SEC no-action letter: Federal Reserve Bank of New York TALF exemption

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF
TRADING AND MARKETS
February 17,2009
Mr. Thomas C. Baxter, Jr.

Executive Vice President and General Counsel

Federal Reserve Bank ofNew York

33 Liberty Street

New York, NY 10045

Re: Term Asset-Backed Securities Loan Facility Dear Mr. Baxter:
Based on the facts and representations set forth in your letter, dated February 17, 2009, the Commission finds that it is appropriate in the public interest and consistent with the protection of investors to grant, and hereby grants, to any broker-dealer that acts as a primary dealer in government securities (each, a "Primary Dealer") a limited exemption pursuant to Section 36 ofthe Securities Exchange Act of 1934 ("Exchange Act") from the prohibitions on arranging for the extension or maintenance of credit contained in
Section 11(d)(l) ofthe Exchange Act solely with respect to such Primary Dealer's
facilitation of extensions and maintenance of nonrecourse credit on behalf ofthe Federal Reserve Bank ofNew York to purchasers of asset-backed securities ("ABS") pursuant to the Term Asset-Backed Loan Facility ("TALF,,).l The foregoing exemption from the prohibitions on arranging for the extension or maintenance of credit ofExchange Act Section 11 (d)(1) is based solely on your representations and the facts presented, particularly your representation that the TALF program is intended to have the effect of unblocking the flow of funds into certain. asset classes, which you describe as a critical objective in the Government's overall strategy to .stabilize and revitalize the nation's economy. The foregoing exemption is strictly limited to the application ofthe prohibitions on arranging for the extension or maintenance of credit under Section II(d)(I) to activities involving Primary Dealers under the circumstances described above and in your letter.2 In the event that any material change occurs with respect to any ofthose facts, This limited exemption from the prohibitions on arranging for the extension or maintenance of credit contained in Section 11(d)(1) applies solely to such Primary Dealer's facilitation of extensions and maintenance of credit by the FRBNY pursuant to the TALF, and not to any other extension or maintenance of credit, or any other arranging for the extension or maintenance of credit, on new issues of ABS in the distribution ofwhich such Primary Dealer participated as a member of a selling syndicate or group within the meaning of Section 11(d)(l) ofthe Exchange Act. A Primary Dealer participating in the TALF program must create and preserve records with respect to that activity as required under the Commission's broker-dealer recordkeeping requirements. 17 2