| Daily news for the equipment finance sector |  |
| Industry News |  |  |
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- Leasing for data centers becomes more attractive, Gartner says
Improving credit conditions have made leasing for data centers more attractive, said Stewart Buchanan, research director with Gartner's research team for information technology asset management and procurement. "The most successful business cases for leasing come about from IT organizations that have their finger on the pulse of the business," Buchanan said. "Because they're looking to pay their people, have operating capital and manage their cash flow, leasing is a terrific way of acquiring this stuff without having to go into debt or use hard-earned cash that could be otherwise used in other aspects of the business," said Ralph Petta, interim president of ELFA. Processor
(11/6)
    
- Panel says U.S. guaranteed as much as $4.3 trillion in assets
The Congressional Oversight Panel said asset guarantees, as much as $4.3 trillion worth, by the Federal Reserve, the Treasury and the Federal Deposit Insurance Corp. helped calm markets. Most of the funds -- at one point as much as $3.217 trillion -- went toward a guarantee program on money-market mutual funds. The panel said the Treasury has improved its tracking of the funds and noted that there are no major flaws with the program. Reuters
(11/6)
, The New York Times
(11/6)
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Panel seeks updates on U.S.-guaranteed Citigroup assets: The Congressional Oversight Panel said the Treasury should provide regular updates on the large pool of Citigroup assets guaranteed by the government. "In light of these guarantees' extraordinary scale and their risk to taxpayers, the panel believes these programs should be subject to extraordinary transparency," the panel wrote. Bloomberg
(11/6)
- Buffett cuts costs, replaces NetJets chief Santulli
Billionaire investor Warren Buffett is putting pressure on managers at Berkshire Hathaway to cut costs, as shown by the replacement of NetJets chief Richard Santulli, analysts said. Buffett replaced Santulli at the aircraft-leasing unit with David Sokol, chairman of Berkshire's energy business. Santulli added about 650 jobs at NetJets in 2008, but the company saw $350 million in losses in the first half of this year. Bloomberg
(11/6)
- Treasury works to give GMAC more financing
The Treasury is debating how it will structure a deal to give GMAC Financial Services more taxpayer assistance. "We're going to get to the right conclusion as fast as we can," said Herbert Allison, who administers the Treasury's $700 billion bailout fund. "I don't know exactly what date that will be, if it will be the ninth [of November] or later in November." Reuters
(11/5)
| Market Trends | | |
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- TALF usage declines for some bond issuance
Banks are relying less and less on the Term Asset-Backed Securities Loan Facility for issuance of bonds backed by consumer loans. Loan requests with TALF guarantees fell to $1.1 billion in October. Issuance of bonds eligible for TALF guarantees dropped to about $6 billion, the lowest level since April. TALF ends in March. "This is the natural evolution of the end to TALF/ABS," said Jim Harrington, a senior portfolio manager at Ryan Labs Asset Management. The Wall Street Journal
(11/6)
- More structured-finance deals without ratings expected
Highland Capital Management reportedly is preparing to issue a corporate collateralized loan obligation without a credit rating, and Credit Suisse is thought to have sold a residential mortgage-backed securities deal without a rating. It is expected that these types of nonrated structured-finance securities deals will become increasingly common. "I expect deals like this will become more prevalent as real money investors begin to restaff and use internal resources to do their analysis," said John Uhlein, founder and managing partner of Grenadier Capital. Structured Credit Investor (U.K.)
(11/4)
| Government & Regulatory | | |
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- House lawmakers discuss measure to limit systemic risk
Members of the House Financial Services Committee continue to battle over giving the government authority to wind down or split up major financial institutions to curb threats to the broader system. "This legislation would take the [Troubled Asset Relief Program] and make it an eternal TARP program," said Rep. Jeb Hensarling, R-Texas. Other lawmakers argued that the legislation would allow the government to more easily deal with issues. "This is about ensuring that our financial institutions are never again allowed to engage in the risky behavior that is so detrimental," said Rep. Luis Gutierrez, D-Ill. The Wall Street Journal
(11/5)
- SEC struggles with lack of consensus on global accounting rules
Julie Erhardt, deputy chief accountant at the Securities and Exchange Commission, said that while most industry participants can agree that a single, global accounting standard is desirable, there is little consensus on what it should be and how to get there. The SEC is examining proposals for transitioning U.S. companies to International Financial Reporting Standards, and officials have vowed to provide more clarity on the issue before next year. Reuters
(11/5)
| Best Practices | | |
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- GE retrains executives with lessons from recession
About 1,000 General Electric executives this year are receiving new training on scenario planning and risk management, the company said this week. "We were close to [the] financial meltdown," said Susan Peters, vice president for executive development and chief learning officer at GE. "There were so many things happening. We need to step back and think of leadership again." The Wall Street Journal
(11/5)
| ELFA News | | |
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ELFA commends expansion of NOL tax provision
ELFA commends Congress and the Obama administration for reaching an agreement to expand and extend the carry-back provision for businesses' tax net operating losses. This provision allows companies, regardless of size, to carry back losses for as long as five years if the losses were incurred in 2008 or 2009. Generally, NOL is carried back two years against previously paid taxes.
This economic-stimulus measure will help leasing companies that find themselves with significant losses from 2008 or 2009 because it allows them to carry back these losses to offset taxes paid in prior years. By offsetting previously paid taxes, companies will receive a tax refund from the Internal Revenue Service, thus creating an immediate cash infusion. Additionally, the measure will help customers of equipment-finance companies struggling to obtain funding by providing cash flow from tax refunds generated by this provision.
For more information, contact David Fenig, ELFA's vice president for federal government relations, at dfenig@elfaonline.org.
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