TIAA to Participate in Term Asset-Backed Securities Loan Facility

Teachers Insurance and Annuity Association of America (TIAA) announced today that it intends to participate in TALF, a Federal Reserve program which aims to get credit flowing to consumers and improve the economy. The program offers government loans to finance purchases of newly-issued securities collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the U.S. Small Business Administration.

“TALF financing presents us with the potential for an attractive risk-adjusted return, which ultimately benefits the more than 3.5 million Americans who are saving for retirement with our organization,” said Roger W. Ferguson, Jr., President and CEO of TIAA-CREF. “As a strong financial company, this also reflects our support for the government’s efforts to restore the flow of credit and get the economy moving, which benefit all investors.”

TALF is a different program than the Troubled Asset Relief Program, or TARP, which is a government program to purchase distressed assets from financial institutions for the purpose of strengthening their balance sheets. Neither TIAA nor CREF has applied for or received TARP funds.

TALF loans have a three-year term, with interest payable monthly, and will be fully secured by the securities. TIAA can pay off the loans at any time, and, because the loans are generally without recourse to the borrower, surrender the collateral back to the Federal Reserve at the end of the term if the loan balance were to exceed the value of the collateral. TALF stands for Term Asset-Backed Securities Loan Facility.

“With TALF financing, TIAA has an opportunity to earn better returns on investments in certain asset-backed securities, an established type of investment that we have long experience with, than we could without the financing,” said Scott C. Evans, who heads TIAA-CREF’s asset management. “Participation in the program is consistent with our investment strategy, which seeks to offer attractive, risk-adjusted returns for the TIAA general account over the long term.”

TIAA has reviewed its proposed participation in TALF with the independent ratings agencies and believes that participation in TALF will not affect the company’s ratings or outlook. The amount of the investment will be consistent with TIAA’s investment program, which supports the company’s claims-paying abilities and obligations to participants.

Participation in TALF is limited to TIAA and excludes CREF.