Obama to 'Fat Cat Bankers': Time to Start Lending

WASHINGTON, Dec. 14, 2009 — -- In a face-to-face meeting with the country's leading financial executives at the White House today, President Obama insisted that the nation's banks do more in "every responsible way" to increase lending to consumers and small businesses and help repair the U.S. economy.

"Given the difficulty business people 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.

The 90-minute summit, involving discussions on small business lending, loan modifications, executive compensation and financial regulatory overhaul, comes as the president grapples with swirling economic discontentment, high unemployment and tight credit markets.

Obama met with the banking executives earlier this year and warned them that he was the only one standing between them and "the pitchforks."

Since then, the executives have paid themselves millions of dollars in bonuses while many of their banks, which have benefited from the government's financial bailout, have been somewhat slow to readjust loans and mortgages for taxpayers.

Sources familiar with today's meeting said there was no "pitchfork moment" this morning. The president didn't berate or browbeat. Rather, he was reportedly frank and direct with the CEOs, as were the CEOs with him.

"He didn't call us any names," U.S. Bancorp chairman and CEO Richard Davis said after the meeting, alluding to the president's "fat cat" comment in his interview with "60 Minutes" Sunday.

"The whole meeting was very productive. It really was. We're in this together and we understand that the bankers are not surprised by the public response. We're paying attention to it."

Davis said he and the 11 other CEOs participating in today's talks committed to increasing lending and improving loan-modification programs.

Senior White House advisor David Axelrod had said on "Good Morning America" today that the president's message would be stern: "What the president's going to say to the bankers is, 'You guys were part of the problem, you helped create an economic crisis here that has cost 7 million Americans their jobs and now you have to be part of the solution. You have to accelerate lending to credible small businesses and medium-sized businesses."

Many of the banks have since returned the government bailout money, a move the president suspects is the result of executives not wanting to be subject to compensation limits being imposed by his administration.

"They're still puzzled why is it that people are mad at the banks," Obama said. "Well, let's see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in decades, and you guys caused the problem."

The president conveyed that message to bank executives today.

After the meeting, Obama said he reminded the leaders that much of the financial crisis that left the U.S. banking system teetering on the brink of collapse had been "of their own making."

One administration official had made a similar argument the day before.

Bank leaders "need to recognize that they've got obligations to the country after all that's been done for them," Lawrence Summers, Obama's top economic adviser, said on "This Week With George Stephanopoulos" Sunday.

The president had also been expected to push the banks to increase lending to small businesses and to participate in the administration's housing help program announced in February to help millions of homeowners modify the terms of their mortgages and avoid foreclosure, Summers said.

Since then, almost 760,000 Americans have signed up for assistance, but banks have accepted only 31,382 applications.

The question for the president now is whether his stern words will be heeded.