The Federal Reserve Building in Washington, D.C.
The Federal Reserve Building in Washington, D.C. - 
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Kai Ryssdal: Ever since the financial crisis got really hairy, the Federal Reserve's been running a hodge-podge of programs that are designed to get credit flowing back through the economy as quickly as possible. It's not overstating the case to say Ben Bernanke and his colleagues have been throwing money at the problem.

One of those programs, the TALF, or Term Asset-Backed Securities Loan Facility, is quite possibly the biggest government program you've never heard of. Even though it's providing the financing for a lot of the things you're buying. From New York, Marketplace's Jeremy Hobson reports.

JEREMY HOBSON: The money comes from the Federal Reserve, not the U.S. Treasury, so the program didn't require Congressional approval. Nevertheless, up to a trillion dollars will be lent to big investors to buy pools of debt. Asset-backed securities they're called, in which the assets are my debt, your debt, the neighbor's debt. Here's UCLA Forecast Economist David Shulman.

DAVID SHULMAN: Student loans are in this package, small business loans are qualified collateral, and they've also opened it up to commercial real-estate loans, so it covers quite a bit of lending that goes on in the economy.

Shulman says when the financial crisis started last fall...

SHULMAN: The market for asset-backed securities stopped. So as a result, auto credit began drying up, credit-card credit began drying up, student-loan credit began drying up because the originating financial institution had no ability to take the loan and sell that loan into the marketplace.

In other words, when your bank or your car dealership makes a loan to you, they'll take your IOU. Add it to hundreds of others. And sell that pool of IOUs to investors who make money on the interest you pay. That way, the IOU is at least partly off the bank or dealership's balance sheet, and they can make new loans to new people.

If investors are willing to buy this debt, then lenders are able to extend more credit to you and me at a low interest rate. This way of doing business may seem roundabout, but Shulman says it's the world we live in.

SHULMAN: The asset-backed securitization is extraordinarily important in our credit system because that's where the bulk of the loans were made in the 21st century. So this market has to work. If this market does not work, we're going to be in a lot of trouble.

Enter the Federal Government -- last November -- with a program called TALF.

It rhymes with Alf, I know, but the only alien life forms here are the asset-backed securities. Through TALF, the government is lending investors as much as 94 percent of the cost of these securities, made up of new loans to get the market for them rolling again.

It's mostly rich people and institutions like money-market funds that are investing. Reed Auerbach is a lawyer with McKee Nelson, who is now devoting almost all of his billable hours to TALF deals. We met outside a car dealership in Manhattan, and here's why.

REED AUERBACH: Whilst individuals standing outside this dealership walking in today to go buy a car is not thinking, gee, I'm getting a low 2 percent financing rate on my car because this dealership was able to package my security into a thousand other securities and issue a TALF eligible bond -- they're not thinking that. In fact, that's exactly what's happening.

Auerbach says investor participation in the program is picking up. The Fed lent investors just a couple billion dollars a month in March and April and $11 billion last month. That's getting closer to what investors were spending on these securities before the financial crisis. So does that mean the TALF's working? Maybe. And Auerbach says if it does work, it'll be because TALF doesn't have the same strings attached as other programs, like the bank bailout, which requires banks to submit to executive pay limits and hiring requirements.

Investors are more willing to participate in TALF, Auerbach says, because it doesn't have those restrictions. Maybe because few people know about it. At least for now.

In New York, I'm Jeremy Hobson for Marketplace.

Follow Jeremy Hobson at @jeremyhobson