Chief executives of the nation's biggest financial institutions
emerged from a meeting with U.S. President Barack Obama Friday
pledging to cooperate with the White House's effort to steer the
economy out of its mess.
Executives said the tone of the more-than-90-minute session was
open and cordial, with both sides looking to move beyond recent
divisive rhetoric.
"We're just in this together. There's still some hard work to
do, but [it was] a pleasant meeting," said Bank of America Corp.
(BAC) CEO Ken Lewis.
White House spokesman Robert Gibbs called the get-together a
"good, productive and frank conversation."
One participant said the meeting was free of drama. Obama
acknowledged that the past few weeks have been rough for banks, but
made clear that the general public is angry over excessive
compensation. He asked the industry to help rein in the issue.
The CEOs agreed they had to make clear that they understood the
public's concern over taxpayer-funded bailouts, according Freddie
Mac (FRE) CEO John Koskinen. The executives, however, said
government programs need firm rules that don't change with the
political winds.
"Whatever the rules are going to be, we need to know them sooner
rather than later because we are prepared to play by the new
requirements but we need to know what they're going to be," he
said.
The bankers said they support the proposal unveiled this week by
Treasury Secretary Timothy Geithner to cleanse their balance sheets
of toxic assets, though they are waiting for more specifics of the
plan.
"We don't know all the details...but we think it's a really
encouraging first step to get the plan out there," said Robert
Kelly, CEO of Bank of New York Mellon Corp. (BK). "We need to hear
the details. I think there's going to be a lot of interest in
it."
Richard Davis, CEO of U.S. Bancorp (USB), said a proposal to tax
bonuses paid to employees of companies that accept government aid
wasn't discussed at the meeting, despite widespread public outrage
- and administration rhetoric - over the bonuses doled out to
executives at American International Group Inc. (AIG).
"We understand there have been some optics that have been very
negative. We apologize for that because it's not something that
this industry supports or wants," Davis said.
Gibbs said the session touched on the toxic-asset plan,
executive-compensation issues, and a revamp of the U.S. regulatory
system. He said Obama was "very pleased" with the meeting and hopes
to keep the lines of communications open with Wall Street.
"He had no agenda beyond working to get a solution, the right
solution for our financial system, and to get it stabilized and
working again for the American people," Gibbs said.
Yet the furor over AIG's bonuses has sparked concerns that
banks, worried about government interference in their compensation
schemes, may stop participating in the Troubled Asset Relief
Program, or TARP, and other government programs. The White House is
eager to keep financial institutions involved, but is sensitive to
anti-Wall Street sentiment.
The president appealed to the bankers' patriotism, urging them
to help the country by boosting lending and helping people get into
more affordable mortgages, the executives said. There was little
talk of the details of the federal rescue funds received by the
industry and whether some banks would seek to return the funds
early, they said.
Asked whether the large financial-services companies owed the
public an apology for their role in creating the financial mess,
Lewis said, "I think there are very few financial institutions who
would not say we've made mistakes and that we feel awful bad about
the mistakes we have made."
However, he argued it was time to stop dwelling on the errors
and work to fix the economy: "At some point you have to stop
focusing on the past, and focus on the present." Lewis disputed
that he favored reinstating a law that separated commercial-banking
operations from that of investment-banking work. He had made
remarks coming into the meeting to a reporter that he said were
misconstrued. "I think a bank that brings all things to bear is the
right way to go," he said.
The thrust of the president's message to the bank executives,
Koskinen said, was that the government and the financial industry
needed to work together to steer the economy to recovery.
"No one in that room gave any indication at all that they were
anything other than enthusiastic about supporting the president and
this program," Koskinen said.
Bank of America's Lewis, when asked if his company planned to
return government funds it received under TARP, said it was
premature to make that decision because banks are still undergoing
government-administered stress tests.
JPMorgan Chase & Co. (JPM) CEO Jamie Dimon told CNBC that
his bank doesn't have a timetable for returning funds it took under
TARP.
One participant said Obama conceded that paying the government
back could be a positive event, but said it shouldn't get in the
way of lending. The president neither encouraged nor discouraged
returning government funds, the person said.
The meeting included JP Morgan's Jamie Dimon, Bank of America's
Lewis, American Express Corp. (AXP) CEO Ken Chenault, Freddie Mac's
Koskinen, State Street Corp. (STT) CEO Ronald Logue, BONY-Mellon's
Kelly, Northern Trust Corp. (NTRS) CEO Rick Waddell, PNC Financial
Services Group Inc. (PNC) CEO James Rohr, Goldman Sachs Group Inc.
(GS) CEO Lloyd Blankfein, Morgan Stanley (MS) CEO John Mack,
Citigroup Inc. (C) CEO Vikram Pandit, Wells Fargo & Co. (WFC)
CEO John Stumpf, and U.S. Bancorp's Davis.
Cam Fine of the Independent Community Bankers, Michael Paese of
the Securities Industry and Financial Markets Association, and
Edward Yingling of the American Bankers Association also attended
the session.
-By Henry J. Pulizzi and Jessica Holzer, Dow Jones Newswires;
202-862-9256; henry.pulizzi@dowjones.com