Fed program backs $12B in consumer loans in July

WASHINGTON — A government program intended to spark lending to consumers and small businesses at cheaper rates supported nine deals worth a total of roughly $12 billion this month, down about 27 percent from June's total.

Earlier this week, the Federal Reserve Bank of New York reported that investors requested $5.4 billion worth of loans in July as part of the program to boost consumer lending. The Federal Reserve on Friday said the money supports nine asset-backed securities deals worth $12 billion.

The Fed is seeking to shed more light on government bailouts as well as lending programs it has launched to ease the financial crisis. The Fed in June issued the first monthly report with such information.

Investors in the Term-Asset-Backed Securities Loan Facility, or TALF, use the money to buy newly issued securities backed by, among other things, auto and student loans, credit cards, business equipment and loan guaranteed by the Small Business Administration.

Demand for these securities was down sharply from June, when investors requested $11.5 billion worth of loans. The Fed on Friday said last month's operation backed 13 deals with a total of about $16.4 billion.

As of late June, the Fed report said that trusts affiliated with John Deere, BMW, Sallie Mae, GE Capital Credit, CarMax, Ford Credit and Harley-Davidson Motorcycle were among the issuers of securities participating in the program.

The TALF started in March and figures prominently in efforts by the Fed and the Obama administration to ease credit, stabilize the financial system and help end the recession.

The program has the potential to generate up to $1 trillion in lending for households and businesses. Spurring such lending is vital to turning around the economy.

The TALF had gotten off to a lethargic start, hobbled by rule changes, investor worries about financial privacy and fears that participants might become ensnared in an anti-bailout backlash from the public and Congress.

Although some credit and financial stresses have eased, experts say it is still difficult for many consumers to secure credit to finance big-ticket purchases such as homes, cars, appliances and school.

In mid-June, investors passed on their first chance to buy newly issued securities backed by commercial real estate loans when that part of the TALF program was rolled out. It is designed to boost the availability of commercial real estate loans, help prevent defaults and facilitate the sale of distressed properties.

The Fed monthly report also showed that the Fed lost $5.248 billion in the first quarter on the securities it acquired with last year's bailouts of Bear Stearns and insurer American International Group Inc. The figure was revised slightly from $5.254 billion reported last month.