AP sources: Fed may offer longer loans as part of TALF

WASHINGTON -- The Federal Reserve is considering allowing longer loan terms in a program aimed at bolstering commercial real-estate lending, according to people with knowledge of the matter.

The aim is to make the yet-to-be-launched program more attractive to investors. The Fed and the Obama administration are looking to the program to help ease credit strains in the commercial real-estate market.

To that end, the Fed is considering providing investors with five-year loans, vs. the three-year loans now available to jump-start consumer credit, according to the people familiar with the matter. They spoke on condition of anonymity because an announcement hasn't been made. It could come as early as Friday.

Both the consumer and the commercial real-estate components are part of the Term Asset-Backed Securities Loan Facility, or TALF. It is a prominent factor in the government's efforts to bust through credit clogs and ease the financial crisis.

However, the program, created by the Fed and the Treasury Department, has gotten off to a rocky start. It has been hobbled by rule changes, investor worries about financial privacy and fears that participants might become ensnared in an anti-bailout backlash from the public and Congress.

Investors may use the money to buy newly issued securities backed by auto and student loans, credit cards and other debt. The program will be expanded to include commercial real-estate loans.

On the consumer part, just $1.7 billion in loans was requested for the second round of funding in April — down from $4.7 billion in March.

Separately, the government has struggled to get a separate bank-cleanup effort off the ground. The Public-Private Investment Program will have two major initiatives: one will purchase soured mortgage loans with the help of the Federal Deposit Insurance Corp., and another to purchase troubled asset-backed securities. That program will receive some financial backing by Treasury and the TALF.

Meanwhile, results of "stress tests" conducted on the nation's 19 largest banks may not be revealed until later in the week of May 4, rather than Monday, the day the results were set to be released.