Term Auction Facility - TAF

See: Term Asset-Backed Securities Loan Facility - TALF.

Prior to 2007, everyone thought they had a pretty good handle on how the economy worked. People were conversant with terms like "interest rates" and "monetary policy." Then markets started melting down as part of the financial crisis of 2007-2008, and suddenly people were inundated by all sorts of terms they didn't even know existed. ABS. MBS. Credit swaps.

As it turns out, the only way to combat problems with esoteric money problems was to create esoteric monetary solutions. So a bunch of nerds at various levels of government launched a series of programs to save the day. This included the Term Auction Facility.

TAF was meant to unfreeze lending markets, especially for short-maturity debt. The Fed auctioned 28-day loans at first, later expanding to 84-day loans. Under the program, the Fed accepted a wider list of collateral, and gave out funds to a wider group of recipients than it normally did under typical operations. The goal was to keep funds flowing through the economy. A little like how CPR keeps the blood going in someone whose heart has stopped beating. Just keep things flowing...until they can get those paddle thingies warmed up.