Fed closer to boosting consumer loan access.
January 29, 2009 by admin
The Fed is running short of bullets as it lowered the Fed discount rate to close to zero late last year. They remain committed to assisting the economy and boosting consumers availabilty to credit. There has been speculation that the Fed would begin working with lenders directly aimed at the credit card and auto finance markets. The decision to allow GMAC to become a bank and the approval of TARP funds for auto companies late last year has been a positive move for auto lending. Many of the major banks that issue credit cards including Chase, Citigroup and American Express have also received funding from the tarp program.
The Fed has indicated they are likely to begin loan pools of securities that are consumer related loans or small business loans. This new movement will be dubbed the TALF program, not likely to include commercial loans. The moves are likely to increase the amount of credit cards that are offered to consumers, but not likely to offer lower rates on these types of loan programs. Numerous credit card companies have attempted to raise the rates on their card portfolios over the past few months, further challenging consumers and their budgets.