Obama Seeks JPMorgan, Goldman, Citigroup Support on Bank Plan

Obama Seeks JPMorgan, Goldman, Citigroup Support on Bank Plan

March 27 (Bloomberg) -- President Barack Obama will seek support today from executives of the nation’s largest banks for his plan to stabilize the financial system and try to get beyond the furor over bailouts and bonuses.

The White House meeting at noon Washington time is scheduled to include chief executive officers Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co. and Lloyd Blankfein of Goldman Sachs Group Inc., all headquartered in New York. They are among as many as 15 banking executives expected to attend.

Lawrence Summers, Obama’s top economic adviser, said the meeting was a measure of the ties between the government and banking industry at a time of economic crisis.

“This is about our duty to do everything we can to support a robust and sustained economic expansion and the reality that the country’s major financial institutions have a major role to play,” Summers said.

White House advisers said the meeting will focus on stabilizing financial markets, boosting lending to businesses and consumers, reducing foreclosures and imposing regulatory overhaul rather than specific issues at individual institutions.

With the U.S. economic recovery tethered to the health of the financial industry, Obama has proposed a public-private partnership to soak up the banks’ toxic assets and help unlock credit, as well as new regulations on banks, hedge funds, private-equity firms and derivatives markets.

“It’s terribly important that an environment of consensus replace the polarization of recent weeks,” said former U.S. Securities and Exchange Commission Chairman Arthur Levitt, now a senior adviser to The Carlyle Group based in Washington and a board member of Bloomberg LP, the parent of Bloomberg News. “It’s essential to the business community that they be very much part of this process.”

Continuing Engagement

The gathering is the latest in a continuing engagement with the business community, advisers said. Obama has held meetings with Dimon and Kenneth Chenault, the CEO of New York- based American Express Co., as well as Redmond, Washington- based Microsoft Corp. Chairman Bill Gates, over the last couple of months, they said.

Industry representatives said they will underscore the connection between the success of the financial-services industry and the broader economic recovery.

“For the economy to recover, for the stimulus to work, Main Street and Wall Street have to work hand in hand,” said Rob Nichols, a former Treasury official and now president of the Financial Services Forum in Washington.

‘Pick Their Brains’

After weeks in which the White House was often sharply critical of excesses at financial companies, the president wants to adopt a more collaborative approach.

“We’re reliant upon them to help rebuild our economy,” said senior adviser Valerie Jarrett. “It would be very unnatural if we didn’t engage them and have a direct opportunity to pick their brains and look to the future.”

Along with Obama, Treasury Secretary Timothy Geithner and Jarrett and Summers will meet with the chief executive officers, also including Kenneth Lewis of Charlotte, North Carolina-based Bank of America Corp., John Mack of New York- based Morgan Stanley, John Stumpf of San Francisco-based Wells Fargo & Co., Ronald Logue of Boston-based State Street Corp. and Robert Kelly of New York-based Bank of New York Mellon Corp.

Other participants are scheduled to include American Express’s Chenault, Herbert Allison, president and CEO of Washington-based Fannie Mae; Frederick Waddell, CEO of Chicago- based Northern Trust Corp., James Rohr, CEO of Pittsburgh-based PNC Financial Services Group, and Richard Davis, CEO of Minneapolis-based US Bancorp.

‘Lots of Details’

“There are just lots of details, that’s one of the things I know that is very much on the minds of some of these folks, they need to know more,” said Bert Ely chief executive officer of Ely & Co., a financial institution and monetary policy consultant in Alexandria, Virginia. They can then “provide input into how these issues are addressed legislatively.”

The administration’s plan 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 plan would remove banks’ distressed assets from the lenders’ balance sheets though a public-private investment program, with Treasury providing $75 billion to $100 billion to finance investors’ purchases of devalued loans and securities.

“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,” Levitt said.

Meeting With Geithner

A number of the CEOs met with Geithner last night at a dinner sponsored by the Financial Services Roundtable.

Popular anger erupted this month after the Treasury said it couldn’t stop $165 million in bonuses to American International Group Inc. employees, after the New York-based insurer received $182.5 billion in taxpayer bailout funds.

Administration officials downplayed the need to strengthen ties that may have been frayed over the fallout from AIG.

Several executives have criticized the administration’s anti-Wall Street rhetoric, its stress-tests to monitor banks’ health and restrictions imposed by the Troubled Asset Relief Program affecting lending, foreclosures, pay and perks.

Capital Injection

The U.S. Treasury in October injected more than $120 billion from the TARP program into nine of the biggest U.S. banks. More than 500 banks, insurers and credit-card companies applied for capital, and the government has distributed almost $300 billion. Lenders including Bank of America, U.S. Bancorp and New York-based Goldman Sachs have said they want to give back the TARP money.

Dimon of New York-based JPMorgan this month called on government officials to stop demonizing Wall Street, saying “it’s just hurting our country at this point.”

“When I hear the constant vilification of corporate America, I personally don’t understand it,” Dimon said in a speech earlier this month hosted by the U.S. Chamber of Commerce in Washington.

US Bancorp’s Davis called TARP a “lousy program” last month during a speech in Minneapolis, and Wells Fargo Chairman Richard Kovachevich said the stress-test policy is “asinine.”

“The atmospherics have to improve,” said Ely. Today’s meeting signals that “the policy makers are listening and trying to deal with this in a positive constructive manner and moving past all the blaming and finger pointing and demonizing.”

BLOOMBERG