Demand surges for lending program

WASHINGTON — Demand surged this month from investors seeking to participate in a government program aimed at jump-starting lending to consumers and small businesses.

Investors requested $10.6 billion worth of loans, the Federal Reserve Bank of New York said Tuesday. That's up from just $1.7 billion in loans last month, and $4.7 billion in requests from the initial round in March. Investors use the money to buy securities backed by auto and student loans, credit cards, loans guaranteed by the Small Business Administration and loans backed by business equipment.

The Term Asset-Backed Securities Loan Facility, or TALF, figures prominently in efforts by the Fed and the Obama administration to ease credit stresses and stabilize the financial system. Those are critical elements needed to lift the country out of recession. The TALF has the potential to generate up to $1 trillion in lending for households and businesses.

Of the $10.6 billion in loans that will be made available in May, $5.5 billion was for securities backed by credit cards, $2.3 billion for securities backed by student loans and $2.2 billion for securities backed by auto loans. The rest of the money requested was for securities backed by the SBA and business equipment.