Fed Chairman Bernanke posed the “existence of an ongoing need” for a lending facility to serve businesses and consumers Friday.

The Term Asset-Backed Securities Loan Facility (TALF), while originally set to expire at the end of this year, will be extended into the next, with a potential to generate $1 trillion for residential and commercial borrowers. The TALF represents the central mechanism of
the Fed/Obama administration’s attempts to restore the flow of credit and stabilize the markets.

Citing the demand to further drive down rates on car loans by continuing to employ the TALF mechanisms to bolster the automotive industry and ensure a recovery, Bernanke also reaffirmed his pledge to reach out to minority-owned businesses and see to it that they get a fair shake from these government lending programs.

The program began slowly and continues to show demand below expectations. With $200 billion offered in the first phase, the Fed found investors taking advantage of far less than was allotted. The program exists to enable the fed to provide loans to investors; this generates purchases of newly issued securities collateralized by assets such as Small Business Administration guaranteed loans and business equipment.

Despite a broad-spectrum portfolio of 121 borrowers, and a statement by Bernanke indicating the program was the indirect source of 3 million household loans and 400,000 small business loans, analysts are skeptical due to consumers inability to secure loans.