President Obama pressured the heads of the nation’s biggest banks on Monday to take “extraordinary” steps to revive lending for small businesses and homeowners, prompting assurances from some financial institutions that they would do more even as they continued to shed their supplicant status in Washington, The New York Times’s Helene Cooper and Eric Dash reported.

Meeting with top executives from 12 financial institutions, Mr. Obama sent a clear message that the industry had a responsibility to help nurse the economy back to health and do more to create jobs in return for the huge federal bailout last year that kept Wall Street and the banking system afloat.

But Mr. Obama also confronted the limits of his power to jawbone the industry as banking companies continued to repay government money received in the bailout. Citigroup and Wells Fargo, two of the biggest, announced on Monday that they were doing precisely that.

If the banks came hat in hand to Washington a year ago to assure their survival, they returned on Monday in a much stronger position to deal with the government. As they scurry to repay the government and escape its influence over their operations, they have been fighting elements of legislation to regulate their industry more tightly.

At the same time, the banks are seeking to restore executive pay to high levels and asserting that the government’s demand that they hold bigger financial buffers against possible losses makes it hard for them to issue more loans.

During the hourlong meeting in the Roosevelt Room of the White House, Mr. Obama prodded the executives to stop fighting the regulation legislation intended to deal with the problems that led to the financial crisis, White House officials said.

“I made very clear that I have no intention of letting their lobbyists thwart reforms necessary to protect the American people,” Mr. Obama said in remarks after the meeting. “If they wish to fight common sense consumer protections, that’s a fight I’m more than willing to have.”

The heads of three of the biggest companies — Goldman Sachs, Morgan Stanley and Citigroup — did not even make it to the White House meeting in person. They had waited until Monday morning to travel on commercial flights to Washington and then were held up by fog.

By contrast, James E. Rohr, PNC Financial’s chief executive, drove his own car on Sunday evening to Washington from Pittsburgh, stopping at a Wendy’s for a sandwich en route. Other chief executives made sure they would arrive on time: Jamie Dimon of JPMorgan Chase flew into Washington on one of the bank’s private jets, while Kenneth D. Chenault of American Express took Amtrak.

Executives at the meeting said that Mr. Obama had told the missing three that he understood that their flight had been canceled. But he directed strong words at the industry afterward.

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

He added, “Ultimately in this country we rise and fall together; banks and small businesses, consumers and large corporations.”

In the glare of the presidential spotlight, Bank of America used the occasion to say it would increase lending to small and mid-size businesses by $5 billion next year over what it lent to them in 2009. JPMorgan Chase announced a similar increase in early November and recently experienced an increase in new applications for loans.

Wells Fargo said in a statement on Monday that it expected to increase lending in 2010 as much as 25 percent, to more than $16 billion, for firms with $20 million or less in annual revenue.

The banking executives promised Mr. Obama that they would take second looks at loans they had denied over the last year. Richard K. Davis, the chief executive of US Bancorp, told reporters after the meeting that the executives were aware of the public perception that they were profiting with hefty bonuses at taxpayer expense, and that they realized they were “under a microscope” and needed to align themselves more closely with the needs of consumers.

But he cautioned that banks had a responsibility to carefully evaluate the qualifications of each client, lest there be a repeat of the bad lending practices that contributed to the financial crisis to begin with.

“We simply want to assure that we make qualified loans,” he said.

White House officials acknowledged that beyond the legislation on Capitol Hill, the administration’s leverage to prod the bankers, particularly on lending, was limited. But Robert Gibbs, the White House spokesman, said that Mr. Obama would keep up the public pressure. “I think that the bully pulpit can be a powerful thing,” he said.

In calling the bankers to the White House, Mr. Obama was seeking to capitalize on public anger over the continuation of big bonuses for Wall Street executives, coupled with the slow pace of renewed lending by institutions bailed out by taxpayers.

During Monday’s meeting, Mr. Obama did not repeat the language he used in an interview on “60 Minutes” on CBS Sunday night, in which he termed the bank executives “fat cats.” During the meeting, “he didn’t call us any names,” Mr. Davis said, adding that “we agree viscerally that more lending needs to be done.”

But with the unemployment rate at 10 percent, the White House needs to move the conversation from visceral to specific, administration officials said. Mr. Obama pressed the bankers to come up with possible solutions, according to administration officials and industry officials. In contrast to the lecturing tones of a similar meeting last March, several people in attendance Monday described this session as more constructive.

“There were no pitchforks, no fat cat bankers,” said Mr. Rohr of PNC.

Several of the chief executives, armed with statistics about initiatives to hire new bankers, replied that they were very focused on lending. Some, like Mr. Davis of US Bancorp, raised ideas like giving a second look to previously denied loans. Others proposed cutting the red tape on Small Business Administration loans.

Mr. Obama will meet next week with representatives of smaller banks, where he is expected to sound similar tones.

Go to Article from The New York Times »

President Obama pressured the heads of the nation’s biggest banks on Monday to take “extraordinary” steps to revive lending for small businesses and homeowners, prompting assurances from some financial institutions that they would do more even as they continued to shed their supplicant status in Washington, The New York Times’s Helene Cooper and Eric Dash reported.

Meeting with top executives from 12 financial institutions, Mr. Obama sent a clear message that the industry had a responsibility to help nurse the economy back to health and do more to create jobs in return for the huge federal bailout last year that kept Wall Street and the banking system afloat.

But Mr. Obama also confronted the limits of his power to jawbone the industry as banking companies continued to repay government money received in the bailout. Citigroup and Wells Fargo, two of the biggest, announced on Monday that they were doing precisely that.

If the banks came hat in hand to Washington a year ago to assure their survival, they returned on Monday in a much stronger position to deal with the government. As they scurry to repay the government and escape its influence over their operations, they have been fighting elements of legislation to regulate their industry more tightly.

At the same time, the banks are seeking to restore executive pay to high levels and asserting that the government’s demand that they hold bigger financial buffers against possible losses makes it hard for them to issue more loans.

During the hourlong meeting in the Roosevelt Room of the White House, Mr. Obama prodded the executives to stop fighting the regulation legislation intended to deal with the problems that led to the financial crisis, White House officials said.

“I made very clear that I have no intention of letting their lobbyists thwart reforms necessary to protect the American people,” Mr. Obama said in remarks after the meeting. “If they wish to fight common sense consumer protections, that’s a fight I’m more than willing to have.”

The heads of three of the biggest companies — Goldman Sachs, Morgan Stanley and Citigroup — did not even make it to the White House meeting in person. They had waited until Monday morning to travel on commercial flights to Washington and then were held up by fog.

By contrast, James E. Rohr, PNC Financial’s chief executive, drove his own car on Sunday evening to Washington from Pittsburgh, stopping at a Wendy’s for a sandwich en route. Other chief executives made sure they would arrive on time: Jamie Dimon of JPMorgan Chase flew into Washington on one of the bank’s private jets, while Kenneth D. Chenault of American Express took Amtrak.

Executives at the meeting said that Mr. Obama had told the missing three that he understood that their flight had been canceled. But he directed strong words at the industry afterward.

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

He added, “Ultimately in this country we rise and fall together; banks and small businesses, consumers and large corporations.”

In the glare of the presidential spotlight, Bank of America used the occasion to say it would increase lending to small and mid-size businesses by $5 billion next year over what it lent to them in 2009. JPMorgan Chase announced a similar increase in early November and recently experienced an increase in new applications for loans.

Wells Fargo said in a statement on Monday that it expected to increase lending in 2010 as much as 25 percent, to more than $16 billion, for firms with $20 million or less in annual revenue.

The banking executives promised Mr. Obama that they would take second looks at loans they had denied over the last year. Richard K. Davis, the chief executive of US Bancorp, told reporters after the meeting that the executives were aware of the public perception that they were profiting with hefty bonuses at taxpayer expense, and that they realized they were “under a microscope” and needed to align themselves more closely with the needs of consumers.

But he cautioned that banks had a responsibility to carefully evaluate the qualifications of each client, lest there be a repeat of the bad lending practices that contributed to the financial crisis to begin with.

“We simply want to assure that we make qualified loans,” he said.

White House officials acknowledged that beyond the legislation on Capitol Hill, the administration’s leverage to prod the bankers, particularly on lending, was limited. But Robert Gibbs, the White House spokesman, said that Mr. Obama would keep up the public pressure. “I think that the bully pulpit can be a powerful thing,” he said.

In calling the bankers to the White House, Mr. Obama was seeking to capitalize on public anger over the continuation of big bonuses for Wall Street executives, coupled with the slow pace of renewed lending by institutions bailed out by taxpayers.

During Monday’s meeting, Mr. Obama did not repeat the language he used in an interview on “60 Minutes” on CBS Sunday night, in which he termed the bank executives “fat cats.” During the meeting, “he didn’t call us any names,” Mr. Davis said, adding that “we agree viscerally that more lending needs to be done.”

But with the unemployment rate at 10 percent, the White House needs to move the conversation from visceral to specific, administration officials said. Mr. Obama pressed the bankers to come up with possible solutions, according to administration officials and industry officials. In contrast to the lecturing tones of a similar meeting last March, several people in attendance Monday described this session as more constructive.

“There were no pitchforks, no fat cat bankers,” said Mr. Rohr of PNC.

Several of the chief executives, armed with statistics about initiatives to hire new bankers, replied that they were very focused on lending. Some, like Mr. Davis of US Bancorp, raised ideas like giving a second look to previously denied loans. Others proposed cutting the red tape on Small Business Administration loans.

Mr. Obama will meet next week with representatives of smaller banks, where he is expected to sound similar tones.

Go to Article from The New York Times »

Dec. 15 (Bloomberg) -- Fannie Mae and Freddie Mac’s federal regulator is renegotiating the companies’ financing plan with the U.S. Treasury Department and may seek an increase to their $400 billion federal lifeline before the end of the year, according to people familiar with the talks.

Treasury and Federal Housing Finance Agency officials are also debating whether to lower the mortgage-finance companies’ dividend payments on their Treasury borrowings, according to these people, who requested not to be identified describing the internal deliberations.

Fannie Mae and Freddie Mac, the largest sources of mortgage money in the U.S., have used $111.6 billion of their $400 billion in backup financing in less than a year. The companies say their 10 percent annual dividend payment, which comes to about $5 billion each, costs more than either have earned in most years and adds to their draws on Treasury.

“A larger line, safest to be executed before year end, would buy Washington the time necessary to address more pressing housing matters,” Jim Vogel, a debt analyst with FTN Financial in Memphis, Tennessee, said in a note to clients today. “The possible risk in the discussions is any investor disappointment that might follow no change in the existing agreements.”

FHFA spokeswoman Stefanie Mullin, Treasury spokeswoman Meg Reilly, Freddie Mac spokesman Doug Duvall and Fannie Mae spokesman Brian Faith declined to comment. Fannie Mae rose 5 cents, or 4.4 percent, to $1.18 at 4:15 p.m. in New York Stock Exchange composite trading. Freddie Mac rose 4 cents, or 2.8 percent, to $1.48.

$400 Billion Lifeline

The financing plan instituted for Fannie Mae and Freddie Mac requires them to reduce their $1.57 trillion combined mortgage portfolios by 10 percent annually starting next year and caps their debt issuance at 120 percent of their assets.

The Treasury and Federal Housing Finance Agency seized control of the mortgage-finance companies almost 16 months ago amid fears the two were at risk of failing.

Officials set up a $200 billion lifeline with the Treasury, which was doubled in May, to keep the companies solvent. If they exhaust that backstop, regulators will be required to place them into receivership.

Treasury officials aren’t likely to take the chance of allowing the companies to fall into receivership, which is a bankruptcy-like process that would increase the companies’ debt costs and disrupt the mortgage markets, said Paul Miller, a former examiner for the Federal Reserve who now analyzes the banking and mortgage industry for FBR Capital Markets in Arlington, Virginia.

‘Pain Threshold’

“The Treasury has shown that their pain threshold is almost” non-existent, and the housing “market is still very fragile,” Miller said in an interview.

The companies have said $200 billion apiece may not be enough support. The Treasury Department is facing a Dec. 31 deadline to increase that amount without congressional approval.

While Treasury officials are free to renegotiate other terms of the deal, such as the dividend payment and restrictions on debt issuance, at any time, Congress set a deadline of the end of this year on the department’s ability to invest in the companies.

“Treasury should be giving confidence to the markets that they will take care of it,” said Rajiv Setia, a fixed income analyst for Barclays Capital in New York. “You increase the backstop and it removes the element of doubt.”

Rules Keep Shifting

Washington-based Fannie Mae, which has lost $120.5 billion over the last nine quarters, has requested $60.9 billion from the Treasury this year. McLean, Virginia-based Freddie Mac has tapped $50.7 billion in government capital since November 2008 and recorded $67.9 billion in cumulative losses over the last nine quarters amid a three-year housing slump.

The companies are an integral part of President Barack Obama’s housing-relief plan and have been pushed by the government to help more homeowners modify or refinance their loans to more affordable terms to curb foreclosures. The government-sponsored enterprises, or GSEs, own or guarantee about $5.5 trillion of the $11 trillion in U.S. residential mortgage debt.

“With the GSEs being used as public policy tools, it is impossible to quantify with certainty what losses might be in a stress scenario, as the rules of the game might keep shifting,” Setia said.

To contact the reporter on this story: Dawn Kopecki in Washington at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .