The Federal Reserve

In a recent announcement, the Federal Reserve has extended a program intended to spur lending to consumers and small businesses. This program, which was scheduled to end on Dec 31, will now be extended through March 31. The TALF program is seen as a key plank in helping to ease credit, stabilize the financial system and leading the US to an end of the recession.

While I’m normally not in favor of the government trying to stimulate anything, I believe the Obama administration got this one right. The severity of this recession and the impact to the financial markets has required an “all hands on deck” approach. Getting the credit markets going again and making loans available is necessary to get this economy going, which is the focus of the TALF program. Given it’s slow start, this program hasn’t gained the traction the administration wanted. By extending this program an additional three months, consumers and small business will hopefully get the loans they need, which in turn will fuel the economy. However, I hope the government doesn’t just extend the program and call it a day. Let us hope they are reviewing why this program has been slow in getting loans to the right people. A program is only as good as its execution. Extending a poorly run program doesn’t really do anything but reinforce people’s perception that the government can’t really run anything. The government has the opportunity to get this one right.