White House and congressional leaders may have been optimistic that a deal was on the way, but a group of Republicans led by House Minority Leader John A. Boehner (R-Ohio) proposed an alternative plan to shore up the faltering credit markets and held up movement on the proposed $700 billion bailout deal. The Republican proposal would create an insurance system funded by banks to address the problems in the individual home mortgage market, rather than have the government purchase faulty mortgage-backed assets. Democrats urged the Bush Administration to drum up support among Republicans for the $700 billion bailout plan after lawmakers, the presidential candidates, and President Bush agreed on the principles of the legislation. Under the revised bailout plan, the U.S. Treasury would receive $250 billion immediately and an additional $100 billion once the funds were deemed necessary through a certification process. The remaining $350 billion would be dispersed without the approval of Congress, though lawmakers would have 30 days to raise objections. The program would be overseen by an independent inspector general and the Government Accountability Office; the U.S. Treasury would have to set standards for executive compensation among participating firms and ensure taxpayers could receive equity in participating firms. If the government earns a return on its investments, the revenue generated would be used to reduce the government deficit and fund affordable housing. The bailout deal is still under debate because Democrats and Republicans cannot agree about whether bankruptcy judges should have the authority to rewrite troubled mortgages. Democrats also have a plan on the table to increase taxes on millionaires or stock transfers as a way to offset the costs of the bailout.

Fed Keeps Banks Afloat as Money Market Crisis Deepens

With the worst financial crisis since the Great Depression playing out, U.S. banks and money managers borrowed almost $188 billion per day from the Federal Reserve in the latest week--a record sum. Fed data indicated on Sept. 25 that the total amount banks borrowed was nearly four times the previous record of $47.97 billion a day, and the central bank reported that borrowings by primary dealers through the Primary Dealer Credit Facility, and via another facility established on Sept. 21 for Goldman Sachs, Morgan Stanley, Merrill Lynch, and their London-based subsidiaries, amounted to $105.66 billion as of Sept. 24. Lending to U.S. depository institutions and bank holding companies to fund their purchases of high-quality asset-backed commercial paper (ABCP) from money market mutual funds through a new lending facility announced on Sept. 19 totaled $72.67 billion. Lending in the "other credit extensions" category to American International Group (AIG) and possibly others rose from $28 billion as of Sept. 17 to $44.57 billion as of Sept. 24. "Every facility got used to a large degree, the ABCP facility, the AIG loan, the Primary Dealer Credit Facility and the good old discount window," noted JPMorgan economist Michael Feroli.
(Link to Source/Publication)

Cost of Commercial Paper Spikes

The Federal Reserve reported that the cost of lower-rated 30-day commercial paper hit a record peak on Sept. 24, with a poll showing that spreads on A2/P2 paper increased from 288 basis points on Sept. 19 to 409 basis points. A separate Financial Week survey of corporate finance executives indicated that corporate borrowers are paying substantially more for debt than they were before Labor Day, noting that borrowing costs for more than 50 percent of the 666 respondents had risen anywhere from 100 basis points to 500 basis points since Sept. 1. A precipitous decline in borrowing has accompanied the increase in short-term costs, while outstanding commercial paper plummeted $44 billion to $1.64 trillion on a non-seasonally adjusted basis. Meanwhile, the financing units of Deere & Co., Caterpillar, and other equipment makers disclosed that they may reduce their reliance on commercial paper following General Electric's announcement that it will shave about $10 billion off the leverage of its financing subsidiary.
(Link to Source/Publication)

WaMu Becomes Biggest Bank to Fail in US History

The Federal Deposit Insurance Corp. seized Washington Mutual Inc., one of the country's biggest banks, and then sold the Seattle-based thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion. Because of WaMu's heavy mortgage-related losses and other risky debt, JPMorgan will write down the thrift's loan portfolio by roughly $31 billion--a figure that could change if the federal bailout plan is enacted and JPMorgan opts into it. Problems in WaMu's home loan business became evident as far back as 2006, when the division recorded losses of $48 million versus net income of approximately $1 billion a year earlier.
(Link to Source/Publication)

Weak or Strong, Banks Take Ratings Hits

Both weak and strong banks, including Washington Mutual (WaMu) and Bank of New York (BNY) Mellon, are being downgraded by credit-rating agencies. WaMu's long-term Issuer Default Rating was downgraded by Fitch Ratings from BBB- to B-, which also placed WaMu and subsidiaries on Rating Watch Evolving. "The ... downgrades reflect the heightened uncertainty associated with WaMu's debt obligations in light of the difficult market conditions and increasingly limited options to bolster capital," stated Fitch. The agency noted that potential buyers are concerned about WaMu's loan portfolio because of high levels of delinquencies and the uncertainty of housing price trends. Meanwhile, Fitch lowered BNY Mellon from positive to stable, and said this downgrade followed the bank's announcement that it will incur a $425 million after-tax charge in the third quarter of 2008 to support a quartet of commingled cash funds used for overnight cash sweeps, one commingled fund associated with securities lending collateral reinvestment, and four money market mutual funds. The holding obligations of insolvent financial giant Lehman Bros. had an impact on all funds. Still, Fitch affirmed that BNY Mellon's financial platform remains solid, pointing out that "Liquidity is very good, as BK's core servicing businesses generate considerable amounts of stable, low-cost, short-term funds in most market environments."
(Link to Source/Publication) Subscription Required

news summaries (c) copyright 2008 Information, Inc.

Web Seminar: Principles of Sales and Use Tax Date: November 19, 2008 Time: 1pm-2:30pm ET This web seminar will provide an overview of sales & use taxes as they relate to leasing transactions for tax professionals; address the general rules that can be applied to most states, and focus on the exceptions and unusual situations that could create risk for your organization. For more information and to register for this web seminar, go to: http://webinars.elfaonline.org/session.php?id=1651 Association Publishes Industry Compensation Data The ELFA recently released results of its 2008 Equipment Leasing and Finance Compensation Survey. A collaborative initiative between the ELFA and HR consultant McLagan Partners, this year's survey results provide market data for management and staff positions in key front office, middle office, and back office functions. Salary, bonus, and commission data is broken out by company type, portfolio size, annual volume and ticket size. The survey represents the most up-to-date industry compensation trend information available. To purchase a downloadable copy of the ELFA/McLagan 2008 Equipment Leasing and Finance Compensation Survey results, go to http://www.elfaonline.org/pub/pubs/ProductDetail.cfm?product_code=RCOMPSURV2008 Convention Sponsorship--Stand Out Among the Standouts "Financing New Frontiers" ELFA's 47th Annual Convention October 12 - 14, 2008 Hilton New Orleans Riverside New Orleans, Louisiana Think of it as our All Star Game: The ELFA Annual Convention is a forum for the best and the brightest in this business. It draws than 900 of the top leasing and finance executives, and dozens of exhibitors from the industry's most trusted service providers. But, kind of like making it to the All Star Game, when everybody's that good, it's hard for you to stand out. UNLESS your company takes advantage of one of the many opportunities to sponsor a Convention event or service! Convention sponsorship: -Raises your profile at the most important and prestigious gathering of equipment finance company decision makers -Marks you as an (All Star) player, demonstrating your commitment to the market -Bolsters your brand and places your products and services top-of-mind with a targeted audience There are still some great sponsorship opportunities available: Women in Leasing Breakfast $4,000 Golf Awards Luncheon $5,000 Closest to the Pin Contest $1,500 Golf Holes $1,200 Don't miss this chance to STAND OUT FROM THE CROWD! For full information on sponsorship opportunities, go to http://www.elfaonline.org/pub/events/2008/AC/sponsor.cfm For information on sponsorship opportunities for the community service project at the convention, go to http://www.elfaonline.org/pub/events/2008/AC/AC08_CSP_Sponsor.pdf or contact Sally Maloney at (202) 238-3427 or smaloney@elfaonline.org ELFA Convention: The Annual Meeting of the Industry There is still time to register for the 47th Annual ELFA Convention, October 12-14 in New Orleans. This year we are particularly proud of this year's program, and you are certain come away from the Convention with valuable, practical information that will impact your influence your business in the next year. Whether you're interested in market intelligence, benchmarking your operations, or programming specifically for companies like yours, there's a Convention session you'll want to attend. Plus, ELFA has booked a first rate line of speakers, including Charlie Wilson, the former Texas congressman and inspiration for the bestselling novel and box office smash, "Charlie Wilson's War", and, just added, economist Dr. Lawrence Chimerine, President, Radnor International Consulting Inc. And of course you will learn plenty from peers in the receptions and other networking events. The convention registration list is now online and it reads like a Who's Who in the Equipment Leasing and Finance Industry. Is your name there? You can view the list here http://www.elfaonline.org/pub/events/2008/AC/attnd.cfm The Lite list is available to all, the full list is available to registrants. The list is updated as new registrations come in, so check back frequently. Final deadline to register and be included in the printed attendee roster is October 2. For more Convention information and to register, go to http://www.elfaonline.org/pub/events/2008/AC/ ELFA President on Fox Business ELFA President Kenneth E Bentsen, Jr. appeared September 23 on FOX Business with some very concrete comments about how Congress and the Administration might move ahead on solving the current financial crisis. To view Bentsen's comments, please go here and click "To Play this item now". http://www.vmsdigital.com/MyFiles.aspx?Onum=0C8E57F2-E05D-4849-A21D-41FA38278338