As a law professor, I can say that I want students to be able to get their student loans without too much hassle. Although I am not a big fan of excessive consumer debt, there is a need for credit to be available. The Fed's TALF program in its announced form is a continuation of the ABSs that have helped us to arrive at the financial crisis that we are in now. Some time ago, Alan Greenspan mentioned the problems arising from lenders incorrectly pricing ABS when they retain no stake in the ABS after sale. Basically, the risk models are prone to error in these cases. Though we don't have the details of the TALF program, I don't see any indication that the Fed is tackling this problem. This means that the risk problems inherent in our current financial crisis from securitization may remain with the TALF program as well.
So, for the next few months while credit remains tight, perhaps Americans will pay down those credit cards. Adding new credit come February when the Fed's TALF takes hold? Perhaps, but let's think carefully about it.