Obama wants that banks help in the lending process

The US economy is on the verge of tottering. President Obama has asked banks to hike lending. He says that he is flooded with letters from the business houses who are not being able to borrow money for project expansion.

The President observes that the banks have already got a lot of assistance from the government. Now the government expects the banks to help it in economic resurgence. They should come forward and help put the economy on the growth track.

Obama had wanted the meeting to be a forum for exchange of ideas but his tone became increasingly harsh. Referring to the banks in Wall Street as fat cats, he said that he expected them to work. However, his temperament became more moderate after a point. The very next day, he said that his intention was not to “vilify” anyone. The banks have already made significant efforts to modify mortgages but that is not sufficient any longer. The government expects better results now.

Financial reforms are on top of the agenda. He also requested bank professionals not to lobby against new proposals. One such proposal is to create an agency for protection of borrowers from abuses. Also he requested for moderation in compensation of executives.

The top-tier of nation’s 12 largest banks was present at the meet with Obama. Lloyd C. Blankfein of Goldman Sach’s, Morgan Stanley’s John Mack and Citigroup chairman Dick Parsons were not present at the meeting. Their flight had got delayed because of fog. They participated on the telephone.

The Citigroup CEO Vikram Pandit was supposed to attend but Parsons had to fill in for him. Citigroup announced that it would pay $20 billion that it had received as Federal aid. The only bank that did not announce a plan to repay was Wells Fargo.

A similar meeting was convened in March 2009. It may be mentioned here that the banks had reduced lending, although their record books have shown profitability because of the large amount that it received as public aid.

Banks have been rescued but in stark contrast, the financial woes of most Americans are only increasing by the day. Unemployment is still at a very high level. Due to that, foreclosures are high also. Democrats are exercising pressure on the government. There is a section that believes some proposals would limit growth. There has been a feeling that banks have not shown gratitude to the government by acting fast.

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