Friday
Oct092009
Manufacturing Industry Needs Credit Now Say Experts
Friday, October 9, 2009 at 2:33PM
By Leah Valencia, University of New Mexico/Talk Radio News Service
Several industry experts called on Congress to help restore credit to manufacturers in a Senate Banking, Housing and Urban Affairs Committee hearing Friday.
A few who testified said that current credit limits typically do not cover the amount that suppliers need to invest in employees, equipment and raw materials.
“In our industry, manufacturers are expected to deliver products just in time. Any delays can cause significant disruption in our nation's critical supply chain...thus stifling economic growth and risking national security,” said Robert Kiener, Director of Member Outreach at the Precision Machined Products Association. “If our customers can not acquire the products they need, due to the credit crisis, they will source from overseas and these lost jobs will never come back to the United States.”
The testimonies focused on the need for long-term programs that support manufacturing, technology and innovation initiatives in the U.S. The experts outlined the increased problems manufacturers have had in gaining access to greater capital during the current economic recession.
“The bank[s] need assurances that the federal regulators will not come down on them for making sound lending decisions, a return to the sound lending decisions will allow for available and affordable credit for manufacturers,” Kiener said. “I think it is crucial to the recovery of the economy to allow renewed capital expenditures... and in the end, increase hiring and employment to get things back and rolling.”
A Senate subcommittee will submit questions to the U.S. Department of Treasury and U.S. Department of Commerce in a continued effort to evaluate and resolve this issue.
Several industry experts called on Congress to help restore credit to manufacturers in a Senate Banking, Housing and Urban Affairs Committee hearing Friday.
A few who testified said that current credit limits typically do not cover the amount that suppliers need to invest in employees, equipment and raw materials.
“In our industry, manufacturers are expected to deliver products just in time. Any delays can cause significant disruption in our nation's critical supply chain...thus stifling economic growth and risking national security,” said Robert Kiener, Director of Member Outreach at the Precision Machined Products Association. “If our customers can not acquire the products they need, due to the credit crisis, they will source from overseas and these lost jobs will never come back to the United States.”
The testimonies focused on the need for long-term programs that support manufacturing, technology and innovation initiatives in the U.S. The experts outlined the increased problems manufacturers have had in gaining access to greater capital during the current economic recession.
“The bank[s] need assurances that the federal regulators will not come down on them for making sound lending decisions, a return to the sound lending decisions will allow for available and affordable credit for manufacturers,” Kiener said. “I think it is crucial to the recovery of the economy to allow renewed capital expenditures... and in the end, increase hiring and employment to get things back and rolling.”
A Senate subcommittee will submit questions to the U.S. Department of Treasury and U.S. Department of Commerce in a continued effort to evaluate and resolve this issue.
Top Bank Regulator Says Bank Recovery May Lag
Top U.S. Bank regulator Sheila Bair, chairman of the Federal Deposit Insurance Corp, told Congress that bank recovery may take longer than expected.
"While we are encouraged by recent indications of the beginnings of an economic recovery, [bank] growth may still lag behind historical norms," Bair said during a hearing with the Banking, Housing and Urban Affairs Committee.
According to Bair, bank failures will remain high because household wealth loss was so pervasive and the general economy is weakened.
Bair urged policymakers to begin thinking about exit strategies in regards to their interventions in the financial markets.
"While these programs have played an important role in mitigating the liquidity crisis that emerged at that time, it is important that they be rolled back in a timely manner once financial market activity returns to normal," she said.
Bair and other witnesses advised against the merging of regulatory committees.
“We are very concerned about this, I think it could weaken FDIC. It could overall weaken banking regulation.”
Bair said that although banks have come a long way in repairing the balance sheet, she cautions that restoration will continue into the next several quarters.