White House Lashes Out at Bankers

By ELIZABETH WILLIAMSON and DAMIAN PALETTA
WASHINGTON—President Barack Obama and his economic team lashed out at Wall Street, with the president calling bankers "fat cats" who "don't get it," in a move that could escalate tensions with the nation's biggest bankers ahead of a meeting with industry representatives.
Mr. Obama, speaking on the eve of Monday's meeting with the heads of top banks at the White House, said he would try to persuade bankers to free up more credit to businesses, with the aim of helping boost job growth. But the president also expressed frustration with banks that the government has assisted.
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Mr. Obama said in an interview to be broadcast on CBS's "60 Minutes" program Sunday evening, according to excerpts made available ahead of the program.
Relations between the banking industry and the White House began frosty and have deteriorated in recent weeks, with large banks lobbying against legislation that would toughen financial-market regulations and administration officials frustrated by some banks' continued payment of high bonuses and their reluctance to lend.
Mr. Obama reiterated that frustration in the interview, noting that some banks have continued to award bonuses and restrict lending while many Americans struggle with unemployment. "Some people on Wall Street still don't get it," he said.
The national unemployment rate was 10% in November.
White House economic adviser Larry Summers also voiced aggravation with Wall Street on Sunday. "Here is what I think they don't get…It was their irresponsible risk-taking in many cases that brought the economy to collapse," Mr. Summers, who chairs the National Economic Council, said on CNN's "State of the Union."
"And they don't get in some cases that they wouldn't be where they are today, and they certainly would not be paying the bonuses they are paying today, if their government hadn't taken extraordinary actions."
Mr. Summers criticized big banks for opposing a bill in Congress that would tighten regulatory controls over the financial industry. Banks and their lobbyists have said that the measure -- a version of which was passed by the House on Friday -- would duplicate existing rules in some cases, were overly broad in others, and would be costly to enforce.
"For them to be complaining about serious regulation directed at making sure this never happens again is wrong. For $300 million to be spent on lobbyists trying to gut serious efforts at financial reform is not how this country should be operating," Mr. Summers said. "For firms that have benefited from taxpayer support to be complaining about the government burdening them is, frankly, a bit rich."
Council of Economic Advisers Chairman Christina Romer said Americans were "still paying the price for what went on on Wall Street."
"We know that some of the practices that happened on Wall
Street did set us up for what was a very severe financial crisis," she told NBC's "Meet the Press" on Sunday.
Large banks, from J.P. Morgan Chase & Co. to Citigroup Inc., have lobbied against parts of the White House's proposed changes to financial- market rules, angering White House officials. The banks have argued that the bill would penalize them for being large, through tougher capital requirements and higher fees, and would give the government greater authority to either seize large companies or order them to decrease their size.
Meanwhile, many small businesses are complaining that they cannot get access to credit, and many government officials believe that banks' reluctance to lend is preventing the economy from rebounding more quickly. But the White House could be criticized for meddling too much in the private business of banks if they were to direct lenders to make specific loans, particularly at a time when regulators are requiring banks to write off certain delinquent loans.
These issues could come to a head on Monday morning, when Mr. Obama is scheduled to meet with some of the country's top bankers, including Goldman Sachs Group Inc.'s Lloyd Blankfein, JPMorgan Chase's Jamie Dimon, and Bank of America Corp.'s Ken Lewis. The meeting was expected to be cordial, but recent rhetoric out of the White House suggests that the administration could take a tough stance.
-From wall street journal