The Manufacturing Credit System

One of the greatest needs of U.S. manufacturing is access to sustained, adequate credit. The U.S. Farm Credit System provides a model for a new U.S. manufacturing credit system. The federal government should create up to a dozen regional manufacturing credit banks, modeled on the farm loan banks. Like the five banks of the federal farm credit system, each regional manufacturing bank would be a cooperative owned by banks and other credit institutions in its geographic region. Complementing the regional manufacturing credit cooperative banks would be a single federally-chartered GSE: the National Manufacturing Loan Marketing Association (NMLMA), or “Mannie Mac.” Mannie Mac would create a liquid market for loans to manufacturing enterprises by purchasing them from banks that belong to the manufacturing credit system and either holding them or selling them in large, structured packages that would be attractive to large investors like pension funds and foreign sovereign wealth funds. The manufacturing credit system and Mannie Mac together would combine flexibility and decentralization with federal support to catalyze the renovation of America’s manufacturing base.

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