Toxic Asset Subsidies and the Early Redemption of TALF Loans

This paper develops a formula to numerically estimate the unsubsidized, fair-market value of toxic assets purchased with Federal Reserve loans. It finds that subsidy rates on these loans were average 33.9 percent at origination. In contrast, by 3rd quarter 2010, there was no in TALF The theoretical model is used predict early redemption Term Asset-Backed Securities Loan Facility (TALF) purchase commercial mortgage-backed securities (CMBS). predictions are strongly supported data. addition, this looks determinants redemption. CMBS originated inside peak bubble years 2005–2007 much less likely be redeemed early. giant investment managers, Blackrock and PIMCO, more redeem their than smaller managers.