June 12, 2009

Davis to Treasury: More Action is Needed to Save Good Manufacturing Jobs from Devastation

Congressman Davis Voices Concerns of Small and Midsized Manufacturing Companies Regarding TARP

Congressman Artur Davis sent a letter to Treasury Secretary Timothy Geithner today addressing Meadowcraft Inc.'s filing for Chapter 11 bankruptcy and the concerns of small and midsized manufacturing companies struggling in the midst of recession:

Below is the full text of the letter:

Congressman Artur Davis
208 Cannon House Office Building
Washington, DC 20515
June 12, 2009

Treasury Secretary Timothy Geithner
U.S. Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220

Dear Secretary Geithner:

My office has received a number of complaints from an Alabama corporation, Meadowcraft, Inc., regarding actions by their lender, an entity which has received funds under the Troubled Assets Relief Program (TARP). Meadowcraft is currently in Chapter 11 Bankruptcy and contends that it is facing liquidation, an event that would trigger the loss of potentially 13 00 jobs in a county with an unemployment rate of approximately 20%.

I am certainly aware that the federal government cannot mandate that a bank, even one that has received TARP money, extend financing to any specific company. But Meadowcraft's plight is not in isolation. Numerous small and midsized manufacturing companies are on the verge of failure because they cannot sustain their sales in the midst of a deep recession without credit. While your predecessor argued that TARP would revive the credit market, Meadowcraft and other companies in my district are examples of a market that remains stalled in many respects.

We will continue to lose manufacturing jobs until the flow of credit to midsized companies substantially improves. Even initiatives like the expansion of the Term Asset Backed Securities Loan Facility (TALF), which was meant to boost lending for private and commercial activities, have not made enough of a mark on the manufacturing sector. I would urge you and the President to address these concerns in a much more direct way. One immediate option might be to redirect some TARP dollars to create a revolving loan fund for distressed manufacturing companies, so that banks are incentivized to loan to entities like Meadowcraft. I believe that this approach can be undertaken without new authority from Congress, just as the Bush and Obama Administrations have extended TARP dollars to the domestic automobile sector without congressional permission.

The owners of Meadowcraft believe that their lender has dealt with them in a wrongful manner, and that the bank's refusal to finance is a deliberate strategy to force liquidation. That claim is a serious one, if there is a factual basis for it, and the Treasury Department should use its oversight authority to assess whether an entity that has received substantial government relief is acting in such an unlawful manner. To the extent you have the legal authority to investigate such a claim, I forward Meadowcraft's correspondence to my office to you.

While I applaud the concrete steps you and the President have taken to reverse failed policies that nearly wrecked our economy, I hope that Meadowcraft will serve as a reminder that more action is needed to save good manufacturing jobs from devastation.

Sincerely,
Congressman Artur Davis