A pending Congressional bill to reform liability laws for automobile rental and leasing companies could boost commercial activity in those sectors and possibly raise ABS issuance volumes as well. The bill may repeal existing vicarious tort liability laws, in which the leasing company of a vehicle can be held liable for damages or injury caused by the operator of the vehicle, or lessee, lifting a substantial cost burden for leasing and rental companies. The bill passed through the U.S. House of Representatives earlier this month and is awaiting consideration by the Senate.
Chris Mrazek, managing director with Fitch Ratings, said the reform would help lessors and rental companies by reducing or eliminating vicarious tort insurance and settlement costs as well as spurring commercial activity as companies pass those savings on to customers. From an investor perspective, it would mean ABS deals from those companies would face less risk. "It will remove some risk and uncertainty from lease ABS," he said.