Fed Moves to Label 'Systemically Important' Nonbank Firms

(New York Times) - WASHINGTON—The Federal Reserve unveiled a rule defining two crucial terms that U.S. regulators will use to determine which financial firms, other than banks, are so risky they warrant tougher scrutiny and regulation.
The Dodd-Frank financial-overhaul law granted top regulators the power to designate financial firms as "systemically important," a label that would place the firm under Fed supervision and subject it to additional capital and liquidity requirements.
The provision is a central part of policy makers' effort to address the problems laid bare by the financial crisis. A number of firms at the epicenter of the crisis—such as American International Group Inc.—were subject to uneven or absent regulation, particularly large financial companies that didn't fit the traditional definition of a bank.

Read Entire Article
http://online.wsj.com/article/SB10001424052748704364004576132142508846126.html?mod=dist_smartbrief

Mazuma Capital Announces Exlusive Broker Services Program

Draper, Utah December 16, 2010–Mazuma Capital announces a new extension of services to include an exclusive broker program.  The offering is part of Mazuma’s Strategic Development Program and provides innovative turnkey solutions for brokers and their clients. 
The broker program has been formed in conjunction with Mazuma Capital’s new affiliation with the NAELB (National Association of Equipment Leasing Brokers).  The exclusive broker program is available to brokers whom seek funding from $100K to $10MM for qualified middle-market clients.  Through a private label solution or as a turn key service provider brokers may access this program to reduce turn-around time and streamline processes.
Mazuma Capital possesses financial backing that provides strength to fund transactions internally, allowing Mazuma to carry residual risk, fund projects over extended installation periods, and other capabilities that most of Mazuma’s competitors can’t match. By bringing together these unparalleled resources coupled with a unique approach to the market place, Mazuma Capital can deliver the quality, timing, strategy and strength that top brokers are seeking.
“We know and understand the competitive landscape of equipment leasing right now.  With the migration of the main stream banks, money centers and independent leasing companies to better credit markets, these sources continue to tighten as they stretch to find ways to reduce static loss, take less risk and strengthen their respective portfolios. This has made the “A” credit markets extremely competitive and left a gaping hole in the “B” credit markets.  Mazuma Capital, staying true to its niche`, has successfully funded more than $100MM in “B” credits since the start of the downturn.  This is due to our strategic partners who remain flush with capital and our own internal capital and expertise in being able to structure and carry equity risk on transactions that have merit.   As relationship continue to win deals, it is important for Mazuma to be an advocate for these companies, and the brokers that represent them.  By following best practices and delivering on our commitments we have created an amazing broker program that provides flexible lease options to meet the needs of brokers and their clients”, said Jared Belnap, Mazuma Capital CEO and President. “It is Mazuma’s goal to help promote these best practices and incorporate them into each leasing transaction and relationship we enter into”, said Belnap.
About Mazuma: Mazuma Capital is committed to our client’s and partner’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance and subscribes to the ELFA Code of Fair Business Practices, and the NAELB Ethical Conduct Code.

# # #

Media Contact – jfuchs@mazumacapital.com 801-816-0800 X291

Stepping Inside the Shoes of Medical/Healthcare CFO's- new challenges they face with proposed accounting changes

Mazuma Capital Company offers it's employees an extensive cross training program to become familiar with all aspects of the leasing industry.  Last week we had an accounting expert come in and discuss the proposed accounting changes, and how that will impact businesses and leasing experts. As a followup to our training I reached out to professionals in industries across the board.  Below is a summary of what challenges face CFO's in the medical/health care arena. I wanted to share his insights with you on the proposed accounting changes, and how they are preparing. I think it is critical for us to be thinking outside of the box on how to approach these CFO’s by understanding their mindset.  I hope you find it helpful…

Thanks for your questions regarding the proposed accounting changes, and how they will affect medical/health care purchases going forward.  Yes we have discussed the change concerning leases and how they will all be shown as Capital leases on the Balance sheet. It is a particular concern to us and other facilities like us that have large loans on their existing property and have to maintain Debt covenants per their loan documents. For example like Debt Service Coverage and Long term debt to capitalization. This will most definitely put expansions and additions planned for facilities on hold.  Being able to maintain certain grants and financial benefits through the government come to us by keeping facilities profitable.  By adding debt to our books, we will have to re-think our strategies to maintain these benefits we currently receive.

With that said we may have to look at delaying purchase of larger capital items and end up trying to pay cash for them. Smaller Capital items we will definitely pay cash.

Remember too that we operate several hundred Critical Access Hospitals (under 25 beds) that can take advantage of being reimbursed by Medicare at cost. Prospective payment hospitals cannot take advantage of that so it may even be more difficult for larger facilities when looking to purchase larger items, such as MRI and X-Ray machines.

Those are just a few of my thoughts.  We will be interested to see what leasing companies put together as an offering for facilities like ours.  Right now we are going with cash, but if there is a product that arises, I know that CFO’s all over the country will welcome it, if it can help the balance sheet.

ELFF: Equipment Finance Confidence Continues to Rise

Overall, confidence in the equipment finance market is 65.5, an improvement from the October 2010 index of 58.8, according to the Equipment Leasing & Finance Foundation’s release of the November 2010 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI).

“The optimism shared by the speakers and attendees at the ELFA Annual Convention may be one of the best leading indicators that the industry is on the rebound,” said survey respondent Adam Warner, president, Key Equipment Finance. “This annual gathering always provides a glimpse into the overall equipment finance industry, and this year both attendance and energy were high. Our experience at Key Equipment Finance is also in sync with the survey results that show increasing confidence in the market. We’ve seen a recent increase in new business activity, and I join the ranks of those who are cautiously optimistic about the state of the industry.”
When asked to assess if their current business conditions would remain the same in the next four months, 38% of executives responding said they believe business conditions will improve, an improvement from 26.8% in October. No respondents believe conditions will get worse (compared with 7.3% in October), and 61.9% believe business conditions will remain the same in the next four months, down from 65.9% in October.
43% of survey respondents, up from 34% in October, believe demand for leases and loans to fund capital expenditures (capex) will increase, while 55%, down from 61%, in October, believe demand will “remain the same” during the same four-month time period. 2.4% believe demand will decrease, a drop from 4.9% in October.
64.3% of survey respondents indicate they expect the “same” access to capital to fund business, a significant decrease from 78% in October. 35.7% of executives expect more access to capital to fund equipment acquisitions, up from 22% in October. No one expects “less” access to capital, an improvement from 4.7% last month.
When asked, 40.5% of the executives reported they expect to hire more employees, up from 22% in October, and 47.6% expect no change in headcount in the next four months, while 12% expect fewer employees, up from 7.3% in October.
100% of the leadership still evaluate the current U.S. economy as “poor” or “fair,” at 33.3% and 66.7%, respectively.
40.5% of survey respondents believe that U.S. economic conditions will get “better” in the next six months, an improvement from 17% in October. 59.5% said they believe the U.S. economy will “stay the same” in the next six months, down from 75.6% in October. No one responded they believe economic conditions in the U.S. will worsen over the next six months, down from 7% who believed so in October.
In November, 45.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 36.6% in October. 54.8% believe there will be “no change” in business development spending, down from 63% last month.
Survey results are posted on the Foundation website, http://www.leasefoundation.org/IndRsrcs/MCI/. Survey respondent demographics and additional information about the MCI are also available at the link above.

Fed is Poised to Allow Healthy Banks to Increase Dividend Payments

The Federal Reserve is poised to allow healthy banks to increase dividend payments for the first time since the financial crisis, an anxiously awaited set of instructions that could provide a boost to bank stocks.
According to people familiar with the matter, regulators as soon as next week are expected to give guidance outlining the standards banks must meet to increase dividend payments. The Fed is expected to take a conservative approach that would require banks to demonstrate their ability to meet tough new international capital standards and any requirements stemming from the U.S. financial-regulatory overhaul.
Many U.S. banks are itching to boost payments to shareholders, citing improved profits, because they have long relied on a steady stream of dividends to lure investors. But they have been in a holding pattern as regulators across the globe hashed out new rules requiring banks to hold more capital as a buffer against future losses. Moreover, in the wake of the crisis, regulators have closely scrutinized banks' use of capital, essentially freezing their ability to increase dividends.
The Fed isn't expected to approve dividend payments en masse but will look at an individual institution's ability to meet the criteria it outlines, according to people familiar with the matter. It is likely, however, to give approvals in batches within the same quarter, to avoid putting any one firm at a competitive disadvantage.
A big part of the Fed's thinking are lessons learned from Japan, where prolonged uncertainty about the health of Japanese banks stymied that country's economic recovery. Regulators want healthy banks to get credit from the markets for increasing their capital bases.
Some banking analysts said allowing firms to increase dividends would telegraph to the markets that the financial sector is continuing to stabilize. "It signals that the health of the system has improved and will continue to improve going forward," said Todd Hagerman, an analyst with Collins Stewart.

Wells Fargo & Co. Chief Financial Officer Howard Atkins said Thursday that returning capital to investors is a "high priority" for the fourth-largest U.S. bank in assets once regulators approve doing so.

Wells Fargo shrank its quarterly payout by 85% last year. Citigroup Inc. hasn't paid a quarterly dividend since February 2009. Regulators allowed J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and some other financial firms to buy back their own stock recently, suggesting federal officials were softening their resistance to dividend increases.

James Dimon, CEO of J.P. Morgan Chase, said recently on an earnings conference call that he hoped the bank could boost dividend payments in the first quarter of 2011.

Dividend payments are especially important for banks now that the financial industry's outlook is clouded by the sluggish economy, toughened regulation and looming capital requirements. Despite rebounding profits, a big-bank stock index from Keefe, Bruyette & Woods Inc. is up 11.6% so far this year after Thursday's rally, surpassing the Dow Jones Industrial Average's gain of 9.7%.
While the banks were waiting for the green light to restore their payouts, other companies have been boosting dividends in recent months, making their shares more attractive, especially given the slow growth in the economy. Financials on average yielded 4.4% in 2008, making them one of the highest-yielding sectors, according to Standard & Poor's. Now they yield 1.1%, making them the second-lowest yielding sector in the market, according to S&P.

Only a handful of banks are expected to meet the Fed's test, said Frederick Cannon, co-director of research at KBW. Among those with strong enough capital ratios are J.P. Morgan Chase, US Bancorp, State Street Corp. and Bank of New York Mellon Corp., he said.

Banks, nonetheless, are unlikely to return to precrisis payout ratios, which in some cases reached 50% of earnings. Analysts said banks are more likely to return to 5% to 10% levels for the near future.
In Washington, increasing dividends could arouse the ire of lawmakers and the White House, which has complained that banks aren't lending enough. KBW's Mr. Cannon said increased payouts shouldn't crimp lending because banks are "sitting on plenty of excess liquidity."