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Obama presses bankers to help rebuild US economy

Text by News Wires

Latest update : 2009-12-15

US President Barack Obama on Monday called top bank chiefs to the White House and asked them to improve lending to businesses, saying they owed an "extraordinary commitment" to taxpayers after they received "extraordinary assistance".

AFP - Fresh from slamming Wall Street "fat cats," US President Barack Obama Monday talked tough with top bankers, demanding an "extraordinary commitment" from them to restore the convalescing US economy.
   
Obama also warned senior bank executives he called to the White House that he would relish a fight unless they dropped objections to his plan to pass the most sweeping regulatory reform since the 1930s Great Depression.
   
The president, adopting a populist tone gelling with public fury at Wall Street as Americans face 10-percent unemployment, called on bank bosses to expand lending to unleash job growth driven by small businesses.
   
"America's banks received extraordinary assistance from American taxpayers to rebuild their industry and now that they're back on their feet we expect an extraordinary commitment from them to help rebuild our economy," he said.
   
Obama said in a televised statement after the meeting that bank executives told him they were making honest efforts to free up credit, especially for small businesses, but complained "we expect some results."
   
"I'm getting too many letters from small businesses who explain that they are credit worthy, and banks that they've had a long-term relationship with are still having problems giving them loans."
   
The president also took on banking executives resisting his attempts to pass major regulatory reforms, including the formation of a consumer protection agency to protect bank and credit card customers from predatory lending.
   
"If they wish to fight common-sense consumer protections, that's a fight I'm more than willing to have," he said, rebuking banks for hiring lobbyists to resist his reform effort.
   
Critics say the US financial industry helped trigger the global economic meltdown and only survived thanks to billions of dollars of emergency taxpayer funding, but is now piling up profits at the expense of consumers.
   
"The way I see it, having recovered with the help of the American government and the American taxpayer, our banks now have a greater obligation to the goal of a wider recovery, a more stable system and more broadly shared prosperity," Obama said.
   
The Democratic-led House of Representatives last week passed an ambitious regulatory reform bill, but the prospects for the legislation are uncertain in the Senate where the draft law is expected to undergo sharp revisions.
   
In an interview with CBS television aired Sunday, Obama lashed out at Wall Street, ahead of an expected wave of bloated bonus payments to top executives.
   
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama said on "60 Minutes."
   
Finance industry titans invited to the meeting included Ken Chenault, president and CEO of American Express; Jamie Dimon, chairman and CEO of JP Morgan Chase, Ken Lewis, President of Bank of America and Gregory Palm, executive vice president and chief counsel of Goldman Sachs.
   
Three executives, Lloyd Blankfein, chairman and CEO of Goldman Sachs; John Mack, chairman and CEO of Morgan Stanley; and Dick Parsons, chairman of Citigroup called in because they could not fly to Washington due to bad weather.
   
Banking chiefs said after the meeting that it was "productive" and declined to respond directly to Obama's remarks.
   
Dimon said that he would support the administration's goals of "increased and responsible" lending, better consumer protections and responsible executive pay.
   
"This is simply what a bank should do," he said
   
Richard Davis, head of US Bancorp described the meeting as "productive."
   
In a related development, Citigroup unveiled plans to repay 20 billion dollars in government aid and outlined a plan to emerge from a massive bailout, in a fresh sign that the banking sector is closer to standing on its own.
   
Citi, which was kept afloat by a series of state rescues during the financial crisis, said it would sell 20.5 billion dollars in new securities under the plan to replace the capital aid.
   
Citi's announcement means that all the major US banks that received capital injections, with the exception of Wells Fargo, have repaid or are in the process of repaying the government.

Date created : 2009-12-14

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