DECEMBER 2, 2010, 12:13 P.M. ET
By APARAJITA SAHA-BUBNA And AMY OR

Money managers, including hedge funds, mutual and pension funds borrowed $71.1 billion under the Federal Reserve's Term Asset-Backed Securities Loan Facility, according to a filing Wednesday on the central bank's website.

Through the program, known as TALF, the central bank offered for a year low-cost loans to investors, enticing them to buy top-quality bonds backed by consumer finance loans, such as auto loans and credit-card debt. TALF was aimed at reviving consumer lending in the broad economy during the financial crisis.

Pacific Investment Management Co., a unit of Allianz SE, was the largest borrower of this cheap funding, the data show. The California-based giant fixed-income asset-management company borrowed $7.13 billion from the program known as TALF.

Other major borrowers were Philadelphia-based Emerald TALF Fund LP, which borrowed $4.18 billion; Ladder Capital Finance LLC, specializing in commercial real estate, which used $3.38 billion of TALF funds; investment manager Arrowpoint Partners, which participated in TALF via two funds, borrowing $3.18 billion; and One William Street Capital, which used $3.22 billion of TALF money via its fund OWS ABS LLC.

Private investment firm Belstar Group used $2.98 billion of TALF money and launched funds in March 2009 to participate in both the asset-backed and commercial-mortgage-backed portions of TALF. Similarly, Cornerstone Investment Management LLC borrowed $1.48 billion through TALF, setting up a fund specializing in TALF-eligible securities.

Several state pension funds also tapped the program, including the following: California Public Employees' Retirement System; California State Teachers' Retirement System; and pension and retirement funds of Connecticut's cities of Bridgeport, Bristol and Milford.

Money managers T. Rowe Price Inc. borrowed $981 million, and Oppenheimer Funds Inc. borrowed $1.11 billion.

As of Sep. 30, more than 60% of TALF loans were repaid in full, with interest, ahead of their maturity dates, which range from March 2012 to March 2015, the Fed said on its website. Loans of $29.7 billion remain outstanding and are current in their payments.

Since its introduction in March 2009, TALF aided the sale of more than $100 billion in bonds backed by auto, student and equipment loans and credit-card debt—the bulk of all the asset-backed deals sold in U.S.

During the credit crisis, when capital markets froze up, it made "complete sense that hedge funds and money managers were taking advantage of this program," said Dan Nigro, chief executive of Warfield Consultants, a Montclair, N.J., firm focused on asset-backed and residential-mortgage-backed securities. "The program was very successful. Returns under the TALF program will be tremendous."

The Fed wrapped up the consumer loan-backed portion of TALF in March.

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