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Obama, Bankers Sit Face to Face
"I think the president made a clean break with the rhetoric of last week," said Michael Paese of the Securities Industry and Financial Markets Association. Paese was one of several trade group representatives at the meeting.
The bankers also expressed optimism as they left the White House. "We look forward to working with the administration," said James Rohr, the chief executive of PNC, in a statement that summarized the public remarks of the others.
This account is based on the recollections and notes of several people who attended the meeting and who spoke on condition of anonymity because the session was private.
President Obama began by speaking about his concern for the continuing fragility of the financial system and his desire to find long-term solutions so that renewed lending could spark economic growth. He also said that systemic risks had been overlooked during the boom, and that there was a need for corrective action, a reference to the administration's blueprint for regulatory reform.
Treasury Secretary Timothy F. Geithner presented Congress earlier this week with an outline of the administration's financial regulatory plans. The issue is expected to be a major topic when the president meets next week in London with leaders of the world's largest industrial nations.
During the meeting yesterday, the president also returned several times to the need for the banks to behave modestly.
Obama at one point cast the issue through the eyes of "a single mom trying to make a mortgage payment," watching banks that get aid spending money on bonuses, and feeling what he described as justifiable anger. He added that such anger could derail the administration's efforts to help banks through programs designed to clear away troubled assets and provide new capital at public expense.
The president, however, spent most of the meeting listening. There were 13 executives seated with Obama, and he called on each in turn, beginning with Jamie Dimon, the chief executive of J.P. Morgan Chase.
Dimon told the president that banks had made mistakes: excessive lending, inadequate underwriting and paying some employees too much. He said, however, that the word "bank" had become an unfair shorthand for the wide variety of financial institutions that engaged in problematic behavior, including mortgage brokers, insurance companies and money-market mutual funds. He also expressed broad support for the administration's regulatory reform agenda.
Dimon was the first of several chief executives to tell the president that his bank has increased its lending.
The chief executive of Wells Fargo, John Stumpf, spoke of increased mortgage lending in recent months, which he described as a boon to the economy.
Richard Davis, the chief executive of U.S. Bancorp, told the president that his company was placing a particular emphasis on maintaining loans and lines of credit to longtime customers, particularly small businesses, even in cases in which the bank's risk models called for curtailing or ending those relationships.
Obama responded by encouraging all of the banks to maintain their relationships with existing customers, particularly small businesses. He told the banks that he was reading a lot of letters from smaller employers whose access to credit had been cut.
All of the banks at yesterday's meeting have received infusions of taxpayer money, and several of the executives told the president they were eager to repay those investments. The president said he would welcome repayments, but only if doing so would not curtail the banks' ability to make loans.