Page last updated at 01:17 GMT, Tuesday, 15 December 2009

Obama tells US banks to lend more and not oppose reform

Barack Obama: "I'm getting too many letters from small businesses"

US President Barack Obama has told bankers to increase loans to small and medium-size businesses.

The president was speaking after a meeting - which he described as "candid" - with executives of some of America's top banks.

President Obama said US banks had received extraordinary assistance and demanded they show extraordinary commitment to rebuild the US economy.

He also warned their lobbyists not to block moves for regulatory reform.

Monday's meeting with executives from Goldman Sachs, JP Morgan Chase and Citigroup, among others, came a day after the president said he had not run for office to help out "a bunch of fat cat bankers on Wall Street".

I urged these institutions here today to go back and take a third and fourth look about how they are operating
Barack Obama

In comments to reporters at the White House after Monday's talks, Mr Obama said: "America's banks received extraordinary assistance from American taxpayers to rebuild their industry, and now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."

He urged bankers to "explore every responsible way" to boost lending and to "take a third and fourth look" at loan applications from small and medium-sized businesses.

He said he was "getting too many letters" from creditworthy small businesses saying banks they have had long-term relationships are reluctant to give them loans.

Microscope

Speaking after the meeting, US Bancorp chief executive Richard Davis said he and his colleagues realised they were "under the microscope" to show they were doing a better job of listening to customers.

Many US citizens are angry the banking industry was granted a $700bn (£430bn) bail-out.

The Obama administration has said the rescue was needed to stem the worst financial crisis since the Great Depression of the 1930s and head off a potentially greater calamity in the broader economy.

The meeting came as Citigroup announced it was ready to pay back an emergency loan of $20bn to the US government earlier than expected.

Wells Fargo, another leading bank, said it too had struck a deal to repay $25bn in government aid it received last year.

The BBC's Adam Brookes in Washington says this may be a sign of the banking sector's recovery - but also a sign of how the banks want to shed government influence over their affairs.

Mr Obama also criticised lobbyists for trying to stall his administration's reform of the financial services sector.

He warned if they were "willing to fight common-sense consumer protection, that's a fight I'm willing to have".

Last week the US House of Representatives approved its version of the financial regulatory reform legislation. But before the bill can become law, it will also need approval from the Senate.

It includes a plan to give regulators the power to dismantle businesses that threaten the economy in a way that ensures shareholders and unsecured creditors, not taxpayers, bear the losses.



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