Financial Regulatory Forum

Obama tells US bankers it’s payback time

By Reuters Staff
December 14, 2009

By Caren Bohan

WASHINGTON, Dec 14 (Reuters) – President Barack Obama told top U.S. bankers on Monday they owed the country their help in lifting the economy out of crisis and implored them to lend more money and to get behind financial reforms.

“Given the difficulty that businesspeople are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again,” Obama said.

After speaking at the White House to executives of a dozen major financial firms, Obama said that, having benefited from taxpayer bailouts, they owed “an extraordinary commitment” to help rebuild the economy.

He said that meant finding ways to help credit-worthy small- and medium-size businesses get the loans they need.

U.S. business lending has plummeted since the financial crisis struck from a peak of $1.65 trillion in October 2008 to around $1.35 trillion earlier this month.

The bankers appeared chastened afterwards, promising to expand credit for small businesses and insisting they supported regulatory reform.

“We realized we’re under the microscope to show every step that we take, to do a better job of listening to customers, paying attention to their needs and being more available than we have been in the past,” said US Bancorp Chief Executive Richard Davis.

 

COMPLAINING ABOUT “FAT CATS”

Obama said he was receiving letters from small firms saying they could not get loans.

Having complained about “fat cat bankers” taking big bonuses, Obama said he also told the executives he had no intention of allowing lobbyists for the institutions to thwart legislation on financial reforms.

“If they are willing to fight common sense consumer protections, that’s a fight I’m willing to have,” Obama said.

In a sign of the discomfort big financial firms have experienced as recipients of taxpayer bailout funds, Citigroup announced on Monday a plan to repay the money it owes the government, which will allow it to escape restrictions on executive pay.

Criticized over its support for the $700 billion financial rescue package, the White House has sharpened its rhetoric toward the financial industry and sought to distance itself from accusations it was too close to Wall Street.

The meeting in the White House Roosevelt Room lasted 1 1/2 hours, longer than expected. Three of the 12 executives scheduled to attend took part by phone after their flight was canceled because of foggy weather.

Lloyd Blankfein, chairman and CEO, Goldman Sachs; John Mack, chairman and CEO, Morgan Stanley; and Dick Parsons, chairman, Citigroup joined by phone.

An army of lobbyists for banks and Wall Street firms, whose profits may be threatened, have fought for months to weaken and delay reforms, criticizing what they call an unneeded and costly intrusion on business.

 

A “DISCONNECT”

Davis, who was taking the lead in answering reporters’ questions on behalf of the banks, said he agreed with Obama there was a “disconnect” between what executives and bank lobbyists were saying about the issue.

Americans are outraged at the bonuses paid to executives of big banking firms. Many blame Wall Street recklessness for the worst financial crisis since the Great Depression and creating an economic mess that has led to double-digit unemployment.

Obama, whose public approval ratings are below 50 percent, the lowest of his presidency, is annoyed that some of the public’s anger at Wall Street firms is being directed at his administration for continuing the financial rescue package begun during the Bush administration.

Among those at the meeting were Jamie Dimon, chairman and chief executive of JP Morgan Chase; Ken Chenault, president and chief executive of American Express Co; and Ken Lewis, president and CEO, Bank of America.

(Additional reporting by Steve Holland, Jeff Mason and Ross Colvin; Editing by Howard Goller and Doina Chiacu)

 ((caren.bohan@thomsonreuters.com; +1 202 898 8300; Reuters Messaging: caren.bohan.reuters.com@reuters.net))

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