FRBNY Clarifies TALF Terms
April 4, 2009
On April 3, 2009, the Federal Reserve Bank of New York ("FRBNY") clarified certain terms of the Term Asset-Backed Securities Loan Facility ("TALF"). The clarifications:
- broaden the definition of "eligible borrowers" to permit participation by certain entities whose parent companies have substantial foreign government ownership, including entities whose parent companies have received foreign government investments in connection with the global financial crisis. The new terms will permit such an entity to participate as a borrower, provided that it is either (i) a U.S. branch or agency of a foreign bank that maintains reserves with a Federal Reserve Bank or (ii) a U.S. insured depository institution.
- clarify that the recently-enacted Employ American Workers Act ("EAWA") applies to TALF borrowers (and, if the borrower is an investment fund, to any entity that owns or controls 25% or more of the total equity of such investment fund borrower). Any TALF borrower must certify to the Department of Labor each time it wishes to hire an H-1B worker that it (i) has taken good faith steps to recruit U.S. workers using industry-wide standards and offering compensation that is at least as great as that offered to the H-1B nonimmigrant, (ii) has offered the job to any U.S. worker who applies and is equally or better qualified for the job that is intended for the H-1B nonimmigrant, (iii) has not "displaced" any U.S. worker employed within the period beginning 90 days prior to the filing of the H-1B petition and ending 90 days after its filing and (iv) will not place an H-1B worker to work for another employer unless it has inquired whether the other employer has displaced or will displace a U.S. worker within 90 days before or after the placement of the H-1B worker. Commentators have noted that entities subject to the EAWA will have severely limited access to the H-1B program as a result of the restrictions, at least until the law's two year scheduled expiration date.
- expand the scope of eligible underlying exposures to include intermediate securitizations of credit card, auto lease and equipment leases. Such intermediate securitizations must have been created in the normal course of business solely to facilitate the issuance of an ABS.
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