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AFSA to Obama, Treasury: Open TALF to Include Floorplan Finance

May 06, 2009

WASHINGTON — The American Financial Services Association is lobbying the U.S. Treasury Department and the Obama Administration’s auto task force to increase participation in the Federal Reserve's Term Asset-Backed Securities Loan Facility.

In an open letter addressed to White House adviser Steven Rattner, AFSA President/CEO Chris Stinebert recommended that the Treasury and Obama's task force expand TALF eligibility to include all investment grades for floorplan financing.

"Without changes, the auto finance industry’s ability to use TALF to generate funding will remain limited," Stinebert wrote. "The National Automobile Dealers Association estimates that sales for new cars and trucks could drop between 15 and 20 percent, or one and a half to two million units in 2009 due to the lack of liquidity in the auto sector. The impact on used cars and trucks could be even greater, with lost sales estimates as high as 25 percent."

Stinebert also noted that TALF is beginning to attract greater participation, with nearly $10 billion worth of transactions in the latest round occurring this week. However, that figure is still a long way from the $1 trillion borrowing capacity available through the facility. Most notably, no floorplan auto ABS were issued under TALF in March and April 2009.

To view AFSA’s other recommendations and the full text of the letter, click here.

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