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Scott Paul spaul@aamfg (202) 393-3430 x2 @ScottPaulAAM on Twitter ManufactureThis.Org

Scott Paul spaul@aamfg.org (202) 393-3430 x2 @ScottPaulAAM on Twitter ManufactureThis.Org. Wall Street: Hollowing Out American Manufacturing. Impact of Repeal of Glass-Steagall Act Role in Economic Policymaking Short-termism Capital Availability for Small & Mid-Sized Manufacturers

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Scott Paul spaul@aamfg (202) 393-3430 x2 @ScottPaulAAM on Twitter ManufactureThis.Org

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  1. Scott Paul • spaul@aamfg.org • (202) 393-3430 x2 • @ScottPaulAAM on Twitter • ManufactureThis.Org

  2. Wall Street: Hollowing Out American Manufacturing • Impact of Repeal of Glass-Steagall Act • Role in Economic Policymaking • Short-termism • Capital Availability for Small & Mid-Sized Manufacturers • Outliers • Supplementary Policy Options

  3. Impact of Glass-Steagall Repeal • From servant of manufacturing to master of manufacturing • Substantial overseas investment • One of two nails in the coffin of 2000s manufacturing

  4. Wall Street's Bias Against Manufacturing • Strong Dollar • Eliminate barriers to investment & trade • VC to innovate, but not to produce • Want a free market America, but tolerate government intervention overseas • Talent, Administration Personnel, Management

  5. Short-termism • Evidence of short-termism across all industrial sectors • Trend is increasing • Economic impact seen in evidence of excess discounting • Subject of a Senate Banking Committee subcommittee hearing (2010) • (Haldane & Davies, Bank of England, 2011)

  6. Capital Availability • Needed a $5 billion line of credit for auto supply chain in 2009 • Lending has declined $4.2 trillion since Fall of 2008; 9 straight quarters of decline in in lending to non-financial businesses (Treasury) • Credit-worthy small businesses experience difficulty obtaining loans (Fed) • Commercial & industrial loans down from $1.6 trillion (2008) to $1.24 trillion (2011) (Fed) • Small business lending down 8.3% 2008-2010 (SBA) • 43% of small businesses reported challenges in gaining access to credit; 57% of applications to large national banks rejected, compared with 41% for community & regional banks (Atlanta Fed) • Banks holding $2 trillion in cash uncommitted to loans

  7. Some exceptions to the rule... • Patriarch Partners: committed to American manufacturing • Wilbur Ross: positive role in restructuring steel & auto parts industries to make competitive

  8. Policy Options • Require more transparency in long-term strategies • Compensation package adjustments • Sliding scale of shareholder voting rights • Link tax breaks/subsidies to duration of holdings • Enhance SBA/Treasury loan guarantee programs • Manufacturing finance facility • National Infrastructure Bank • On with the great rebalancing, internally and globally

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