Washington , 15th December 2009 : President Barack Obama told executives from some of the nation’s largest bank yesterday they have a duty to take “extraordinary” steps to boost lending and help the U.S. economy after getting a taxpayer bailout.

Financial institutions were rescued from a crisis “largely of their own making,” he said, and now must help homeowners and small businesses.

“America’s banks received extraordinary assistance from American taxpayers,” Obama said in remarks after the White House session. “Now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild the economy.”

Obama has expressed frustration with the banking industry for fighting his effort to overhaul financial regulations and paying out bonuses as the country struggles to emerge from the worst recession since the 1930s. He’s trying to revive employment growth after U.S. lost about 7.2 million jobs since the recession began in December 2007. The unemployment rate was 10 percent in November, down from a 26-year high of 10.2 percent the month before.

The administration argues that one of the keys to unlocking job growth is opening up credit to small businesses. The president today will discuss how $8 billion in spending on making homes more energy efficient can spur hiring.

Attendees at yesterday’s meeting, who included the CEOs of U.S. Bancorp, Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. vowed afterwards to step up their lending activities.

‘Aggressive Goals’

“Every bank in that room talked about adding many, many small business originators, and setting very aggressive goals for small-business lending next year,” said Richard Davis, the chief executive officer of Minneapolis-based U.S. Bancorp.

Davis said the banks recognize they are “under a microscope.”

Charlotte, North Carolina-based Bank of America, the largest U.S. bank by assets and deposits, issued a statement after the meeting pledging to increase small business lending at least $5 billion in 2010 from anticipated 2009 levels.

Wells Fargo plans to increase lending in 2010 as much as 25 percent, to more than $16 billion, for firms with $20 million or less in annual revenue, according to a statement by Sarah E. Toffoli, vice president and communications manager.

While White House press secretary Robert Gibbs said all the bankers agreed to take “second looks” at loans that had been denied, some executives cautioned that they still needed to act judiciously.

No Benchmarks

Obama didn’t give the executives any specific benchmarks for lending, he said.

The president plans to meet with a group of community bankers on Dec. 22, before leaving to spend the holidays in Hawaii.

Obama said he doesn’t expect or want banks to resume making risky loans, and that he understood they must increase their capital as a financial cushion.

“But given the difficulty businesspeople are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again,” Obama said.

Regulatory Overhaul

In addition to freeing up more credit to small businesses, Obama is trying to blunt opposition to his plan to revamp financial market regulations, including creation of a Consumer Financial Protection Agency to enforce rules intended to prevent abuses in credit-card and mortgage lending. Obama’s other topics were executive compensation and the housing market.

While the meeting was mostly cordial, Obama said he told the executives he will battle for the financial regulatory overhaul.

“I made very clear that I have no intention of letting their lobbyists thwart reform necessary to protect the American people,” he said. “If they wish to fight common-sense consumer protections, that’s a fight I’m more than willing to have.”

The U.S. House voted Dec. 11 to approve legislation sought by the president to tighten rules for derivatives, expand oversight of hedge funds and create new authority to break apart financial firms that threaten the economy. Action now moves to the Senate.

“Around the table, all the financial-industry executives said they supported financial regulatory reform,” Obama said. “There’s a big gap between what I’m hearing here in the White House and the activities” of industry lobbyists.

“I urged them to close that gap,” Obama said.