Representatives: Spur participation among marine lenders
WASHINGTON, D.C. – Twelve Congressional representatives sent a letter to Federal Reserve Chairman Ben Bernanke to express their concern with elements in the Term Asset-Backed Securities Lending Facility that could be deterring participation for non-auto floorplan asset-backed securities last Friday.
In March, non-auto floorplans, also known as mixed collateral floorplans, were included as an eligible asset class in TALF. The inclusion of non-auto floorplans came after more than 13,000 emails from throughout the recreational boating industry were sent to Congress and Treasury expressing the industry’s concerns about floorplan financing.
“Access to credit and reasonably priced capital remain difficult for U.S. marine dealerships and manufacturers despite all recent recovery efforts,” said Representative Pete Hoekstra (R-MI), the lead Republication on the letter. “Many lenders have left the market completely, causing job losses and an erosion of the marine industry.”
As Friday’s letter notes, there has been no issuance of non-auto asset-backed securities to date, largely due to the comparatively high haircut levels for non-auto ABS. A “haircut” is the percentage amount deducted from the market value of the ABS to account for the risk of loss that the investment poses. The letter encourages Treasury and the Fed to re-examine the haircut levels for non-auto ABS in order to increase liquidity in the marine industry.
“As we work to free up credit markets, we must not overlook the marine dealerships and manufacturers who create thousands of jobs for middle class, working families in Central Florida and across the country,” said Representative Suzanne Kosmas (D-FL), the lead Democrat on the letter. “I am proud to work with my colleagues from both parties to improve our recovery efforts so that these businesses can access needed capital and continue to create jobs.”
“NMMA deeply appreciates Representatives Pete Hoekstra, Suzanne Kosmas, and Dave Camp for leading this bipartisan effort and thanks all of the Members of Congress who signed this letter,” said NMMA President Thom Dammrich. “Increasing liquidity in the secondary markets for dealer floorplan loans is an extremely critical issue for the recreational marine industry and we hope that Treasury Department and Fed officials recognize that the current haircut levels are discouraging investor and lender participation in this vital program.”
Joining Representatives Kosmas and Hoekstra on the letter were, Dave Camp (R-MI), Thomas Petri (R-WI), Lincoln Diaz-Balart (R-FL), Frank LoBiondo (R-NJ), Walter Jones (R-NC), Tammy Baldwin (D-WI), Christopher Carney (D-PA), Lynn Jenkins (R-KS), Michael Arcuri (D-NY) and Ron Klein (D-FL).
To read the full letter, click here.
- Can’t get enough boating news? Subscribe to our blog’s RSS feed, follow us on Twitter or look for “Boating Industry” on Facebook and LinkedIn.
- For more of the latest news, click here.
