"The way I see it, having recovered with the help of the American government and the American taxpayers, our banks now have a greater obligation to the goal of a wider recovery, a more stable system, and more broadly shared prosperity," he said.
Following a White House meeting with the heads of the nation's top financial firms, the president said he urged banks to increase lending to small businesses. He said business owners and entrepreneurs have complained that they are unable to get loans even as banks complain they face a shortage of creditworthy individuals and businesses.
"Now, no one wants banks making the kinds of risky loans that got us into this situation in the first place," said Mr. Obama. "And it's true that regulators are requiring them to hold more of their capital as a hedge against the kind of problems that we saw last year."
"But given the difficulty businesspeople are having as lending has declined, and given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again," he said.
He also argued banks shouldn't stand in the way of financial regulatory reform, which he said the financial industry has "lobbied vigorously" against. He said he made it clear in the meeting that "it is both in the country's interest -- and ultimately, in the financial industry's interest -- to have updated rules of the road to prevent abuse and excess."
"Short-term gains are of little value to our banks if they lead to long-term chaos in the economy," said the president.
"I have no intention of letting their lobbyists thwart reforms necessary to protect the American people," he added. "If they wish to fight common-sense consumer protections, that's a fight I'm more than willing to have."
Although the bailout of the banks is credited with avoiding a financial collapse, it has also prompted anger among many Americans that the government has been helping wealthy bankers while ignoring the plight of ordinary people at a time of rising unemployment. This could be an issue that would hurt Obama's Democrats in next November's elections.
Bankers maintain that lending is limited by factors beyond their control: The sluggish economy and tighter oversight by regulators. The slow economy has businesses reluctant to expand - and makes banks more grim about their prospects. Loan applications are down.
Meanwhile, regulators are telling banks to be more skeptical about potential borrowers. They are forcing banks to keep larger cushions of capital to protect against future losses. That means there's less money available to lend.
The House passed legislation Friday that would restructure financial regulations, and the Senate is considering its own version of the legislation.
The meeting with the bankers, which lasted more than an hour, comes just one day after an interview aired on "60 Minutes" in which the president railed against Wall Street "fat cats."
The comments marked a rhetorical volley by a White House that has seemed to grow increasingly frustrated with Wall Street leaders who the president says have not shown "a lot of shame" about their behavior and outsized compensation despite the bank bailouts and economic downturn.
Bankers brushed off Obama's harsh rhetoric.
US Bancorp chief Richard Davis denied that there was any rancor after Obama's "fat cats" comment.
"It was an opportunity for the president to make clear how important some of these issues are," he told reporters in the White House driveway. "We haven't done as good a job as we can in the future to align the interests of our constituents with those of the American public."
Davis added: "I think we agree there are better ways to do that, and he gave us some very good ideas about how to do better communicating that."
At the meeting, Bank of America chief executive Kenneth Lewis pledged to Mr. Obama that his bank would lend $5 billion more to small-and mid-sized businesses in 2010 than it did in 2009. The bank said the move is part of the its broader effort to support an economic recovery.
JPMorgan said last month that it would boost such lending by $4 billion.
Obama's stern talking-to came hours after Citigroup Inc. said that it is repaying $20 billion in bailout money it received from the Treasury Department, in an effort to reduce government influence over the banking giant. The government will also sell its stake in the company.
The New York-based bank was among the hardest hit by the credit crisis and rising loan defaults and got one of the largest bailouts of any banks during the financial crisis. The government gave it $45 billion in loans and agreed to protect losses on nearly $300 billion in risky investments. Wells Fargo & Co. remains the last national bank that has yet to pay back its bailout money.
The bailout repayment news kept Citigroup chief Vikram Pandit from attending Monday's meeting, Citi spokeswoman Molly Millerwise Meiners said. She said chairman Richard Parsons planned to attend but bad weather kept him from reaching Washington in time.
The White House said Parsons and two other executives listened to the meeting by telephone because of a heavy fog over Washington. The two others were Goldman Sachs chairman and chief executive Lloyd Blankfein and Morgan Stanley chairman and chief executive John Mack.
In the daily press briefing following the meeting, White House Press Secretary Robert Gibbs was grilled about what leverage the president has in getting banks who paid back their TARP money to offer more loans to small business.
"The president believes the meeting was positive and constructive," Gibbs said. "The important thing is not what somebody says in a meeting but actions. The president will evaluation their actions going forward."
Without any obligation or restrictions after paying off the U.S. government and taxpayers, the once chastened banks can revert to old ways. Mr. Obama's influence is confined to the bully pulpit, which Gibbs said can be powerful force, and the specter of financial regulation.
"We will ensure that credit worthy businesses, small and medium, are getting access to capital....and see our economy through this dark night and longer economic recovery," he said.
CBS News White House correspondent Mark Knoller pressed Gibbs on whether Mr. Obama now feels that the bank execs now "get it," having said on "60 Minutes" that they do not.
Gibbs repeated that the meeting was positive. He stopped short of saying Mr. Obama now feels the CEOs "get it."