Felsenfeld, Carl

English

Fordham University School of Law

Fordham Law Review Volume 60 Issue 6 Article 8 1992 An American Reflection on Turkey's Financial Leasing Industry Carl Felsenfeld Fordham University School of Law Follow this and additional works at: https://ir.lawnet.fordham.edu/flr  Part of the Law Commons Recommended Citation Carl Felsenfeld, An American Reflection on Turkey's Financial Leasing Industry, 60 Fordham L. Rev. S135 (1992). Available at: https://ir.lawnet.fordham.edu/flr/vol60/iss6/8 This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Law Review by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact tmelnick@law.fordham.edu. AN AMERICAN REFLECTION ON TURKEY'S FINANCIALLEASING INDUSTRYCARL FELSENFELD*An American observer of the banking scene finds Professor Tekinalp'spresentation remarkable. Although one might believe that leasing inTurkey could not conceivably be of interest to an American lawyer, onediscovers that the subject casts an illuminating light on regulation of thefinancial system.Professor Tekinalp describes a highly controlled, newly establishedsystem for financial leasing. Charters from the state are required; activi-ties of lessors are prescribed; relationships among manufacturer, lessor,and lessee are circumscribed; lease terms and amounts are limited; re-ports must be submitted; and much more. At first blush, this all seemssomewhat reasonable. In the United States, we have a highly regulatedbanking system. Indeed, many of the controls established in Turkey'sLaw Concerning Financial Leasing are imposed by the United States onbanks. A commercial bank, for example, is restricted in its investmentbanking activities, in its sale of insurance, and in its entry into the manu-facturing sector. Moreover, although a holding company may operateacross state lines, a bank generally may not have interstate branches, andthe holding company is subject to restrictions under both federal andstate law.But strangely, in the face of all this financial regulation, United Statesfinancial leasing companies are essentially unregulated. If a leasing com-pany in the United States wants to manufacture as well as lease equip-ment, there are no prohibitions. If it wants to establish a branch office inTennessee, no laws interfere. And if it wants to open a pizza parlor onthe side, again no law or regulation is violated. Why is financial leasingsuch a highly regulated activity in Turkey when in the United States it issubject to the free market? This is an especially compelling questiongiven that the United States subjects a related industry-banking-to ablanket of laws and regulations.Professor Tekinalp provides an answer. The essential difference is theplace of financial leasing in the Turkish economy as contrasted with itsplace in the United States. Turkey is trying to stimulate financial leasingand is willing to make several accommodations to financial leasing com-panies that it does not make for other businesses. For this reason, it mustdefine and delimit the field of leasing. By contrast, bank regulation in theUnited States exists for another purpose-to ensure the safety of thebanks.One must ask, however, how the system of highly controlled regula-* Professor of Law, Fordham University School of Law; A.B. 1948, DartmouthCollege; M.S. 1950, Columbia University; J.D. 1954, Columbia University.S135FORDHAM LAW REVIEWtion will work in Turkey. There is currently considerable debate aboutthe extent to which the United States banks might be over-regulated andwhether market freedom would improve the health of what is increas-ingly perceived as a marginal business. Many are asking whether regula-tory concepts imposed in 1863 (when national banks were established),or 1913 (when the Federal Reserve was formed), or 1933 (when the de-pression led to extensive "corrective" legislation), or 1956 (when bankholding companies were regulated) continue to make sense in the 1990s.The United States experience has been that it is easier to enact a statutethen to repeal it. Regulations build bureaucracies who are unwilling tolose their powers and who ultimately see themselves as significant spokesin the economic wheel. Regulations also protect parties who will fight,rather than lose, their protected status. In short, regulations acquirelives of their own.One looks with interest to Turkey down the road, when it will havedeveloped a vibrant and thriving financial leasing industry. Will it con-tinue to require that financial leases be at least four years long in order toprotect the lessor, the lessee, the economy, or whatever? The UnitedStates experience strongly indicates that there will be arguments both forthe demise and continuation of the regulatory scheme Turkey has forged.S136 [Vol. 60

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An American Reflection on Turkey\u27s Financial Leasing Industry

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