OBAMA FOR USA

President Barack Obama will have a “serious talk” with executives from 12 major banks to press for expanded lending when he meets with them tomorrow, White House economic adviser Larry Summers said today.

“We were there for them and the banks need to do everything they can to be sure they’re there for customers across this country,” Summers said in an interview on ABC’s “This Week” program.

Administration officials want to see an expansion of credit to companies as a way to stimulate job creation in an economy burdened with 10 percent unemployment. Summers said that he expects employers to start adding jobs early in 2010.

“I believe, as do most professional forecasters, that by spring, employment growth will start to be turning positive,” Summers said.

The unemployment rate in November dropped to 10 percent from a 26-year high of 10.2 percent the previous month. Employers reported eliminating a net 11,000 jobs in November, moving the labor market closer to stability after a year in which monthly job losses have at times exceeded 700,000.

Expanded credit will help sustain recovery, Summers said. At tomorrow’s meeting, Summers said, Obama will ask bankers to “support enhanced lending” to bolster the economy in return for the support the financial industry received in the $700 billion bank bailout.

‘Extraordinary Support’

“No major bank would be intact in a position to pay bonuses if that extraordinary support had not been provided,” Summers said. “The bankers need to realize that, they need to recognize that they’ve got obligations to the country after all that’s been done for them and there’s a lot more they can do.”

Obama is to meet with executives representing banks including Citigroup Inc., Goldman Sachs Group Inc. and JP Morgan Chase & Co., White House officials said late last week. Also represented will be Bank of America Corp., Wells Fargo & Co., Capital One Financial Corp. and American Express Co.

“Absolutely we know that some of the practices that happened on Wall Street did set us up for what was a very severe financial crisis, and we are all still paying the price,” the head of Obama’s Council of Economic Advisers, Christina Romer, said on NBC’s “Meet the Press” program.

Small-Business Lending

A White House official said Dec. 11 that Obama would focus in the meeting on efforts to boost small business lending and on the financial regulatory overhaul proposal Congress is considering.

In an appearance on CNN, Summers said job creation is the administrationâ€™s top priority, followed by deficit reduction in the â€œmedium run.â€

Summers wouldn’t say whether Obama would get behind a possible bipartisan deficit-cutting commission to identify government spending reductions.

“The president is open to any approach that offers the prospect of controlling the budget deficit,” Summers said.

Senator Mark Warner, a Virginia Democrat and former governor, said on CNN he backs the commission idea.

“We need to start down a path that gets us to an up or down vote” on budget priorities, Warner said.

A group of Senate Democrats threatened to oppose a boost in the U.S. debt limit by up to $1.9 trillion unless lawmakers agree to create a special commission to address the government debt. That is opposed by fellow Democrats such as Finance Committee Chairman Max Baucus, a Montana Democrat whose panel handles tax and spending matters.

Baucus called the idea “truly dangerous” last week because “if we were to cede all of our responsibilities to this commission” without allowing its recommendations to be amended, “we would risk setting in motion some truly terrible policy.”

To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net .