Back in May, several of us from CFO.com and CFO magazine met with Mike Fleming, then-president of the Equipment Leasing Association, who was making the rounds of media organizations to educate them on the benefits of, and misconceptions about, leasing.
Educational media tours, it should be noted, are a leading indicator of potential regulatory disruption.
Leasing is one of two big battles facing FASB, and is likely to be the scrappiest. The other battle, over pensions, already has the attention of a worried Congress. But despite the support of the SEC, FASB won't likely have the potential benefit of growing Congressional concern when it comes to leasing.
I don't remember Fleming mentioning his pending retirement at the meeting, but I wasn't surprised to see the Equipment Leasing Association's announcement
of his successor, former Texas Congressman Kenneth E. Bentsen, Jr.
Bentsen's appointment is a clear indication that the leasing industry is girding for battle. He's a former member of the House Financial Services Committee, and a former investment banker. The ELA's press release quotes him as saying "It is essential that the significant role equipment finance plays in the business economy be understood by policy makers, the media and the public."
Leasing does play a significant role. According to the latest figures from the Equipment Leasing Association, originations are on the rise, totaling $5.9 billion in new equipment leases and loans in May alone. I also couldn't help noticing that, of the 25 companies on which the ELA bases its Monthly Leasing Index, seven are not, at their core, traditional finance companies. They include Canon, Caterpillar, Hitachi, HP, John Deere, Verizon, and Volvo. As Ron has pointed out for years, the leasing activities of these companies has a profound impact on their capital structure and financial results, meaning that changes in lease accounting could be disruptive.
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