Accounting firm Arthur Anderson has been chosen by Compass Bank to look into residual auto loan securitization. The Birmingham, Ala.based bank has been mulling a securitization of residuals from its auto loan portfolio as a way to avoid buying residual value insurance, which has been described by some in the industry as expensive and shoddy.

Thus far, the only alternative to purchasing the residual coverage has been for the company to eat the losses on the collateral. Residual securitization is being looked at as an out from these costs.

Compass was in the market last summer with a $379.3 million auto loan securitization that was broken into three tranches. The one-year piece registered 12ML+5 and the two-year piece tallied 53 over the curve. Both were triple-A rated. The deal also carried a 0.35-year 2a7 tranche. Credit Suisse First Boston led the offering.

Under the employ of Compass, Arthur Anderson is currently researching the first and only auto loan residual deal ever completed. Toyota brought the $566 million transaction, dubbed Gramercy Place Insurance Limited, to market last July. - SK

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