Wednesday 3rd of March 2021

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Obama Wants Banks To Increase Loans

Top officials from twelve of the nation’s largest banks on Monday were told by President Obama to look for ways to bolster lending for small business and homeowners, saying the industry had a responsibility to help the U.S. economy and create new jobs just as the government had bailed out the banking system.

“America’s banks received extraordinary assistance from American taxpayers to rebuild their industry,” Obama said after the meeting. “Now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild our economy.”

Bank of America officials said they will increase their lending activity with small and mid-size businesses by $5 billion in 2010 compared to what it did this year. JPMorgan Chase earlier announced a similar increase and has seen increases in loan applications. Wells Fargo expects to INCREASE lending up to 25 percent next year for companies with $20 million or less in annual revenue. That could mean more than $16 billion in loans.

The bank officials also told the president they would reconsider decisions during the year that to turning down loan applicants.

Although the financial institutions committed to doing more to assist the recovery, their obligations are fairly limited as they continue paying the loans they received. The latest to indicate they are doing so are Citigroup and Wells Fargo.

However, repaying their obligations hasn’t been enough to escape the scrutiny they have faced lately, including calls for legislation that would regulate their industry. Obama told the bank executives to end their challenges to new laws intended to eliminate the problems that led to the economic meltdown.

US Bancorp CEO Richard K. Davis said he and the other officials were aware taxpayers feel they are footing the bill for big bonuses for bank executives at taxpayer expense and that the banks need to meet the needs of consumers. But he added the institutions are committed to scrutinizing each loan applicant, otherwise the same poor lending practices that triggered previous economic problems could recur. Also, the government’s pushing for stronger policies to prevent losses in turn makes it difficult to issue loans, he said.

Obama is scheduled next week to have a similar meeting with executives from smaller banks.
Administration officials acknowledge they can only encourage the banks to step up their lending activities since enforcement only comes through federal legislation. Still, “I think that the bully pulpit can be a powerful thing,” said Robert Gibbs, the White House spokesman.