- The Washington Times - Monday, December 14, 2009


WASHINGTON (AP) — President Barack Obama says banks have a greater obligation to help the U.S. economy recover because they received extraordinary assistance from the government and taxpayers.

After a White House meeting with the heads of the top U.S. financial firms, the president said he urged banks to increase lending to small businesses. He also said banks cannot stand in the way of financial regulatory reform.

The House passed legislation Friday that would restructure financial regulations. The president says banks have used their lobbyists to try to thwart reform efforts and says it is the interest of the financial industry to have modern rules.

Administration officials described the meeting as a continuation of discussions the president initiated early in his tenure and the latest push for lenders to take greater responsibility as the nation combats an economic crisis that began on Wall Street.

Specifically: Wall Street should fall in line with Obama and back a proposal for a consumer protection agency that cleared the House last week.

“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Obama told CBS television’s “60 Minutes” in an interview that broadcast Sunday.

Financial industry officials braced for Obama’s tough tone. They planned to press a conciliatory message and highlight areas where they agree with the administration while smoothing over their differences.

But the executives also planned to stand up to the president on issues where they feel his statements oversimplify their positions — particularly the creation of the Consumer Financial Protection Agency — according to people familiar with their thinking who spoke anonymously because they were not authorized to discuss the plans.

“He can say what he wants, but we’re not going to go back to the kind of lending that put us in this mess,” said a person who is helping prepare executives for the meeting. A dozen executives were on the list of those coming, from Goldman Sachs Group Inc., Bank of New York Mellon Corp., Bank of America Corp., Citigroup Inc., U.S. Bancorp , JPMorgan Chase & Co., Morgan Stanley and more.

Lending is one of the issues Obama was expected to raise with the bankers Monday. He has said banks are benefiting from bailouts, and should use that strength to lend more money to consumer and businesses.

The bankers planned to tell Obama 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.

Citigroup Inc. said Monday that it is 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 chief executive Vikram Pandit from attending Monday’s meeting, Citi spokeswoman Molly Millerwise Meiners said. She said 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 would be attending by telephone “due to inclement weather.” The two others were Goldman Sachs chairman and chief executive Lloyd Blankfein and Morgan Stanley chairman and chief executive John Mack.

Bankers expected the regulatory overhaul to provide the meeting’s most contentious moments. They believe the president has mischaracterized them as being against the new rules, when in fact they support the vast majority of the administration’s proposals.

“These same banks who benefited from taxpayer assistance … are fighting tooth and nail with their lobbyists up on Capitol Hill, fighting against financial regulatory control,” Obama said in the television interview.

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