No big changes in the Fed Talf amendments today. Main news is the Fed will conduct an independent risk evaluation of ABS before providing financing rather than rely on solely credit ratings. That seems sensible enough. It will also accept ratings from a wider set of rating agencies – the aim here is to promote competition in that business.
The big Talf question remains whether the Fed will be able to justify extending the programme – which relies on a 13.3 finding under the Federal Reserve Act of “unusual and exigent circumstances” beyond the spring of next year.Given refinancing problems in CMBS and the long lead time putting together those deals, we’d better hope so.