By Marilyn Odendahl, Truth Staff
modendahl@etruth.com
WASHINGTON -- Officials from the manufactured housing and boating industries are cautious in predicting how expansion of the federal government's TALF program will help their struggling manufacturers and retail dealers.
The Term Asset-Back Securities Loan Facility, commonly known as TALF, now will give support to floorplan loans for dealers of boats and manufactured homes. The frozen credit market has hampered the ability of retail outlets to buy inventory to stock their lots.
TALF originally provided support only to auto loans, credit card loans, student loans and small-business loans. The U.S. Department of Treasury and the Federal Reserve then opened the program to include recreational vehicles and recently enlarged the program again to take on boats and manufactured homes.
Although he conceded the program will take some time before it begins working, Mathew Dunn, legislative director of the National Marine Manufacturers Association, called the expansion of TALF "a step in the right direction."
Tom Beers, vice president of economics at the Manufactured Housing Institute, echoed Dunn.
"For us, we're not convinced that this will be used immediately but we wanted the option out there for lenders to take advantage of," he said.
TALF is designed to stir interest in the secondary loan markets by giving incentives to investors to buy certain AAA-rated loans. In turn, banks should be able to sell the loans off their portfolios, giving them additional funds to make more loans. The Treasury Department touts TALF as having the potential to generate up to $1 trillion of lending for businesses and consumers.
As the economy has stalled, some major lenders, such as KeyBank, have stopped providing floorplan lending to the boat, manufactured housing and recreational vehicle industries. Consequently, dealers have to work harder to get the financing they need to buy the products from the manufacturers.
Dunn attributed the lack of liquidity in the credit market to causing boat production to fall 50 percent to 60 percent.
Like many other industries, boating is also being hurt by the lack of consumer confidence.
Noting that consumer demand in the marine market has dropped 30 percent, Dunn said, "The important things is to get consumer confidence back up."