President Barack Obama signaled that he would toughen restrictions on and oversight of banks as part of a fresh plan to aid the battered industry.
Obama blasted the banks yesterday over reports that they’ve spent money renovating offices after receiving billions of dollars from the government and vowed they would be held accountable for any aid they receive in the future.
The tough talk seemed designed to build support for a rescue plan that aides say Obama will roll out soon by reassuring lawmakers and voters that the administration will keep close tabs on money it hands out. Pressure for a plan is building after the Standard & Poor’s 500 Index fell for the third straight week, in part because of concerns about the health of the banks.
“They’re going to have to take some early action,” said Michael Bleier, a partner at law firm Reed Smith in Pittsburgh and a former Federal Reserve lawyer. “Banks and the financial services industry have to have balance sheets that are strong.”
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The administration’s economic team, which will meet with Obama today, has been working on a program to bolster the banks and get them lending again. People familiar with their thinking have said the plan is likely to include fresh capital injections into the banks and steps to clear bad assets off bank balance sheets.
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Lawrence Summers, who, as director of the White House’s National Economic Council, is playing a key role in putting together the bank-rescue package, canceled plans to attend the World Economic Forum next week in Davos, Switzerland. So too did Sheila Bair, chairman of the Federal Deposit Insurance Corp., whose agency guarantees bank depositors against loss.