Obama asks community banks to free up business lending

"More capital means that we could make larger loans," said Bridges, who was not part of the ICBA group.

'It takes two' to lend

Fine said his group's members told the president that the real problem was a lack of demand.

"We've got plenty of money to lend, but it takes two parties to make a loan," Fine said.

Several bankers also told the president that regulators were unduly restricting lending in some cases, for example by requiring banks to set aside money to cover possible but unlikely losses, reducing the money available for new lending.

"The bank regulators are concerned about risk, and so the natural thing to do when you're concerned about risk is to pull back," said Deborah Wright, the chief executive of Carver Federal Savings Bank in New York. "That's the message that most of us have been getting."

Wright, also invited separately from the ICBA group, said Obama emphasized that the regulatory agencies are independent but promised to share with them the concerns expressed by the bankers.

Fine said the White House called Dec. 14, the morning of the president's meeting with the heads of large banks, to tell him that Obama wanted to meet with community banks the next week. A number of trade groups compete to represent banks in Washington, but the ICBA has been more supportive of the administration's financial reform plan than some of the other groups. The American Bankers Association, which has been more vigorous in its opposition, was not asked to send a representative to the meeting.

The ICBA members at the meeting included Diamond Bancorp in Schaumburg, Ill., in the district of Rep. Melissa Bean, a leader of the moderate New Democrat Coalition; Solvay Bank in Solvay, N.Y., in the district of Rep. Dan Maffei, a target of Republicans; and German American Bancorp in Jasper, Ind., in the district of Rep. Baron P. Hill, another Democrat who faces a difficult race.