President Barack Obama told top bankers today to explore “every responsible way” to increase lending, saying they were obliged to help repair the US economy after being saved by the taxpayer-funded bailout.
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 US 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 US 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 at the White House.
Although the bailout of the banks is credited with avoiding a financial collapse, it has also prompted anger among many Americans that the government has been helping wealthy bankers while ignoring the plight of ordinary people at a time of rising unemployment.
This could be an issue that would hurt Obama’s Democrats in next November’s elections.
Obama also urged lenders to find creative ways to free up lending. He said banks had 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, we expect them to explore every responsible way to help get our economy moving again,” he said.
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.
Despite Obama’s pointed words, the bankers have said 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 sceptical about potential borrowers. They are forcing banks to keep larger cushions of capital to protect against future losses. That means there is less money available to lend.
The meeting came amid Obama’s fierce criticism of Wall Street. In an interview screened yesterday, Obama rebuked executive paycheques at firms which 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 television’s 60 Minutes.
Bankers, however, brushed off Obama’s harsh rhetoric.
US Bancorp chief Richard Davis denied that there was any rancour 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.”