Tuesday, September 6, 2005
Headlines--- Flag Upside Down ######## surrounding the article denotes it is a "press release"
CITIGROUP $3MM plus Employee Matching "I just wanted you to know that Citigroup will donate $3MM including matching all employee contributions to the American Red Cross to help in the relief efforts from Hurricane Katrina. In addition to these efforts, Citigroup is committed to working with affected customers to alleviate the temporary financial impact of this disaster through extension of grace periods, waiver of fees and other solutions as appropriate." Ross Guilford Flag Upside Down
" I enjoyed the ragged flag wav file you sent and as a patriot myself; it was a joy to listen to. I get the sense you also share my beliefs as an American having a son in the navy and serving in the military yourself. My only question is why is the flag upside down on your website? Are you criticizing the leadership?" The only time the American flag may be flown up-side down is for distress. This is a military designation primarily, for a ship in trouble, or a fort or army base. It was used in Viet Nam when your unit was in trouble and you wanted others to know, particularly in the air. Hurricane Katrina has put the State of Louisiana in great distress. Neighboring states also. It has greatly affected us all, not just economically, and many have volunteered to go down and help others; have sent money, many have volunteered to house those who have been displaced and are without a place to live. The other flag, below the date, which we ran last Friday, September 02, 2005 and waving, is the Louisiana State Flag. If you look closely, it is also flying up-side down.
Here is the State Flag of Louisiana up-right:
I thought it was time to fly both flags upside down last week on our Leasing News masthead our country was in distress. Help was needed. It still is. I was hoping with the Citicapital message from Ross Guilford that others in the industry would take up the cause, too. Kit Menkin, Editor/Publisher --------------------------------------------------------------- Welcome New Readers
While most who read Leasing News go to the web site first, many still join our mailing list. Our goal is to print daily from Monday to Friday, but most often it is only three or four times a week, so when you are on the mailing list, you are informed that the new edition is available. We go to "press" when we think there is enough equipment leasing news to do so. Readers on our mailing list also get notices of major events from time to time. We welcome the new readers and hope you enjoy and find informative Leasing News. ----------------------------------------------------------------
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---------------------------------------------------------------- Oh, No, Mr. Bill... Not CIT again???
by Kit Menkin As CIT Financial has grown since divorcing itself from Tyco, moving into Europe and making plans for expansion into India, its main base of American vendor business appears to be slipping, not concerned about collateral. One of my former partners was Jim Kalinski at American Leasing, who originally came from CIT, San Francisco. He was perhaps one of the best credit man in the business, and others, like Bob Fisher, now at Main Street Bank were the pick of the pack when it came to understanding credit situations, especially looking at the collateral--- almost a sixth sense. Jim said he was trained by being thrown at the desk with a bunch of applications and told he could approve any under $25,000, and over that, he had to get his boss's okay. He was told point blank, don't ask me any questions, unless you have to, as it is your job to approve or turn them down. The more he processed, the more he got. He said he used his common sense, and was promoted when he was told he was approving more than he was turning down. Later his boss said credit was so complex, he had to learn it the hard way, as each application was different. And that was the approach Jim had taken. He had approval in the old days up to $250,000 by himself, and with another, up to a $1 million, 1972. That's the way I remember the story, that it was easy to turn a deal down, but you got more authority when you understood that you could take a better chance if you knew what you were doing. Unfortunately, they don't seem to do it that way today as credit scoring and "processing time" appears to be the guideline. Not only should CIT have learned this with the NorVergence leases, with $500 matrix boxes for $20,000 and $120,000 leases ( yes, just one Matrix box was the equipment description,) but it appears CIT is doing it again, this time with credit clearing machines that allegedly cost $350 but the contract calls for $7,000 plus as "cost to lessor." Leasing News has received several complaints from lessees, and was also told that the Federal Trade Commission is looking into the contracts. Here is how the scam works. A merchant pays a few percentage points in a credit card transaction, plus enters into a contract of service, plus obtains the dial-up hardware to process the transactions. "I own a small mail order company called RTG Parts," he wrote. "In late June we received a phone call from a woman claiming to work for Chase Manhattan Bank. We were told we could save money if we switched to their credit card Merchant service. I agreed to meet with a representative and discus this. "On July 7 th I met with a man and his trainee from "NPMG Registered ISP/MSP of JP Morgan Chase' ...Several times I asked what this would cost me and he always answered 2.2% of my credit card sales. He said there were no other fees. The 2.2% was good for any transaction and it was guaranteed for 60 months. "While signing I was confused by many items...He assured me that the charge for this equipment would come out of the 2.2%...I was told the $99 a month for the machine would be paid by NPMG. That it would come out of my 2.2% and I would never have to pay anything above 2.2%. "...Instead of signing a simple service contract as promised I instead signed a lease for equipment owned by 'CIT Financial USA., d/b/a Lease Finance Group.' (233 North Michigan Avenue, Suite 1800, Chicago, IL 60601-5519) I have contracted this company but I believe they are organized with the fraud. I can not talk to a real person and the recording says I owe more than $5500 just to cancel the lease (this is a$250 piece of equipment as advertised on line.) Then to cancel the draconian service contract I would have to pay another $1000 cancellation fee to NPMG." The contract was for 48 months with an estimated 10% residual. He concluded his letter to Leasing News, "I feel like quite the fool. I got nailed big time...hard to believe I could be so foolish." Leasing News was unable to get a comment from any of the other parties involved, but here is a copy of the letter from the owner of RTG Parts as well as the contracts he signed: http://leasingnews.org/PDF/NPMG2.pdf Leasing News has received calls regarding how to break the contract with CIT because the service was slow with the provider, and then when they found out the "buy out," they never realized it was a contract based on a $350 dollar machine. In addition, a salesman was offered a job with a company in Silicon Valley that sells these programs, using CIT Financial, as their funding source. The question we were asked was how could a $300 (the number he gave us) turn into a $7,000 contract, and weren't leasing companies concerned about the collateral. This was not only a humorous question, but it came from a former copier salesman who said he was trained to give full disclosure to the customer to what they were signing. He said the commissions were also too good to be true, and that's why he came to visit us, as it didn't seem to jive, but CIT Financial was funding the leases, so it gave creditability to the transaction, he thought. Should he take the job? No way, we told him, as he could wind up in court for many days, plus also may have personal liabilities in how he sold the transaction. As to collateral, the owner of RTG Parts said he had a credit score over 800, and had good cash in the bank, too. I bet there was very little credit investigation or even much human time spent on this under $10,000 lease--- wasn't worth the time. The old Jim Kalinski or Bob Fisher would have never gotten into this situation as they would have seen through the collateral. Perhaps the new Jim or Bob would have not had the time, but let the credit score and alleged "hell and high water" contract run pell mell in putting the deal on the books. This certainly looks like another NorVergence situation or perhaps even Leasecomm. I don't think Jim or Bob would have fallen for it. ---------------------------------------------------------------
New Industrial Banks in Utah/One offering Leasing The Salt Lake Tribune writes that Wal-Mart Stores Inc.'s controversial application to open a Utah-based industrial bank may be getting all the attention lately, but Daimler Chrysler, Sallie Mae, CapitalSource Inc. and Lease Corp. of America also have made application. Lehman Brothers and the Utah-based Leavitt Insurance Group, successfully opened their own industrial banks last month. Merrill Lynch, Target Corp., and American Express already have industrial banks established in the state. Reportedly there are currently are 31 industrial banks operating in Utah. Combined, those financial institutions have assets of more than $115 billion. Steven Oberbeck writes in the Salt Lake Tribune, " Regardless, if all the pending applications are approved by the end of 2005, this will be the busiest year for industrial bank formation in Utah history." SLM Corp., better known as Sallie Mae, plans to offer student and education loans through its bank. "The industrial bank will allow us to fund and originate, in our own name, private credit education loans that we offer nationwide to students and families," said a statement from Sallie Mae executive vice president Marianne Keler. CapitalSource will offer commercial loans. Daimler Chrysler will provide automobile loans and Leasing Corp. of America Bank will offer equipment leasing. Lehman Bros. Bank was set up to provide commercial real estate loans and warehouse lines of credit. "We'll have no retail presence," Julie Boyle, the bank's president, told the Salt Lake Tribune. "Our smallest loan will be in the $5 million range." Utah is one of the few states that allows industrial loan corporations. It was created in 1987 by congress that allows brokers and retailers to own a federally insured, deposit-taking financial institution. In California, many banks are located in large grocery stores and drug stores. Many retailers have also gone direct to forming their own banks out of state to be able to issue credit cards direct, plus use their cash flow, cutting out the "middle-man." --------------------------------------------------------------- Classified Ads---Help Wanted Account Executives
Credit Analyst
Lease Representatives
MIS/Business Analyst
National Account Manager
Vendor Relationship
--------------------------------------------------------------- ICB Leasing latest on "Funder Only" list Funder's Only - Update A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program
(F) ICB Leasing - Business is conducted only with approved brokers. In addition, Brokers must not only be approved by ICB but licensed where appropriate. We will permit use of ICB Leasing Corp. lease docs in approved originators name and purchase/take assignment of lease.
To view the full "Funder Only" list, please go here: http://www.leasingnews.org/Funders_Only/Funders.htm --------------------------------------------------------------- Leasing Association Meetings Open to Non-Members The UAEL Golf Tournament deadline closes tomorrow. The new location for the ELA September 19-21 Lease Accountants Conference is the Renaissance Harborplace Hotel, 202 East Pratt Street, Baltimore, Md.
UAEL Oregon Region Presents "Annual Golf Tournament" Call UAEL at 760-564-2227 to REGISTER NOW (before September 7th) as this is a first come, first serve event, as we have tee times reserved for 40 players!! When: Thursday, September 15, 2005 (review www.eastmorelandgolfcourse.com for directions) Event: This will be a scramble format, and is open to both members and non-members. We will have both contests and drawings. Time: Check in will be at 10:00 a.m., and the first start time will be at 10:30 a.m. Cost: $40.00 for members, and $55.00 for non-members. Registration: Simply call UAEL at 760-564-2227 to make payment arrangements. As mentioned, this is first come, first serve, so please REGISTER NOW (deadline is September 7 th ). UAEL can take your credit card information over the phone or they can invoice you as well. Please also make sure to provide us with your handicap, and let us know if you would like to be partnered with anyone. Final Comments: The Oregon Annual Golf Tournament has been held for many years now, and has always been a huge success. We have always had an excellent mix of funding sources, brokers and lessors, and vendors. We also encourage non-golfers to come out and meet us for beverages, as all players should be coming off the course between 3:00 and 4:00 p.m. For additional information: Please contact Gary Parker, Commercial Equipment Lease, at ---------------------------------------------------
September 19-21 ELA Lease Accountants Conference New location for the ELA Lease Accountants Conference is the Renaissance Harborplace Hotel, Baltimore, MD Hotel Accommodations: If you need to make a change in your reservation, please wait to receive this confirmation and then call 800-468-3571 to make the change. IMPORTANT: If you did NOT have a reservation at the JW Marriott, but were staying at another hotel in New Orleans, you need to call the Renaissance Harborplace at 800-468-3571 and make a new reservation there. Be sure and tell the reservations clerk you are attending the ELA Lease Accountants Conference in order to get the group rate. Please take care of making your reservations by Friday, September 9. We have increased the block of rooms, so you should have no trouble securing a reservation at the Renaissance. Note: You should also cancel the reservation you made at the other New Orleans Hotel. Any questions, contact Sally Maloney at smaloney@elamail.com Benefits of Attending: - Pre-conference workshops on accounting for Commercial Vehicle Fleet and Real Estate - Doing business in a changing corporate environment: understanding the regulatory, tax and accounting impact - Learn about current & emerging developments at the FASB and how they impact lease accounting - Understand the impact of the SEC report on off-balance sheet arrangements on leasing - Assess the current status and outlook of proposed FASB standards related to offbalance sheet accounting and financial reporting for securitization implementation and interpretive questions - Receive an update on the latest developments in accounting for cross-border transactions - Understand the changes in the accounting treatment of tax benefits in leveraged leases - Participate in unmatched networking activities! Who Should Attend? Conference brochure: -------------------------------------------------------------- Oct. 21-22, 2005 National Association of Equipment Brokers Join us in sunny Irvine for networking, education, and to For more information, please go to: E-mail: mwilson@hqtrs.com ---------------------------------------------------------------------
November 4-5 Join us in Atlanta for networking, education, and fun. For more information, please go to: E-mail: mwilson@hqtrs.com
---------------------------------------------------------------- ELA Executive Committee Sets Sites on Best Practices ELTnews At its recent annual planning meeting, the Equipment Leasing Association Executive Committee addressed the issue of "reputational" risk for the equipment leasing and finance business. Association members and elected leaders alike have been raising concerns about how various groups, including customers, legislators, regulators and the business media perceive leasing company business practices. The lengthy discussion revolved around two issues. The first deals with customers and the growing importance to the business of good customer relations, satisfaction and repeat business. Do current practices actually encourage customer satisfaction and high reputation? The second issue involves potential increases in government regulation either through laws or regulations. Regulatory bodies, including state legislatures, Attorneys General and the Federal Trade Commission are actively looking at practices in the industry. In the discussion of practices, most discussion focused on end of lease provisions and the transparency of documents. The Executive Committee will recommend that a Task Force on best practices be established to address the subject of best and fair practices and how to build greater awareness among member companies of the impact of practices on reputation and business success. The Task Force would address among other things: . Establishing a clear industry philosophy related to the importance of the customer, important principles and standards of practice to use as a guide in addressing specific issues and questions. . The source and nature of practices giving rise to reputational problems. . What other industry organizations do to encourage / establish ethical behavior, best practices and high quality of standards in dealing with customers. . Potential activities such as development of Best Practices Guidelines. . Changes to the Code of Fair Business Practices--content and/or process of enforcement. . Activities to educate/build greater awareness of the impact of practices on customer relations/satisfaction. . Activities to focus on lessons learned from business situations or practices that exposed member companies to legal action or increased regulation. In other action, the Executive Committee took steps to increase resources for Advocacy programs and programs to provide more business development opportunities. Members of the committee believe that an expanded government affairs and legal effort, including more member involvement, will be critical in the next several years as legislation related to changing tax systems and certain consumer oriented legislation increases. --Michael J. Fleming, ELA president ---------------------------------------------------------------- ### Press Release ############################ Fitch Rates GE Equipment Small Ticket LLC, Series 2005-1 CHICAGO---Fitch rates the GE Equipment Small Ticket LLC, series 2005-1 (GE EST 2005-1) as follows: -- $180,000,000 class A-1 notes 'F1+'; -- $120,000,000 class A-2 notes 'AAA'; -- $277,000,000 class A-3 notes 'AAA'; -- $110,269,000 class A-4 notes 'AAA'; -- $63,845,000 class B notes 'A'. The $751 million of notes are backed by a pool of receivables originated or acquired by the North American Leasing (NAL) and Healthcare Financial Services (HFS) operating segments of General Electric Capital Corporation (GECC). GE EST 2005-1 is General Electric Company's (GE) second securitization of primarily small ticket vendor-based originations. The GE EST 2005-1 ratings are based on the following: -- Historical delinquency and loss performance of the selected portfolios; -- Origination, underwriting and servicing experience and procedures of GECC; -- The role of GECC as servicer; -- Collateral pool characteristics; -- Available credit enhancement for the class A and B notes; and -- Sound legal and cash flow structure of the transaction. The 'AAA' rating on the senior notes reflects the credit enhancement (CE) provided by the subordination of the class B notes (8.50%), the initial reserve account (0.75%), available excess spread, overcollateralization (OC) created by a partial turbo, and available residual realizations related to the leases in the pool. The 'A' rating on the class B notes reflects the CE provided by the reserve account, available excess spread, OC created by a partial turbo, and available residual realizations. The ratings address the likelihood that noteholders will receive full payments of interest and principal in accordance with the terms of the transaction documents. The receivables consist of loans and leases originated or acquired by the NAL (approximately 94%) and HFS (approximately 6%) segments of GECC. The largest equipment concentrations (as a percentage of the final cut-off date pool balance) include office (52.18%), technology and telecommunications (13.99%), printing presses (9.14%), medical (6.37%), and industrial equipment (5.07%). Noteworthy obligor industry exposures are services (46.53%), printing and publishing (12.00%), and health care (11.26%). The overall pool is diversified geographically, with the top five states as follows: California (11.44%); Florida (8.96%), New York (8.13%), Texas (7.89%), and Illinois (6.44%). The highest single obligor concentration is 0.87% of the initial pool balance, with the five largest obligors constituting 3.19%. Fitch considered both quantitative and qualitative factors in evaluating the CE structure of the GE EST 2005-1 transaction. Fitch reviewed the business segments' annual and static loss histories, projecting cumulative losses on pools that have not fully paid down using segment specific loss curves. Ultimately, in determining the cumulative net-loss proxy for the GE EST 2005-1 portfolio, Fitch weighted the individual segment's projected losses by its portfolio proportions. Stresses were applied to Fitch's expected loss rate within the cash flow model to simulate deteriorating asset performance. To replicate a reduced amount of excess spread available to cover losses and turbo principal to the notes, Fitch also implemented a higher servicing fee within cash flow models. Supplementary stress on the classes A and B notes was initiated by reducing credit to residual realizations, limiting 'AAA' and 'A' access to 50% and 55% of the booked amount, respectively. Surveying the performance of the structure under different loss timing scenarios, the cash flow model was analyzed under front-end, back-end, and a more even distribution of losses. The break-even losses sustained by the enhancement structure were then compared with Fitch's cumulative net-loss proxy stressed by a multiplier consistent with the rating being sought. Under stress scenarios consistent with 'AAA' and 'A' ratings and minimum multiples of 5.0 times (x) and 3x, respectively, the CE structure was sufficient to ensure payment of the classes A and B notes by the legal maturity date. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. ### Press Release ########################### ---------------------------------------------------------------
News Briefs---- Storm may stem rates http://www.ajc.com/news/content/business/0905/03bizdow.html States waive weight, height regs for hurricane relief trucks http://www.landlinemag.com/Special_Reports/2005/Katrina/ Top Restaurants in New Orleans May be Lost http://www.nytimes.com/2005/09/06/business/06restaurant.html?pagewanted=all ----------------------------------------------------------------
You May Have Missed Home prices increase at their fastest rate in 25 years http://www.usatoday.com/money/economy/housing/2005-09-02-housing-usat_x.htm Top 265 metro areas of Housing Growth http://www.usatoday.com/money/perfi/housing/2005-09-02-housing-price-chart.htm ----------------------------------------------------------------
Sports Briefs---- Jerry Rice retires---the full story http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/09/06/RICE.TMP NFL's Q rating, revenue continue to climb http://www.usatoday.com/money/industries/2005-09-02-forbes-revenues_x.htm ---------------------------------------------------------------
Today's Top Event in History 1877-Birthday of legendary New Orleans trumpet player Buddy Bolden *** http://www.redhotjazz.com/buddy.html http://www.redhotjazz.com/buddyinfo.html http://www.pbs.org/jazz/biography/artist_id_bolden_buddy.htm http://www.nathanielturner.com/buddybolden2.htm **** "...thought I heard Buddy Bolden say, Jelly Roll Morton
This Day in American History 1620--- Pilgrims set sail from Plymouth England to the New World **** thought I heard Buddy Bolden say, Jelly Roll Morton *** http://www.geocities.com/BourbonStreet/5135/Bolden.html (1) http://www.frederickdouglass.org/ ----------------------------------------------------------------
Baseball Poem whiskey moon frank says the full moon from Tim Peeler, from his book These come from a soft cover 128 pages
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