On Sunday night's 60 Minutes, President Obama punched up his ongoing rhetorical battle with Wall Street, declaring that "fat cat bankers" have shown little "shame" about their out-sized compensation packages. Today, investors will see if the leader of the free world backs up his words with deeds as Obama meets with top financial executives.
In the interview, Obama suggested that many banks are paying back their TARP money early solely to free themselves from government restrictions on pay. He used fairly strong language, in what appeared to be a nod to the populist outrage over Wall Street bailouts.
"Which I think tells me that the people on Wall Street still don't get it," Obama says. "They don't get it. They're still puzzled, why is it that people are mad at the banks?"
The meeting will be awkward. According to Politico.com, Obama is not going the fire-and-brimstone route with his reluctant audience but he will make it clear that the "banks that they have a special responsibility to help spur recovery because of the extraordinary bailout assistance they received last year." The last thing Wall Street wants is to be locked in a political street brawl with Obama which they would probably lose.
"He's going to have a serious talk with the bankers," National Economic Council director Larry Summers told George Stephanopoulos on ABC's "This Week."
Time to Listen
Bank executives -- at least the anonymous ones quoted by Politico -- sounded conciliatory, saying they wanted to develop a plan to help the economy that they both could support. One executive told the website, "Every CEO that's participating is ready to a) listen and b) step up."
Many of the executives expected to attend the meeting, including Goldman Sachs Group (GS) head Lloyd Blankfein, Bank of America's (BAC) departing CEO Kenneth Lewis, and JPMorgan (JPM) CEO Jamie Dimon, have sustained withering criticism over their banks' pay. They will probably spend most of their time listening.
As The Washington Post notes, politicians have many reasons to dislike bankers. For one thing, the amount of money on loan from banks fell by almost $600 billion, or 7.2%, from September 2008 to September 2009, while lending to businesses, excluding construction loans, fell 15% , the paper said.
On Friday, the House passed the most sweeping overhaul of financial regulations since the New Deal over the objections of Wall Street. The political horse-trading has already begun. A deal is in the works that would allow access to government bailout funds without pay restrictions provided that the money goes to small businesses, according to the Post.
Citigroup's (C) Vikram Pandit is trying mightily to extricate his floundering financial behemoth from under the government's thumb. The New York-based bank today reached a deal to pay back some of its $20 billion in TARP aid to the government. It remains unclear whether the least popular CEO on Wall Street will show up at the White House.
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