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LI banking community mixed on Obama plan

President Barack Obama speaks during a meeting with

President Barack Obama speaks during a meeting with CEOs of several small and community banks on Dec. 22, 2009 at the White House in Washington, DC. Credit: Pool Photo

WASHINGTON -  President Barack Obama said Tuesday that his administration 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 from around the nation.

Long Island bankers welcomed the support and said the federal government could help them help the economy.

It was smart of Obama to identify larger banks as the ones that need more oversight and to spare smaller banks from further regulation, said Sangeeta Kishore, chief financial officer of Hanover Community Bank in Garden City Park.

"This was really a forward-looking move the president has taken," she said Tuesday.

Douglas Manditch, chairman and chief executive of Empire National Bank of Islandia, said the big banks -- the ones that are supposedly too big to fail -- should be broken up. Because they know they'll be bailed out, they continue to take unreasonable risks, he said.

Short of that, Manditch said the government ought to make it easier for smaller banks to make Small Business Administration loans, which could help small businesses hire and ease joblessness.

He dismissed Obama's meeting as more useful for publicity than for substance.

Obama said his administration does not have direct influence over independent regulators but would still seek to spotlight cases in which restrictions have become too tight on community banks, curtailing their 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.

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 examination by a proposed consumer protection agency.

The event followed 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.

With Newsday's Andrew Smith

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