The first round of the Federal Reserve Bank of New York and the United States Treasury Department’s Term Asset-Backed Securities Loan Facility (TALF) program has launched to a lukewarm reception among investor-borrowers.  According to a statement issued by the Federal Reserve on March 18, 2009, in its first round of funding, the TALF program received only $4.7 billion in requests for loans out of $200 billion in available loan capacity.  Only 19 hedge funds applied for funding.  Market participants attribute the relative lack of interest in part to resistance on the part of investors to the terms of customer agreements that investors are required to enter into with dealers.  According to lawyers who have negotiated such customer agreements, the customer agreements are more restrictive than the Master Loan and Securities Agreement (MLSA) that primary dealers must enter into with the Federal Reserve to participate in the TALF.  The customer agreements are generally dealer-friendly, including unilateral set off rights that favor dealers and broad rights for dealers to inspect investors’ books and records.  We explain the concerns among hedge funds and their advisers relating to the customer agreements.  We also describe TALF Trusts, a creative solution that some hedge fund are employing to circumvent the customer agreements, along with a review of some of the shortcomings of TALF Trusts.