The
The original TALF Program was created during the 2008 financial crisis and successfully established a market for consumer lending-related assets, including mortgage servicing receivables, credit cards, auto loans and other similar assets. The new program excludes most mortgage-related assets other than a limited category of commercial mortgage-backed securities (CMBS) while focusing on auto financing, credit cards and similar offerings.
The
Key Terms
- CEO Attestations (Lender of
- Lack of Available Credit. Lack of adequate credit does not mean that no credit is available: "Lending may be available, but at prices or on conditions that are inconsistent with a normal, well-functioning market."
- Insolvent. According to the Federal Reserve Act and the Board's Regulation A, it is defined as being in bankruptcy, while the Title II resolution under the DODD-Frank Act (DFA) adds "any other Federal or State insolvency proceeding" or fails to pay "undisputed debts as they become due during the 90 days preceding the date of borrowing under the TALF."
- Jurisdiction. The
State of New York and the exclusive jurisdiction of theU.S. courts for theSouthern District ofNew York . - Dividends and BuyBacks. The executive compensation limitations, stock repurchase ban and dividend restrictions that were detailed in the CARES Act do not apply to the TALF.
- Ownership. The MLSA requires that the borrower continuously monitor the ownership interests of the company to ensure that prohibited parties do not acquire an interest during the loan. The prohibited parties are direct and indirect ownership by foreign governments, or any company that is owned by the president, his family or the vice president. Furthermore, the borrower must maintain significant operations in the
U.S. (with a significant number of employees in theU.S. ; the Fed would not consider any parent company or sister affiliate under this test), an account relationship with a TALF Agent and stay organized under the laws of theU.S. - Collateral Eligibility. For newly issued asset-backed securities (ABS), a
Public Company Accounting Oversight Board (PCAOB)-recognized accounting firm must provide an Auditor Attestation, the Agreed-Upon Procedures (AUP) Report (TALF) and, if available, the AUP Report (Industry). - TALF Agents. The list of TALF Agents is available here, and the Fed said it may increase the number in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ms
11th Floor
MA 02116
Tel: 6175232700
Fax: 6175236850
E-mail: Kristin.vasilj@hklaw.com
URL: www.hklaw.com
© Mondaq Ltd, 2020 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source