Update: Don’t get your hopes up
I just watched the president’s press briefing about his meeting with the “fat cat bankers.” To say that it was uninspiring would be a significant understatement.
Here are my notes paraphrasing the president:
Regarding TARP: We are determined to recover every last dime for the American taxpayer (despite the fact that some of the money will never be recovered).
We expect banks to lend to small businesses. No one wants banks making risky loans that got us into this situation in the first place, but we expect them to explore every responsible way to get the economy moving again.
The banks told me they are looking at hiring more people and exploring second-look loan programs for lending to small business. But we want to see results. I urged these institutions to go back and take a 3rd and 4th look.
We also talked about regulation to prevent another financial crisis. The industry has lobbied against some of these reforms. I made it clear that the reforms are important.
Considering the taxpayer assistance of the past year, banks have a greater obligation to the larger economy. I urged them to work with Congress to finish the job of bringing accountability and transparency to the financial system.
I should note that the banks said they supported financial reform. But I’m seeing a discrepancy between what I heard here at the White House today and what I’m seeing in terms of industry lobbying against reform on Capitol Hill. The banks assured me they would make every effort to close that gap.
They’ve begun working on modifying loans, but they admit much more needs to be done.
I look forward to continuing this dialogue with the banks in the months and years to come.
I’ve started my own dialogue with the California lottery. I urged them to give me a winning ticket, and they said they are working on it. I made it clear that winning the lottery is important to me, and they said, we understand. They assured me they would do more.
Seriously, since most of the large banks are out from under TARP or close to it, what leverage does the president have, beyond urging? Sure, the government still owns stock in some of these banks, but that hardly equates to leverage. If the government encourages more lending, for example, what happens if that drives down share prices? Lose, lose.
Some of the executives didn’t even show up in person. Lloyd Blankfein of Goldman Sachs, John Mack of Morgan Stanley and Richard Parsons of Citigroup didn’t make the meeting because of commercial flight delays. They wound up on speaker phone instead. Think that excuse would fly with your boss?
By the way, Parsons was supposed to attend in the place of Citi CEO Vikram Pandit, who was busy trying to persuade his investors to help Citi pay back the TARP funds so the bank doesn’t have to deal with government pay intrusions.
Here’s the president’s exchange with Parsons at the beginning of the meeting. Draw your own conclusions:
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