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Opalesque Exclusive: TALF program tries to entice private capital with an end to collateral calls
From Kirsten Bischoff, Opalesque New York:
As the US government attempts to waive the risk involved in consumer asset backed lending with the Term Asset Backed Loan Facility program (TALF), hedge funds and other investors remain wary.
Hedge funds stepped in to fill the void for many businesses through asset backed lending during the tightening credit crunch, and now the US Government is hoping they can spark the same interest in the consumer space.
A number of the hedge funds which Mitch Nichter deals with have expressed interest in the program. However, Nichter, a partner in the investment management practice at international law firm Paul Hastings says those funds which do have assets that can be deployed into such investments will be active only to the point that they feel return expectations can be met.
“They will compare financing available at TALF against the financing available in the private sector.” says Nichter.
Ending the collateral call disaster
One of the biggest issues for funds involved in lending has been the collateral calls which have further devalued assets. As asset values dropped funds were required to post additional collateral to their lenders, a process that repeated itself many times over until funds were left with no assets.
“Deals were structured so that le...................... To view our full article Click here
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