I think it [the first January TAF auction] suggests that the funding pressures that raised interbank funding rates in mid-December have eased substantially.

From press Q&A, as reported by Market News International.

Since we started announcing the TAF program, we have seen many of the interest rate spreads narrow appreciably. Now, I'm not saying the TAF was the only reason that's occurred, but I think it was a contributing factor in that.

...

So far, the TAF auctions have given banks access to "relatively low cost funding," at rates that are higher than the federal funds rate but lower than the Fed's discount rate.  "It was reasonable rates that these transactions occurred at," Rosengren said, adding that TAF participants could use "assets that are temporarily, or at least hopefully temporarily, illiquid and that they would prefer not to sell at this time."

From remarks as delivered, as reported by Market News International

Based on our initial experience, it appears that the TAF may have overcome the two drawbacks of the discount window, in that there appears to have been little if any stigma associated with participation in the auction, and--because the Fed was able to set the amounts to be auctioned in advance--the open market desk faced minimal uncertainty about the effects of the operation on bank reserves. The TAF may thus become a useful permanent addition to the Fed’s toolbox.   TAF auctions will continue as long as necessary to address elevated pressures in short-term funding markets, and we will continue to work closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives.

The TAF enables banks with illiquid collateral to borrow from the discount window at a price determined by an open auction. This innovative tool has the potential to provide greater flexibility for the Federal Reserve to respond to the sort of liquidity problems that we have seen in recent months. The benefit to banks is that they can borrow relatively low-cost funds using assets that are temporarily illiquid as collateral. This facility is particularly useful in providing term lending, and appears to have been helpful as financial institutions sought liquidity at the end of 2007.

The first two auctions have provided term funding at a rate above the overnight federal funds rate but below the primary credit rate that banks borrow from the Fed’s Discount Window. An added benefit of the TAF is that it allows the Fed to supply funds to the market without adding to stresses in Treasury markets by engaging in direct purchases of Treasury securities.

The introduction of the TAF was aimed at addressing the Fed’s objectives for financial stability, not its objectives for monetary policy.

Going forward, we must be careful to distinguish when financial conditions call for Fed actions to help markets function effectively, such as we are now seeing with the Term Auction Facility, as opposed to situations when a change in the overall stance of monetary policy is called for.

The Term Auction Facility seems to address a liquidity need, and we're continuing it because that liquidity need is still there. ...  
My sense is there's a preference for using the Term Auction Facility as a mechanism, and also because it doesn't carry the same stigma content. ... The communication has been quite adequate. I would defend the communication practices and policies that we've carried out in the last few weeks. From press Q&A session, as reported by Market News International

"It's not clear that this facility will address fundamental issues in inter-bank markets such as constraints on balance sheets, the need to raise capital and, importantly, concerns about counterparty risks," Lacker told reporters after a speech in North Carolina.

As reported by Dow Jones

WSJ: Your bank’s board asked for a quarter point cut in the discount rate before last week’s FOMC meeting. Was that to narrow the penalty over the federal funds rate, or for a parallel move with a presumed reduction in the federal funds rate?

Plosser: It was a little bit of both. A case could have been made for reducing the penalty rate. It was a complicated mixture of what the right strategy should be for the funds rate, the discount rate and the and the term auction facility.