Thursday, January 29, 2009

Banks could re-enter auto leasing

Auto makers applauded Ottawa's new $12-billion credit facility as a vehicle to crack open the frozen auto leasing market, but are likely to be less enthusiastic about another move by the federal government that could allow Canada's big banks to eventually muscle into leasing.

A single paragraph in the budget said Ottawa will reopen the debate about amending the Bank Act, before its regular review in 2011, to allow the big banks to enter the auto leasing market.

“The government will consult market participants on the potential merits of changing the legislative and regulatory regime governing leasing activities by federally regulated financial institutions,” the federal government said in Tuesday's budget.

Auto makers and their dealers have battled fiercely against the banks for years and kept them out of leasing business, which has been closed to them for more than two decades.

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