FACTBOX: Fed launches TALF program for consumer loans

(Reuters) - The Federal Reserve and the U.S. Treasury on Tuesday announced details, including a start date, for its massive new program aimed at generating lending to consumers and small businesses.

The Term Asset-Backed Loan Facility, or TALF, is a key element of U.S. efforts to stabilize the financial system and target especially troubled corners of the credit market.

Fed officials, from Chairman Ben Bernanke on down, have recently spoken of their high hopes for the program as a way of prying open the market for credit at the consumer level, and bringing down the cost of those loans.

Asset-backed securities markets have traditionally funded a large portion of consumer credit and small business loans.

But those markets "have been virtually shuttered since the worsening of the financial crisis in October," adding to the negative feedback loop gripping the economy, the agencies said in their announcement.

** TALF will lend against securities backed by student, auto, credit card and small business loans, in an all-out effort to pull the economy out of recession.

** Now funded at $200 billion, TALF could be expanded to $1 trillion and widened to include some of the riskier mortgage and debt securities held by banks.

** The Fed said the first applications for the facility will be accepted from March 17, and the first three-year loans will be granted starting March 25, to mature in March 2012.

** TALF requests will be considered monthly through December 2009, or longer if the Fed extends the facility.

** As collateral, the TALF will accept triple-A rated asset-backed securities supported by new and recently originated auto loans, credit card loans, student loans and government-guaranteed small business loans.

** In a separate release, the New York Federal Reserve Bank said fixed rates on the loans would range from 50 basis points over the three-year Libor swap rate for deals in the small business sector, to 100 basis points over in the auto and bank-card sectors.

** Floating rates range from 50 basis points over one-month Libor on government-guaranteed paper backed by student loans, to 100 basis points over for autos and bank-card debt.

** Any U.S. company that owns eligible collateral may borrow from the TALF. Borrowers will access the program via a primary dealer -- one of the 19 firms authorized to deal directly with the Fed.

** Noting that TALF and other credit-easing actions taken to stabilize the financial system have the potential to greatly expand the Fed's balance sheet, the Fed and Treasury said they will seek legislation to give the Fed additional tools to manage its level of reserves.

(Reporting by Ros Krasny; Editing by Leslie Adler)