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11/20/2008



Rail News: Rail Industry Trends

ELFA to Secretary Paulson: Include the commercial finance market in your 'rescue package' thinking


Yesterday, the Equipment Leasing and Finance Association (ELFA) formally asked U.S. Treasury Secretary Henry Paulson and his brain trust to factor the commercial finance market into the mix as they attempt to figure out how to support the consumer finance asset-backed securities market.

"Our members, banks and non-bank financial institutions, agree with your comments, with the additional point that the securitization market for business or commercial credit, including equipment loans and leases, has also stalled, as has the bank-supported conduit, commercial paper and syndication market for such instruments," ELFA president Kenneth Bentsen Jr. said, referencing Paulson's Nov. 18 testimony before the House Financial Services Committee and Nov. 12 comments regarding the financial rescue package. "Despite having been more prudent than other classes of credit extension, the equipment finance sector has suffered the effects of the demise of the public securitization market, and more importantly, the private market utilizing private placement securitization, syndication and conduit finance, much of it through the bank channel, resulting in a declining ability to fund transactions."

Moreover, ELFA members "understand the magnitude of the situation faced by financial policy makers" as well as the need to protect taxpayers' interests, Bentsen added.

"We appreciate the complex issues related to the extension of the Capital Purchase Program to non-regulated entities and we respect your need to investigate the potential risks related to such action," he said. "We believe, however, that there are viable policy options through the regulated bank channel which would provide necessary liquidity to the commercial credit sector similar to your comments regarding support for the consumer finance ABS market through a federally supported liquidity facility."

ELFA represents more than 700 financial services companies and manufacturers that finance the utilization of and investment in capital goods.


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