additional aid to the automobile industry.

But Obama said in his nationally televised news conference Monday night he does not yet know if more money will be needed for the TARP fund.

Geithner today is not expected to address additional direct aid to the automobile industry from the TARP fund.

He is scheduled to outline the next chapter of financial rescue at 11 a.m. EST.

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