Brian Sack, Executive Vice President of the Federal Reserve Bank of New York gave a speech yesterday at the New York Association for Business Economics entitled, "Reflections on the TALF and the Federal Reserve's Role as Liquidity Provider." Sack said, "In my remarks today, I had intended to focus on the Federal Reserve's experience with the Term Asset-Backed Securities Loan Facility, or the TALF. This facility, which is scheduled to end later this month, was the last of the Federal Reserve's special liquidity programs.... However, the context for this talk has shifted importantly with recent developments in financial markets. In particular, investors' concerns about sovereign risk in some European countries, with the attendant pressures on financial firms with exposures in those areas, have put renewed emphasis on liquidity provision and led the Federal Reserve and five foreign central banks to reestablish dollar liquidity swap lines." He added, "Although the structure of the TALF differed considerably from the other liquidity programs initiated by the Federal Reserve, its basic role was similar in many ways to the traditional central bank function of providing liquidity to the financial system and encouraging the flow of credit. In this case, however, the program was geared toward providing support for market-based credit intermediation, as opposed to the traditional banking sector. More specifically, the TALF was designed to support the market for securitized credit."
