Comment Text:
From: McKee, Ryan
Sent: Thursday, December 09, 2010 2:49 PM
To: Wilder, George G.
Subject: Captive Finance 90 90 Regulation
George:
Thank you again for taking the time to meet with the group of captive finance companies last week (twice…).
Per our discussion, I’ve included a description of the issue we raised, and I’ve attached suggested language that could be used to clarify the 90 90 exemption in the rule.
Please let me know if you have any questions.
Thank you again for your time and for considering the attached.
Ryan
At the request of Commission staff, we are providing the following proposed language to implement the statutory exclusion of captive finance companies from the definition of “Major Swap Participant” under Section 1a(33)(D) and from the definition of “financial entity” under Section 2(h)(7)(C)(iii) of the Dodd Frank Act. The exclusion was intended to carve out from the definition of Major Swap Participant and from the mandatory clearing requirement companies whose financing activities are predominately designed to “facilitate” the sale or leasing of that company (or its affiliates) products.
The captive finance companies provide a variety of important financing to facilitate the sale or lease of products manufactured or sold by its parent or affiliates. These include loans to finance the sale or lease of the products being sold by the company or its authorized dealers; financing of the dealer’s inventory, financing of service, labor and parts, and other general financing of the manufacturer’s dealer or distribution network to support the sale or lease of the company’s products. This is the core of what a captive finance company does and is essential to the sale or lease of the company’s products. In addition, in order to maximize the sale of the company’s products ,the financing provided by the captive finance company must be broad enough to cover component parts, attachments, systems and other products that may be manufactured by others but sold together with the company’s products. All of this activity is consistent with Congress’ intent to cover all financing that “facilitates the purchase or lease” of the company’s products.
Ryan McKee
Senior Director
Center for Capital Markets Competitiveness
U.S. Chamber of Commerce
