White House seeks to spur bank lending

President Barack Obama said Tuesday the administration would look to boost bank lending by cutting regulatory "red tape."

Obama met with a dozen small- and community-bankers at the White House for his second meeting with bankers in two weeks. The meetings are aimed at finding ways to increase lending. Banks have decreased lending in the financial crisis, despite the $700 billion financial rescue program.

Community banks and some Democrats, including House Financial Services Committee Chairman Barney Frank (Mass.) and Rep. Walt Minnick (Idaho), have suggested that some bank examiners are being overly strict with their work and have contributed to the depressed lending environment.

Obama struck a similar tone in comments following the meeting.

"We are looking to see if there are possibilities to cut some of the red tape," Obama said. "We don't have direct influence over our independent regulators, but ... in some ways the pendulum may have swung too far in the direction of not lending after a decade in which it had gone way too far in the direction of getting money out the door no matter the risk."

Obama said several times that some of the riskiest practices were carried out by the nation's largest banks on Wall Street rather than small and community banks. Community banks have won several exemptions in financial overhaul legislation passed by the House, and they have worked to distinguish themselves from the larger banks.

The largest banks have repaid the government bailout money by raising capital in private markets. The vast majority of banks that continue to receive bailout funds are small or regional institutions.

Obama said the administration would consider additional steps to boost lending to small businesses.

"Everything that we're going to be doing here in the White House over the next several months is going to be geared towards catalyzing and spurring additional lending, particularly to small businesses," Obama said.

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