Community bankers get Obama’s soft touch at meeting in D.C.

Obama had implored those bankers to help keep the fragile recovery from faltering by increasing lending to small businesses.

WASHINGTON (AP) — Sounding a friendly tone to the nation’s community bankers, President Barack Obama on Tuesday said the White House will seek to cut bureaucratic restrictions so that local lenders can help businesses seize “enormous opportunities” for growth after bleak times.

“We feel very optimistic that the worst is behind us,” the president declared after meeting with heads of a dozen small and community banks.

The event, among the final acts of business for Obama before he leaves for a Christmas vacation in Hawaii, follows a similar meeting the president held at the White House with some of the nation’s top bankers. But the tone was different this time.

Obama had implored those bankers to help keep the fragile recovery from faltering by increasing lending to small businesses and supporting a rewrite of financial regulations. With the smaller lenders, he rallied behind them.

Obama said his administration does not have direct influence over independent regulators but would still seek to spotlight cases in which restrictions may have become too tight on community banks, causing the pendulum to swing too far in the direction of not lending.

“There remains enormous opportunities as we come out of this recession for businesses to start growing again and to start hiring again,” Obama said. He pledged that the White House would keep working in the months ahead to spur the lending needed to help businesses hire.

Unemployment remains in the double digits as the year nears its end, dragging down the mood of the country and the poll numbers of Obama with it.

Obama made a point to say the community lenders are largely not responsible for the risky behavior that helped imperil the U.S. financial system.

There are about 8,000 small and community banks with assets of less than $5 billion, most of them with assets of no more than $1 billion. They are important to the Obama administration because they make more than 50 percent of small business loans under $100,000.

Obama’s relationship with smaller bankers is friendly. They have generally backed the administration’s financial regulatory package and have received kinder treatment in the House version of the legislation. For example, banks with assets of less than $10 billion will not have to undergo a separate bank examination by a proposed consumer protection agency. Large banks would have to submit to such a review.

As a result, a rift has developed between large financial institutions and community bank organizations. The American Bankers Association last week sent an e-mail to its members lamenting the position the Independent Community Bankers Association had taken by not fighting against the House financial regulation bill.