By Don Miller
President Barack Obama convened a "who's who" of executives from the nation's largest banks Friday to mend fences with Wall Street and drum up support for his plans to stabilize the financial system.
The meeting appeared to clear the air as bankers said afterward they knew their companies are vital to a potential economic recovery and they want to work with the government.
"The basic message is we're all in this together," John Stumpf, the Chief Executive Officer of Wells Fargo & Co. (WFC), told reporters outside the White House after meeting with Obama. "We're trying to do the right thing for America."
The White House meeting was called in part to instill a sense of interdependence among attendees and to try to get beyond the furor over bailouts and bonuses that have roiled relations between the administration and the financial community.
"He wanted to convey to them his long-standing view that we all got to be in this thing together and if one institution, or some group of traders or what have you are going to be in for the quick buck and pass the losses on to everyone else, that's not really going to work," Austan Goolsbee, a member of the White House Council of Economic Advisers, told CNBC.
Goolsbee stressed that Obama did not go into the meeting with a specific agenda, but was in more of a listening mode, trying to ascertain from them the current state of the credit, banking and financial markets.
The White House meeting included chief executive officers Vikram Pandit of Citigroup Inc. (C), Jamie Dimon of JPMorgan Chase & Co. (JPM) and Lloyd Blankfein of Goldman Sachs Group Inc. (GS), all headquartered in New York. They headed a list of as many as 15 banking executives attending.
White House advisers said the meetings were aimed at stabilizing financial markets, increasing lending to businesses and consumers, and halting foreclosures.
Beginning in October, The U.S. Treasury injected more than $300 billion from the Troubled Asset Relief Program (TARP) program into the biggest U.S. banks. Lenders including Bank of America Corp. (BAC), U.S. Bancorp (USB) and Goldman Sachs have said they want to return TARP money.
That was followed by a number of other government programs to spur the financial markets and loosen credit, including a $275 billion housing rescue plan and, more recently, a $100 billion program to rid the banks of the "toxic" assets clogging their balance sheets and jamming the credit markets.
Treasury Secretary Timothy Geithner last week unveiled the details of the government's "Public-Private Investment Program," setting off a stock market rally as investors cheered the news that banks might loosen lending and help the economy get on its feet again.
But the administration's plan to accomplish those goals is dependent, in part, on the financial companies being willing to sell distressed assets at prices attractive enough to create a new market and enable banks to start lending, which they have been reluctant to do.
The administration stressed that the problems are so serious that the government cannot solve them alone. Geithner emphasized that market participation is vital.
"For these programs to work investors have to be prepared to take some risk," he told a pool of reporters last week.
On Thursday the administration also outlined its proposals to impose tighter regulations on the financial sector in an effort to avoid a repeat of the industry meltdown that contributed to the recession.
Wall Street and the banking community have been under attack from Congress and the public after the Treasury said it couldn't stop $165 million in bonuses to American International Group Inc. (AIG) employees, even though the New York-based insurer received $182.5 billion in taxpayer bailout funds.
The uproar has set the financial community on edge and several executives have criticized the administration's anti-Wall Street rhetoric, its stress-tests to monitor banks' health, and restrictions imposed by Congress.
"A recovery based on a public-private partnership will depend, to a large extent, on the business community believing that they are in a partnership rather than enthralled to politicians and a punishing public that wants to extract the last ounce of blood," former U.S. Securities and Exchange Commission Chairman Arthur Levitt, now a senior adviser to the Carlyle Group based in Washington, told Bloomberg News.
During a speech in Minneapolis U.S. Bancorp's Davis said last month TARP is a "lousy program," and Wells Fargo Chairman Richard Kovachevich called the stress-test policy "asinine."
JPMorgan's Dimon was one of the more vocal critics of the rhetoric.
"When I hear the constant vilification of corporate America, I personally don't understand it," Dimon said in a speech earlier this month. "It's just hurting our country at this point."
But after some officials said Obama's meeting shows the administration is prepared to listen to bankers' problems and move towards the future with open lines of communication.
Today's meeting signals that "the policymakers are listening and trying to deal with this in a positive constructive manner and moving past all the blaming and finger pointing and demonizing." Bert Ely, chief executive officer of Ely & Co., a financial institution and monetary policy consultant in Alexandria, Virginia, told Bloomberg.
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