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WESCO FINANCIAL CORPORATION

301 East Colorado Boulevard

Suite 300

Pasadena, California 91101-1901

(626) 585-6700

December 21, 2005

Ms. Nili Shah

Accounting Branch Chief

Division of Corporate Finance

Securities and Exchange Commission

1 Station Place, N.E., Stop 0510

Washington, D.C., 20549

    Re:

    Wesco Financial Corporation

    Form 10-K for the Year Ended December 31, 2004

    File No. 1-4720

Dear Ms. Shah:

     The purpose of this letter is to respond to your letter dated December 2, 2005. To assist you
in reviewing our responses, we will precede each response with a copy (in bold type) of the point
as stated in your letter.

Form 10-K for the Fiscal Year Ended December 31, 2004

Goodwill, page 28

    1.

    We have read your response to prior comment 8. In future filings, please revise your critical
accounting policy to disclose the following:

    •

    Your consideration of the impact of the cyclicality of the furniture
rental business on your goodwill impairment test.

    •

    The nature of your assumptions, including an analysis of their specific
sensitivity to change.

    •

    A discussion of the circumstances in which goodwill in future periods
could become impaired such as (1) situations where fair value of the
reporting unit is just “slightly” above the carrying value of the
reporting unit or (2) situations where the headroom between the fair value
and the carrying value of the reporting unit is declining from period to
period.

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In future filings, we will expand our critical accounting policy disclosures to
address the matters discussed above.

Consolidated Statement of Cash Flows, page 39

    2.

    We acknowledge your response to prior comment 13. However, based on your statement of cash
flows, we note that the proceeds from sales of rental furniture, less gross profit that was
included in net income appears to be 11.8% of the furniture rental segment’s sales.
Accordingly, it appears that the majority of the revenue generated by your rental furniture is
derived from its rental, as opposed to its sale. Please confirm, if true, that our
understanding is appropriate.

Gross revenues from sales of furniture have approximated 19% of furniture segment revenues in
recent years. That figure includes both the gross profit on sales, included in net income reported
on the statement of cash flows, and the proceeds from sales, less the gross profit figure, that you
have properly indicated to be 11.8% of the furniture segment’s sales.

    If so, please explain your consideration of paragraph 24 and 87 of SFAS No. 95. These
paragraphs indicate that cash outflows from the acquisition of and inflows from the sale of
equipment to be rented to others are generally investing activities, unless the assets are
to be rented to others for short periods and then sold. However, as noted in your response,
because rental furniture is held for approximately 36 months prior to sale and because the
majority of the revenue related to rental furniture appears to be derived from rental,
rather than sale, it would appear that both cash outflows from acquisition of and inflows
from the sale of rental furniture should be classified as investing activities in the
statement of cash flows.

    In addition, citing relevant accounting literature, please tell us your basis in GAAP for
classifying proceeds from the sale of rental furniture as revenue in your statement of
operations. As part of your response, please tell us your consideration of the
classification of these proceeds in the statement of cash flows in determining the
classification in your statement of operations. For example, if you determine that the
cash flows from the purchase and sale of rental furniture should be classified as an
investing activity, please tell us your basis for continued presentation of proceeds as
revenue in your statement of income.

    The following commentary is presented in order to clarify the Company’s views with respect
to the treatment of cash flows associated with the overall furniture rental business as
well as the associated treatment of those sales in the Company’s statement of income.

    The Company’s furniture rental business operated by CORT is comprised of two principal
activities: the rental of furniture and the sale of furniture. As part of the

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    business model, retail sales of furniture is an important aspect of the overall business,
and as a result it is not considered peripheral or incidental in nature. Therefore, when
CORT purchases furniture it is purchasing assets similar to inventory. While we believe our
historical presentation of the cash inflows and outflows of CORT’s furniture business was
in accordance with the spirit of SFAS No. 95 and was also consistent with the nature of the
utilization of assets in our business model, which is further elaborated below, it appears
to be more appropriate to have all such cash inflows and outflows associated with the
purchase and sale of furniture classified together in the statement of cash flows.

    We believe that our business model is to rent and sell furniture. As such, we believe that
SFAS No. 95 allows for the classification of CORT’s purchase of furniture for rental
activities as cash used in operating activities. Paragraph 87 contains the following
statement: “...productive assets are sometimes acquired or produced to be a direct source of
the enterprise’s revenues, such as assets to be rented to others for a short period and
then sold. In those circumstances, the nature of those assets may be similar to inventory
in a retailing business. Accordingly, the acquisition or production and subsequent sale of
such assets are appropriately classified as operating activities.”

    We believe the term “short period of time,” is subjective and subject to reasonable
interpretation. The nature of CORT’s furniture sales operation, described below, is a
retailing operation.

    Your request for us to support the inconsistent classifications encourages us to reconsider
the matter. We believe it is appropriate to reclassify the cash used in purchases of
rental furniture to operating activities in order to consistently treat cash inflows and
outflows, and to be consistent with the nature of CORT’s business activities: furniture
rental and sales.

    Following is the principal support for our belief that furniture sales activities are
appropriately considered operating activities (data is as of 2004 yearend):

    •

    CORT’s furniture retailing operation is an integral part of its business.
CORT’s operations are conducted in 52 districts where general managers have
responsibility for both furniture rental and retail sales. Those districts
encompass 174 facilities, in which 87 facilities in 34 states devote significant
square footage to retail furniture sales.

    •

    Area Managers and Vice Presidents devote management time overseeing both the
rental and retail efforts. The operating results of furniture rental and of
retail sales are measured against operating budgets and projections by senior CORT
management who devote substantial time and effort to managing the furniture rental
as well as the retail sales activities.

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    •

    The retail facilities are staffed by 167 full-time, commissioned, sales staff
and management who are dedicated to the retail aspect of CORT’s furniture
business.

    •

    In CORT’s business model, furniture is purchased new for rental to residential
and commercial customers and is depreciated on a declining balance method over
three to five years with estimated salvage values of 25 to 40 percent. Each piece
of furniture typically remains in the “rental” stock for about 36 months, during
which time it may be rented two or three times. When furniture is moved into the
retail stock, the retail manager reviews each item and assigns a grade based on
its condition to establish pricing so that CORT may obtain the maximum margin on
the sale of the item. This process enables CORT to maximize the return on its
business. The high gross margin earned in retailing the previously rented
furniture justifies the utilization of such significant resources versus alternate
disposal methods that would result in lower margins. The integrated procedures
used in CORT’s furniture business are a principal factor enabling CORT to maintain
its competitive advantage, which has resulted in its national presence and
significant market share in its niche industry.

    •

    Several hundred warehouse and delivery personnel devote substantial time to the
retail stock but do not differentiate their time between rental and retail stocks.

    •

    CORT refurbishes all furniture intended for sale before placing it into its
warehouse and subsequently delivering it to its retail showrooms, in the same
manner as it refurbishes its rental furniture stock.

    •

    Retail sales of new furniture, although modest in volume, are an integral part
of CORT’s “full-service” business model. In addition to its rent-to-rent business,
CORT offers its customers a rent-to-own option, typically transferring the
furniture and recording the sale as a retail transaction after a 15-month period.

    •

    CORT advertises its furniture for sale through use of four separate websites,
direct marketing mailers, radio and television advertising, and billboards.

    •

    CORT’s retail margin was 37% for 2004, akin to margins of furniture retailing
operations by dedicated retailers of new furniture. It is believed that the
maximization of the retail margin is a critical factor in enabling CORT to
maintain competitive pricing of its rental stock.

    •

    Retail sales accounted for $67 million of CORT’s revenues in 2004, representing
19% of its overall revenues for that year.

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We believe the foregoing explains how the retailing of furniture is an important and
integral part of CORT’s business operations based on the percentage of sales and the
resources of space, personnel and management focus that are dedicated to those
operations. We believe that the foregoing also explains how the retailing of used
furniture is integral to the overall business of furniture rental and in keeping with
Statement of Financial Accounting Concepts No. 6 (“CON 6”), paragraph 78, that its
operating results should be reflected as revenues in operating income, as opposed to
their reflection as gains or losses. We believe that this treatment is consistent with
paragraphs 82 and 83 of CON 6 which indicates that gains or losses are “...from
peripheral or incidental transactions of an entity...” Accordingly, we believe that the
nature of CORT’s integrated furniture operations is consistent with operating treatment
in the statement of cash flows, and for revenue treatment for the retail furniture
sales in the statement of operations.

In summary, when CORT purchases furniture, it is purchasing assets similar to inventory, and
therefore it is appropriate to classify the cost of furniture purchases as cash used in operating
activities on the statement of cash flows, and we will do so on a go-forward basis effective with
our Annual Report on Form 10-K for the year 2005. We will also reclassify the cost of furniture
purchases to operating activities for each of the two prior years included on the consolidated
statement of cash flows, and explain our reclassifications in a note to the consolidated
financial statements.

* * * *

Should you have any questions, please contact the undersigned at (626) 585-6700.

    Yours very truly,

WESCO FINANCIAL CORPORATION

    /s/ Jeffrey L. Jacobson

    Jeffrey L. Jacobson

    Vice President and

Chief Financial Officer

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