This Tiny TALF Auction Demonstrates Lack Of Demand For Consumer Credit

Two credit card issuers applied to sell a total of $1.4 billion asset backed securities under the Federal Reserve’s TALF program today, bringing the total amount offered under the program today to $3 billion. That far short of last months total, and much less than anticipated.

While supply has been scant, demand for the bonds–which are guaranteed against the worst losses by the Fed–is strong. Investors are buying these things. The supply is almost certaintly depressed by the lack of consumer demand for credit. You can’t push a string, as they say. And all the liquidity programs and guarantees in the world won’t help if consumers stubbornly refuse to borrow money.

The two new issuers are Cabelas and World Financial Network. Earlier auto finance firms CarMax and World Omni had offered t $1.7 billion of deals. 

 

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