California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

The Federal Reserve launched a much-awaited program to spur lending for autos,
education, credit cards and other consumer loans by providing up to $200 billion in
financing to investors to buy up the debt.

“The intent of the program is to help bust through the credit clogs in place since last
year and make it easier for Americans to finance large and small purchases at lower
rates”, said Federal Reserve Chairman Ben Bernanke to members of the House Finance
Committee. “That, in turn, would help revive the economy,” he said.

Created by the Fed and the Treasury Department, the program has the potential to
generate up to $1 trillion of lending for businesses and households. It will be expanded
to include commercial real estate, though that won't be part of the initial rollout.
"There's a looming crisis in commercial real estate whereby owners of shopping malls,
hotels, rental properties and many other types of buildings are unable to refinance or to
pay for new construction because the (commercial) securitization market is completely
shut down," Bernanke said during an appearance before the Senate Budget Committee.

The program will start off by providing $200 billion in loans to investors with the goal of
jump-starting lending to consumers and small businesses. The program, dubbed the
Term Asset-Backed Securities Loan Facility, was first announced late last year and
originally was scheduled to start in February.

Under the program, the Fed will buy securities backed by different types of debt, including
credit card, auto, student and small business loans. The credit crunch — the worst since
the 1930s — has made it much harder for people to obtain such financing , and those that
do can be socked with high rates.

I am Tim Johnson and this has been the California Business Minute.