Obama Sits Down With the Masters of the Universe

Thursday morning, Barack Obama met with Jamie Dimon, Lloyd Blankfein, Brian Moynihan, and other members of the country's largest financial institutions. Let me pause for a minute to let you digest the sheer number of pinstripes and massive egos that strolled into the White House.

While the full details from the meeting between the President and financial leaders weren't released to the public, it is encouraging to see there is at least some communication present on Capitol Hill. According to the White House, the group discussed housing, education policy, and clean energy financing. Although not explicitly stated, the bankers probably shared their thoughts on the new regulation, such as the Volcker Rule. Of these topics, bank leaders were surely heavily interested in the housing sector.

After drastic deterioration in the housing sector pushed the country into a deep recession, banks and policymakers both received most of the blame. However, looking ahead, a productive relationship between the largest money centers and housing policy makers is absolutely vital to a continued housing and broader economic recovery. The discussion comes at an interesting time, as the nation's two largest mortgage lenders, Wells Fargo (NYSE: WFC  ) and JPMorgan Chase (NYSE: JPM  ) are set to release earnings on Friday morning.

The two banking behemoths controlled roughly 40% of the mortgage origination market in 2012, and both experienced huge year-over-year revenue increases, as customers' refinancing accounted for roughly three out of four mortgages. The high refinancing volume was predominantly driven by customers with equity in their homes who jumped at the chance to lock in record low interest rates.

However, the refinancing market is expected to slow, and volume is likely to decline. Enter a necessary productive housing policy. As the refinancing volume becomes a smaller piece of the pie, policymakers and lenders are going to need to be increasingly more in sync. While no one wants to a return to an era of shoddy lending, there is certainly a middle ground that allows banks to support the sector and housing policy while maintaining credit standards.

With the election out of the way, Obama and these leaders may actually be able to make some positive contributions.

With so much of the financial industry getting bad press these days, it may be a "greedy when others are fearful" moment. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report, The Stocks Only the Smartest Investors Are Buying, you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad, because it has better operating metrics than his favorites. Just click here to keep reading.


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  • Report this Comment On April 12, 2013, at 8:27 AM, Kenny80 wrote:

    A community organizer as president with CEO's of major companies. Kind of embarrassing.

  • Report this Comment On April 12, 2013, at 8:41 AM, dephcon5 wrote:

    LOL, the accomplished with a history of success sit with the president to explain how its done. Again.

  • Report this Comment On April 12, 2013, at 10:03 AM, bigalnc wrote:

    There's a parallel between Obama's meeting with bankers and Kerry's comments on North Korea:

    1) The administration's communication to the two diverse groups had the same amount of success - nil!

    2) The bankers in the room are realistically MORE dangerous to the American people than anything from NK.

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