U.S. May Supercharge TALF To Buy Distressed Assets Too

Bloomberg is reporting that the Obama administration is considering expanding the Federal Reserve's TALF program, which was designed to spur consumer lending, by providing liquidity not only to buy newly created asset-backed securities but also distressed assets.

The report suggests the Treasury may meld the Public-Private Investment Fund with the Fed's TALF program.

The Treasury's plan for the Public-Private Investment Fund set aside $500 billion to be targeted at legacy loans and assets that are now burdening many financial institutions.

By melding the Public-Private with the Fed's TALF, the amount of leverage would be increased significantly, which could make the plan that much more effective.

An announcement from the Treasury on the Public-Private Investment Fund is expected later this week and could include this expanded TALF plan.

The TALF has been viewed by many as the best part of the bank bailout plan. Today, it appears Ford (NYSE: F) is taking advantage of the plan by selling $2.95 billion in TALF auto debt.