Obama to call on bank chiefs to boost lending
Thursday, December 10, 2009
President Obama is summoning the chiefs of a dozen big banks to a White House meeting Monday to press them to do more for the economy, even as many of the firms are striving to get out from under the government's thumb.
Obama is expected to tell the executives to lend more, especially to small businesses, and to support his administration's efforts to reform financial regulation, administration officials said. He may also address the continuing firestorm over excessive executive pay.
The meeting -- Obama's third of the year with senior bank executives -- comes at a time of ongoing tension between Washington and Wall Street. Some administration officials and lawmakers say banks that got massive bailouts from the government aren't doing enough to lift the nation out of its economic slump. Those officials also criticized the gaudy pay packages Wall Street is handing out while unemployment soars around the country.
But some industry officials say that the government has become too intrusive and complain about its contradictory signals. Regulators warn banks against lending recklessly, while lawmakers and politicians criticize them for not lending enough, these officials said.
On Wednesday, some of the nation's biggest banks took steps to free themselves from federal constraints, such as executive pay curbs. Bank of America said it had delivered a check to repay the $45 billion aid package that it had received from the government's Troubled Assets Relief Program, or TARP. Citigroup officials said they are close to winning an agreement from regulators to begin paying back their $45 billion bailout.
In total, Treasury officials say they expect $175 billion to be returned from banks by the end of next year. Another $139 billion of the $700 billion program was never allocated.
Treasury Secretary Timothy F. Geithner told lawmakers Wednesday that the TARP would be extended until next October, while pledging not to spend $150 billion of the funds. That money could be used for a jobs bill currently being crafted by House Democrats, sources familiar with the matter said.
In a letter to the Democratic leaders of the House and Senate, Geithner said the extension of the TARP was necessary to assure financial markets that the government has enough resources to address an unforeseen crisis and to aid American families and businesses that are still struggling in the slumping economy.
"History suggests that exiting prematurely from policies designed to contain a financial crisis can significantly prolong an economic downturn," Geithner wrote.
Geithner also made an effort to recast the image of the highly unpopular program. He wrote that Treasury is winding down programs that aided big banks, and he committed to limiting TARP next year to a consumer-credit revival effort and to initiatives that help small businesses, community banks and homeowners who are in danger of losing their homes.
At his meeting Monday, the President is expected to also press bank executives for ideas on job creation and how to aid small businesses struggling to get credit.
Administration officials have said supporting such companies is key to an economic recovery because they employ a majority of America's workers.
"The president is looking forward to meeting with members of the financial services industry on Monday to discuss our shared interest in economic recovery, the need to increase small business lending and the Administration's plans for financial reform," said White House spokeswoman Jen Psaki.