Obama May Discuss 'Obligations' with Banks
President Barack Obama is set to meet with a dozen bank leaders Friday, according to various reports. Sources told the Wall Street Journal that executives from Goldman Sachs Group Inc. (GS), JP Morgan Chase & Co. (JPM) and Citigroup Inc. (C) are among those that have been invited to the discussion. As a MarketWatch bulletin reports, the meeting will cover Obama's plans to "put the sector on a sounder footing." The White House had not yet confirmed the meeting by the time this story was published, but anonymous sources close to the issue had spoken with multiple media outlets as to the itinerary of the discussion. "President Obama will...reiterate his belief that getting the economy back on track will require and understanding that each of us must look beyond our own short-term interests to the wider set of obligations we have to each other in order for America to succeed," sources told msnbc.com on Tuesday. A Chase spokesperson confirmed to HousingWire the invitation to speak with Obama Friday had been received by the bank, although details on whether bank leaders would attend or what would be discussed were not yet available. HW's sources close to the issue have confirmed Goldman's Lloyd Blankfein and Citigroup's Vikram Pandit are among the leaders invited to speak with the President, although no details could be given regarding the agenda of the discussion. Citigroup and Goldman spokespeople did not return calls seeking official comment before this story was published. A history of weak confidence The Treasury Department released details Monday morning before market open of the latest approach to clear toxic loans and securities off of bank’s balance sheets. Saying that “the financial system is still working against economic recovery,” the Treasury said it will earmark up to $100 billion in funds from the Troubled Asset Relief Program, hoping to attract capital from private investors in order to generate $500 billion in purchasing power to buy legacy assets. The announcement sparked some comeback in investor confidence as stocks closed higher Monday. But the rosiness of secretary Tim Geithner's new plan continues to be overshadowed by severe public and media criticism over the Treasury and Federal Reserve's failure to block the payment of some $165 million in bonuses to top employees of AIG Financial Products, the division largely blamed for the parent insurer's failure. The wave of blame and general search for a pariah in the face of weak financial institutions that have received TARP funds -- along with new restrictions on executive compensation at these firms -- has led many such institutions to express their intent to repay Treasury funds as soon as possible. Enforcing the idea that TARP money has become a stigma, banks and financial institutions across the country have publicly said they will not seek government funds. The fear of nationalization -- or at least partial nationalization -- of the U.S. banking system was only heightened recently when the Treasury announced it would exchange common stock for the preferred securities of Citigroup obtained by the Treasury through the Capital Purchase Program. Investor and consumer fears linger over the ability of major banks to continue without major government aid. (Complete the monthly Sounding Board survey and let us know whether you think your money is safe at these banks.) Write to Diana Golobay at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.