Obama implores top bankers to increase lending
Washington: President Barack Obama implored top bankers Monday to help keep the fragile recovery from faltering by boosting lending to small businesses and getting behind an overhaul of financial regulation. "We rise and fall together," he declared.
The bankers said they got the message. Some pledged to increase lending and exercise more caution over outside compensation for their employees.
But they also insisted they are getting conflicting messages from Washington when they do try to make more loans. While the White house presses for more lending, regulators are cracking down on banks to lend more prudently and forcing them to keep larger cushions of capital to protect against future losses. That means there`s less money available to lend.
Obama called his message a simple one: "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 urged bankers to "explore every responsible way" to boost lending and to "take a third and fourth look" at every loan application.
The impact of the president`s burst of populist jawboning was hard to gauge. Meanwhile, the government is losing direct leverage as major banks repay the taxpayer bailout loans.
Obama`s lecture to the bankers was also part of a broader election-season Democratic effort to tie sluggish bank lending to continued high joblessness — and to try to tie the banking industry to Republican efforts against Obama`s financial overhaul legislation.
The meeting came amid growing friction between the president and the banking industry, a day after Obama denounced "fat cat bankers on Wall Street" who enjoy big bonuses but "just don`t get it."
"He didn`t call us any names" during Monday`s session lasting just over an hour, said US Bancorp CEO Richard Davis.
Davis called the meeting "very productive" and acknowledged banks haven`t done as good a job as they could in resuming lending. He said he and fellow bankers understood the public outcry over compensation and said they agreed to "make sure we are doing the job of banking, which is lending.
"And we should get paid for that when we do it," added Davis, who is incoming chairman of the Financial Services Roundtable.
Bank of America CEO Kenneth Lewis pledged that his bank would lend USD 5 billion more to small- and mid-sized businesses in 2010 than it did in 2009. JPMorgan Chase & Co, said last month that it would boost such lending by USD 4 billion.
Participants said Obama focused on four areas: Make more loans to small and medium-size businesses, increase modifications of underwater mortgages, bring executive compensation under control and give more support to legislation overhauling financial regulation.
White House spokesman Robert Gibbs was later asked how Obama could persuade banks to lend more and to support overhaul given the hard time the administration had in winning that case when it had more leverage because of the bailout loans.
Gibbs cited the USD 5 billion that Bank of America had pledged as an early indication of success. "I think that the `bully pulpit` can be a powerful thing," he said.
Nearly all US presidents have used jawboning — Washington slang for an effort to talk things into happening — with mixed results.
Obama earlier in the year tried — with little apparent effect — to jawbone the leader of China into letting Chinese currency rise with market forces to help right global financial imbalances.
In 1961, President John F Kennedy "jawboned" the steel industry into overturning a price increase after first encouraging labor to lower wage demands. President Lyndon Johnson was acknowledged by friend and foe alike as a master of the art of twisting arms.
George W Bush criticized departing President Bill Clinton for not attempting to lower oil prices by "jawboning" OPEC to increase supply. But the former Texas oilman did no better on that score with OPEC after taking office. Clinton tried to use the White House pulpit to coax an end to a major league baseball strike in 1995, but it was ended without his intervention.
Increasingly, the White House and congressional Democrats have been lashing out at the banking industry, responding to polls show growing public outrage at compensation practices while joblessness remains at 10 percent.
"Politically, the bankers are an unpopular group these days," said Democratic pollster Mark Mellman. "People believe that banks helped to create the desperate economic situation that we`re in and that they`ve gotten a lot of money and haven`t helped the economy in exchange."
Mellman also said Obama`s jawboning "will only help to show the American people that he`s focused on this issue. Honestly, that helps whether the banks respond or not."
American University political scientist James Thurber said he believed Obama`s effort would have "limited effect" in changing bankers` ways. "But maybe it will have some effect on the American public that will have an effect on members of Congress when they`re trying to pass these reforms on the Hill."
The White House said Obama plans a similar meeting on Dec. 22 with heads of smaller financial institutions.
Obama has complained that, while bankers claim they support financial regulation reform, large banks have been lobbying against portions of overhaul legislation moving through Congress, including a provision to set up a new consumer protection agency to oversee their marketing of credit cards, mortgages and car loans.
Using a sports analogy, Obama told the bankers Americans might be more sympathetic to outsize pay if those who got it were in the equivalent of a financial World Series, according to a senior administration official who lacked authorization to speak publicly and spoke on the condition of anonymity.
The bankers told Obama they are shifting from cash bonuses to longer-term payouts such as stock, but Obama said that was not good enough because the public was likely to still see it as excessive, this official said.
The bankers have said the amount of 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.
More from India
More from World
More from Sports
More from Entertaiment
- Rajasthan: Gujjars revive reservation agitation, block rail track
- J Jayalalithaa sworn-in as Chief Minister of Tamil Nadu
- Dr Subhash Chandra Show: Aspiring for more than what you have!
- ISIS to buy first nuclear weapon from Pak?
- Mumbai: CCTV captures assailant with gun at Film City
- Mathura SSP receives death threat letter, message for PM Modi
- BJP now central pole of Indian politics: Arun Jaitley
- Maharashtra FDA sends Maggi noodles for lab testing
- Watch: Fast N Facts @ 7:30pm
- Haridwar: Hotel Radisson Blu sealed for polluting Ganga
- Reservation issue: Police register case against Bainsla, 20 others
- Delhi: Two killed in road accident in New Ashok Nagar
- Girl in Punjab's Pathankot quit studies for fear of eve-teasing
- Zee Media exclusive chat with 'Welcome to Karachi' cast
- Zee Media exclusive interview with Haryana CM Manohar Lal Khattar
- Goa Board SSC Exam Results 2015 announced
- ISIS close to buying nuclear weapon from Pakistan?
- Manohar Parrikar visits forward areas along LoC, reviews security situation
- Credibility of Prime Minister's Office restored by BJP, says Arun Jaitley
- ISIS justifies raping slave girls, says Michelle Obama is 'worth $40'
- IPL 2015 Final: Mumbai Indians vs Chennai Super Kings - Preview
- 'Unhappy' Celina Jaitley asks Sunny Leone to move out?
- Arvind Kejriwal to highlight AAP govt's 100 days work on Monday
- CBSE Results 2015: 10th board exam results to be declared on May 27
- BJP's plan for one-year celebration: 200 big rallies, 5,000 public meetings
- IPL 8 Final: We need to be at our best against Mumbai, says Michael Hussey
- Heatwave leaves 153 dead in Telangana, Andhra Pradesh
- Heatwave kills 223 in AP, Telangana, Chandrababu Naidu announces compensation; Delhi records hottest day
- 'Tanu Weds Manu Returns' starts on a good note at the Box Office!
- CBSE Results 2015: 12th board exam results to be declared on May 25