- The Washington Times - Tuesday, December 15, 2009

On health care and climate change, President Obama has found at least some backing in the business community. But when it comes to rewriting the nation’s financial regulations, he’s having a much tougher time lining up support.

Ratcheting up his use of the bully pulpit, Mr. Obama on Monday summoned more than a dozen financial executives to the White House to pitch an overhaul of the federal regulatory system but found the firms — many of whom have received billions of dollars in taxpayer assistance — reluctant to jump on board.

For all his tough rhetoric, the most Mr. Obama appeared to get from the meeting was a promise from the banks to re-examine some of their lending practices.

“I made it clear that it is both in the country’s interest — and ultimately, in the financial industry’s interest — to have updated rules of the road to prevent abuse and excess,” Mr. Obama said. “If they wish to fight common-sense consumer protections, that’s a fight I’m more than willing to have.”

While some businesses see economic advantages in health care reform and fighting climate change, most Wall Street firms see little benefit in endorsing a bill that they warn would vastly increase the federal government’s authority over financial products and bank practices.

Specifically, the legislation, which passed the House last week, would create a new consumer financial regulatory agency charged with, among other things, policing industry practices on credit cards, home mortgages and other products. The House bill would also give the government new authority to break up ailing financial giants if regulators conclude they pose a risk to the economy as a whole.

“The bill will increase risk and inject more uncertainty into the financial markets — the exact opposite of the direction we need to move,” Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, said earlier this month. “The financial crisis demonstrated a need to modernize our regulatory structure. However, this bill will stifle creativity and the free flow of ideas and capital.”

Though the White House said Mr. Obama would listen to the ideas and concerns brought forward by the CEOs, the president just the night before bemoaned the practices and pay scales of “fat-cat bankers” in a television interview. In his remarks after the meeting, Mr. Obama said banks owe it to the American taxpayer to sign onto the bill.

“The way I see it, having recovered with the help of the American government and the American taxpayers, our banks now have a greater obligation to the goal of a wider recovery, a more stable system and more broadly shared prosperity,” he said.

Bankers said Mr. Obama had been civil during the get-together, which lasted just more than an hour.

“He didn’t call us any names,” U.S. Bancorp Chief Executive Officer Richard Davis told reporters later.

He said that he and fellow bankers understood the public outcry over compensation and that they had agreed with the president to “make sure we are doing the job of banking, which is lending.”

But the only firm commitment to emerge Monday was a pledge by the banking executives to take a second look at loans that had been rejected. Bank of America Corp. said it would lend $5 billion more to small businesses next year, and JPMorgan Chase & Co. made a similar pledge of $4 billion.

The meeting comes on the heels of the administration’s decision to extend the Troubled Asset Relief Program (TARP) through October.

Banks have sought to pay back the funds as quickly as possible, in part because of the strings attached to the bailout support, including salary caps for top executives recently imposed by the White House’s “pay czar.”

Both parties on Capitol Hill have emphasized the need to jump-start lending to small and midsized businesses, though their prescriptions differ, with Democrats calling for a redirection of TARP money to promote new jobs and Republicans calling for lower taxes and less intrusive regulation by the government.

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