In White House meeting, Obama calls on banks to increase lending
Tuesday, December 15, 2009
President Obama exhorted the nation's biggest banks on Monday to make "extraordinary" efforts to increase lending, even as some of those firms are racing to distance themselves from government control.
The nation's most powerful bankers sat in the Roosevelt Room at the White House and nodded as the president spoke, but some executives and industry officials said afterward that increasing lending is largely beyond their ability.
Meanwhile, Citigroup and Wells Fargo announced plans Monday to spend billions of dollars -- not on lending, but to repay federal aid. Citigroup chief executive Vikram Pandit missed the White House meeting to rally investor support.
Bank executives say they itch to make profitable loans, as many as possible, but are struggling to find qualified borrowers. They also say that the administration is asking for increased lending even as it pursues financial reforms that will limit the ability of banks to make loans.
Some note that a recession caused by an orgy of lending must be solved in part through greater restraint.
Obama has come under increasing pressure to demonstrate his concern for the plight of Americans caught in a rising tide of joblessness, even as the larger economy appears headed to recovery. The White House portrayed Monday's meeting as a chance for the president to channel the anger of Americans who think federal programs intended to revive the broader economy have succeeded only in restoring Wall Street's profitability.
"America's banks received extraordinary assistance from American taxpayers to rebuild their industry," the president said after the meeting. "And now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."
Obama added that he expects not just effort but "results."
Some administration officials privately conceded that borrowing always declines during recessions, and that they are struggling to find effective ways of spurring new lending. Furthermore, the administration's options continued to be constrained by the belief of many officials that meddling in the details of banking is counterproductive.
The administration also is surrendering a measure of leverage over the industry as banks repay federal aid provided under the Troubled Assets Relief Program -- although officials are eager to shed the political baggage of aiding big Wall Street firms. With the announcements Monday by Citigroup and Wells Fargo that they would repay federal aid, all of the nine major banks that got money late last year will be on track to pay it back.
As a result, while the White House has raised the temperature of its rhetoric in recent weeks, policy measures have not followed.
Some activists are calling on the president to do more. Just after leaving an Atlanta meeting Monday with ministers and others, some of whom are facing foreclosure on their churches and homes, the Rev. Jesse Jackson called on Obama to use federal fair-lending laws to force the banks to help struggling communities.