Obama implores top bankers to increase lending

The bankers said they got the message. Some pledged to increase lending and exercise more caution over outside compensation for their employees.

But they also insisted they are getting conflicting messages from Washington when they do try to make more loans. While the White house presses for more lending, regulators are cracking down on banks to lend more prudently and forcing them to keep larger cushions of capital to protect against future losses. That means there's less money available to lend.

Obama called his message a simple one: "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 every loan application.

The impact of the president's burst of populist jawboning was hard to gauge. Meanwhile, the government is losing direct leverage as major banks repay the taxpayer bailout loans.

Obama's lecture to the bankers was also part of a broader election-season Democratic effort to tie sluggish bank lending to continued high joblessness — and to try to tie the banking industry to Republican efforts against Obama's financial overhaul legislation.

The meeting came amid growing friction between the president and the banking industry, a day after Obama denounced "fat cat bankers on Wall Street" who enjoy big bonuses but "just don't get it."

"He didn't call us any names" during Monday's session lasting just over an hour, said U.S. Bancorp CEO Richard Davis.

Davis called the meeting "very productive" and acknowledged banks haven't done as good a job as they could in resuming lending. He said he and fellow bankers understood the public outcry over compensation and said they agreed to "make sure we are doing the job of banking, which is lending."

Bank of America CEO Kenneth Lewis pledged that his bank would lend US$5 billion more to small- and mid-sized businesses in 2010 than it did in 2009. JPMorgan Chase & Co., said last month that it would boost such lending by US$4 billion.

Participants said Obama focused on four areas: Make more loans to small and medium-size businesses, increase modifications of underwater mortgages, bring executive compensation under control and give more support to legislation overhauling financial regulation.

White House spokesman Robert Gibbs was later asked how Obama could persuade banks to lend more and to support overhaul given the hard time the administration had in winning that case when it had more leverage because of the bailout loans.

Nearly all U.S. presidents have used jawboning — Washington slang for an effort to talk things into happening — with mixed results.

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