The House Financial Services Committee held a hearing on June 17 with Federal Reserve Chairman Jerome Powell testifying before the members on “Monetary Policy and the State of the Economy.” During the hearing, Rep. Bill Huizenga (R-Mich.) informed Powell about liquidity issues that motor vehicle parts suppliers are facing.
“A huge part of our manufacturing economy is in automobiles, especially automobile parts, those account for about 900,000 jobs, 125,000 of those here in Michigan alone,” Huizenga said. “And what we are seeing and hearing from the large automobile manufacturers is their concern for their suppliers. And those suppliers are telling me, which I have a tremendous number of here in the second district of Michigan, that they were having some liquidity issues. Not that they don’t have, been properly funded previously, but it’s about liquidity right now.”
Huizenga asked if Powell is committed to working with Treasury Secretary Steve Mnuchin to create a new program in the Main Street Lending Program that will assist medium-sized businesses in the auto parts sector. Powell said that a new facility will not be made for the industry.
“[Businesses in the auto sector] would be a perfectly good fit for this facility, and we don’t do facilities that are designed for individual industries,” Powell said, “we do facilities of broad applicability and anybody who meets those requirements can borrow.”
MEMA has urged the Treasury secretary to work alongside the Michigan Congressional delegation to resolve liquidity issues impacting motor vehicle parts suppliers and to use the financial tools from the Main Street Lending Program to shrink the duration of loans, either through a factoring or a traditional loan program. You can read the full letter from May 27 here.