Wall Street promises to work with Washington

The chief executives of the biggest US banks emerged beaming from a meeting with President Barack Obama yesterday, believing that Washington's political class is turning down the rhetoric against the industry.

At a meeting that lasted more than an hour, the President warned Wall Street's most powerful men that the American public wanted to see an end to excessive pay for bankers, but he stopped short of giving them the carpeting that many had feared as they headed from New York to the capital.

Instead, the meeting turned to practical matters such as how best to reinvigorate bank lending to consumers and businesses, the operation of the US Treasury's new public-private partnership to buy toxic loans, and the new regulatory framework being proposed for the industry.

The chief executives variously called the meeting "fabulous", "co-operative" and "pleasant", and Bob Kelly of Bank of New York Mellon declared that "the President is a terrific listener".

The meeting came a week after the crescendo in public and political anger over $165m (£115m) in bonuses paid to employees at the collapsed insurance firm AIG, which is now majority-owned by the US government. Mr Obama had called those bonuses an outrage, and repeated his theme that large bonuses for bankers are shameful while many firms are operating using taxpayer money.

After the White House talks, Ken Lewis, the chief executive of Bank of America, said he believed that punitive tax proposals on Capitol Hill, which would have confiscated almost all of the largest employee bonuses on Wall Street, would not now make it into law. "Cooler heads will prevail," he said. "The answers that we got before will not be the final answers."

And Mr Lewis expressed optimism that the poisonous atmosphere could give way to a more constructive one. "It was like we are all in this together."

Jamie Dimon, the chief executive of JPMorgan Chase, said that the industry was doing "a big mea culpa". He said: "The President thinks that we should be cognisant of the needs, desires and anger around the country on compensation. We know mistakes were made and compensation went too far, and it has been reined in."