WASHINGTON - President Obama challenged the nation's biggest banks yesterday to help accelerate the economic recovery after the government bailed them out of a crisis "largely of their own making."
"America's banks received extraordinary assistance from American taxpayers," Obama said after a White House meeting with executives from the 12 largest banks. "Now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild the economy."
He called on them to explore "every responsible way" to increase lending, especially to small businesses and homeowners, and to ease their opposition to an overhaul of the regulatory system.
The meeting included executives from American Express Co., Bank of America Corp., Bank of New York Mellon, JPMorgan Chase & Co., PNC Financial Corp., and Wells Fargo & Co. (the parent of Wachovia Bank). Three of those invited - Richard Parsons, chairman of Citigroup Inc., John Mack, chief executive of Morgan Stanley, and Lloyd Blankfein, CEO of Goldman Sachs Group Inc. - couldn't get to the White House because of flight delays caused by fog in Washington. They participated via conference call.
Bank of America, of Charlotte, N.C., the largest U.S. bank by assets and deposits, issued a statement after the meeting pledging to increase small-business lending by at least $5 billion in 2010 from anticipated 2009 levels.
Wells Fargo, of San Francisco, said it expected to increase lending in 2010 as much as 25 percent, to more than $16 billion, for firms with $20 million or less in annual revenue.
Obama said he doesn't expect or want banks to resume making risky loans and that he understood they must increase their capital as a financial cushion.
"But given the difficulty businesspeople are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again," Obama said.
Richard Davis, chief executive officer of U.S. Bancorp, of Minneapolis, said as he emerged from the White House that the bankers understood that more credit needed to be extended to businesses and that financial companies are under a microscope because of the bailouts.
While White House press secretary Robert Gibbs said the bankers agreed to take "second looks" at loans that had been denied, some executives cautioned that banks still needed to act judiciously because the economy was still fragile.
Gibbs said Obama didn't give the executives any specific benchmarks for lending.