The Fed is set finally to roll out the mother of all financing facilities, the TALF. The first wave of money starts rolling out the door on March 25.

TALF is growing like Topsy. Here is, as best I can put it together, what you will be able to sell to the Fed. Keep in mind that they are going to be buying asset backed securities.

1. Student loans, auto loans, SBA loans and credit cards will be eligible for the March 25 draw.
2. They may include securities backed by vehicle-fleet and equipment leases in the March 25 draw.
3. In April they anticipate buying ABS backed by rental, commercial, government vehicle fleet leases, small-ticket equipment, heavy equipment and agricultural equipment loans and leases.
4. They are considering accepting CMBS, collateralized loan and debt obligations, ABS backed by non-auto dealer financing and ABS backed by mortgage-servicer advances.

Let the leverage party begin again!

Separately, they also announced that participants in the program, read here anyone who sells securities to the Fed, won’t have to abide by the executive compensation limits. Here is their reasoning: 

“Executive compensation restrictions are targeted towards ensuring that executives of institutions that receive government support are not unjustly enriched,” the New York Fed said in a separate question-and-answer document on its Web site.

If you can parse that one for me and explain just why someone who is selling to the Fed isn’t receiving government support I would be most appreciative. I thought that it was written into the fiscal stimulus bill that you had to abide if you wanted to play the game. If I’m right there then where does the Fed get the authority to suspend the provisions of that bill? Talk about picking winners and losers! If I have this wrong, let me know.

Just one other dart to throw at all of this. The securities the Fed proposes to purchase have to be rated AAA by guess who. Yep, you got that right, those mental giants who assured us before that all of these pieces of paper were money good. It would be helpful to have Bernanke explain just why he expects them to get it right this time.

There is probably little choice but to do this but why does it have to get so big so fast. Dipping a few toes into the water first might not be a bad idea, just in case you know. And it’s beating a dead horse but like everyone else, I still would like to know how he gets out of this. The line about it naturally running off as the market gets better just doesn’t cut it.

more: here and here