President Barack Obama
challenged top bankers Monday to explore "every responsible way" to increase lending, saying they were obliged to help after being rescued by taxpayers.
In a statement after more than an hour with the executives, Obama said he reminded them that much of the financial crisis that took the U.S. banking system to the brink of collapse had been "of their own making." He also exhorted the executives — both in private and in public — to drop their opposition to an overhaul of the nation's financial industry.
"If they wish to fight common sense consumer protections, that's a fight I'm more than willing to have," Obama told reporters in the Diplomatic Reception Room of the executive mansion.
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He also urged lenders to find creative ways to free up lending. Obama said banks have benefited from bailouts and should use that strength to lend more money to consumers and businesses.
"But given the difficulty business people are having as lending has declined and given the exceptional assistance banks received to get them through a difficult time," he said, "we expect them to explore every responsible way to help get our economy moving again."
Delay, he said, was not an option he was willing to consider.
"And so I urged these institutions here today to go back and take a third and fourth look about how they are operating when it comes to small business and medium-sized business lending," he said.
Bank of America CEO Kenneth Lewis pledged to Obama that his bank would lend $5 billion more to small- and mid-sized businesses in 2010 than it did in 2009. He said the move is part of the bank's broader effort to support an economic recovery.
JPMorgan said last month that it would boost such lending by $4 billion.
Obama's stern lecture came hours after Citigroup Inc. said that it was repaying $20 billion in bailout money it received from the Treasury Department, in an effort to reduce government influence over the banking giant. The government will also sell its stake in the company.
The New York-based bank was among the hardest hit by the credit crisis and rising loan defaults and got one of the largest bailouts of any banks during the financial crisis. The government gave it $45 billion in loans and agreed to protect losses on nearly $300 billion in risky investments. Wells Fargo & Co. remains the last national bank that has yet to pay back its bailout money.
The bailout repayment news kept Citigroup CEO Vikram Pandit from attending Monday's meeting, Citi spokeswoman Molly Millerwise Meiners said. She said that chairman Richard Parsons planned to attend but bad weather kept him from reaching Washington in time.
The White House said Parsons and two other executives listened to the meeting by telephone and that they could not attend in person because of a heavy fog over Washington. The two others were Goldman Sachs chairman and CEO Lloyd Blankfein and Morgan Stanley chairman and CEO John Mack.
Despite Obama's pointed words, the bankers have said that lending is limited by factors beyond their control: The sluggish economy and tighter oversight by regulators. The slow economy has businesses reluctant to expand — and makes banks more grim about their prospects. Loan applications are down.
Meanwhile, regulators are telling banks to be more skeptical about potential borrowers. They are forcing banks to keep larger cushions of capital to protect against future losses. That means there's less money available to lend.
The meeting came amid Obama's fierce criticism of Wall Street. In an interview that aired on Sunday, Obama rebuked executive paychecks at firms that only last year required tax dollars to keep their doors open.
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama told CBS's "60 Minutes."
Bankers, however, brushed off Obama's harsh rhetoric.
US Bancorp chief Richard Davis denied that there was any rancor after Obama's "fat cats" comment.
"It was an opportunity for the president to make clear how important some of these issues are," he told reporters in the White House driveway. "We haven't done as good a job as we can in the future to align the interests of our constituents with those of the American public."
Davis added: "I think we agree there are better ways to do that, and he gave us some very good ideas about how to do better communicating that."
To that end, work continued on legislation to overhaul financial regulations.
Treasury Secretary Timothy Geithner — who sat at the Roosevelt Room table with Obama and the bankers — was also meeting Monday with Senate Banking Committee chairman Christopher Dodd, D-Conn., and the committee's top Republican, Richard Shelby of Alabama.
After House passage of a regulatory overhaul Friday, the work now shifts to the Senate, which has been preoccupied with health care legislation.
Some lawmakers believe legislation could reach President Obama's desk by St. Patrick's Day.
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