Banks have been lending to the wrong borrower for decades. Since 1980s loans to the businesses have contracted, and loans to the consumer has expanded. Business loans are used to create value. They contribute more to the real economy. The likelyhood that they will be paid back is higher. But consumer loans do not provide value. Consumers consume. They do not produce. Today, banks are 98% invested in consumer loans. The collateral for consumer loans depreciate in time. They do not create value. This is the cause of bank troubles today. 50 years ago banks would be invested in pristine US government bonds. If that was the case now, a housing market crash would not effect the banks much. Alas, it is too late.

There is not much Obama or anybody can do. Economic Depression is coming. Social mood directs the markets, economy, politics and the culture. When pessimism as seen in these forums takes hold, markets decline first, and the economy suffers later.

http://www.tradingstocks.net/html/socionomics.html

There is not much a president can do to fix the economy. They can only try to talk it up to improve social mood. But the coming decline is a major one only seen once in 400 years or so. Thus spin efforts won't work this time. They always find a reason to explain why stocks go down or go up. News does not drive the stock market:

http://www.tradingstocks.net/html/news_does_not_move_stocks.html

Everyday there are good news and there are bad news. Media chooses the headline based on how the stock market reacts. Earnings do not rive the stocks. Good earnings appear at the top. Earnings is not a good technical indicator. Earnings decline AFTER the market declines:

http://www.tradingstocks.net/html/earnings_does_not_drive_stocks.html

Social mood drives the markets. A bull market is the result of optimistic social mood. A bear market comes when the social mood declines. Our economic problems are not about what we are doing today. It is about what we have already done. Economy is not a machine that you can oil and grease and fine tune to run at a certain pace. Due to earlier optimism, entire population has already borrowed all they can for decades. Money supply was inflated with borrowed money. Prices and salaries were inflated with borrowed money. What we borrowed is our money supply. Banks create money when we borrow:

http://www.tradingstocks.net/html/banks_create_money.html

And this money supply which is the principal, needs to be paid back with interest! I think it is obvious to the alert reader that it is an impossible proposition if borrowing does not expand exponentially. Money supply is credit, and credit can deflate. Crash is coming, and great depression will look pale compared to what we are facing. The time to fix it was decades ago. It is too late now. Obama will be blamed for it as every president was blamed for his bear market term.

Now, about making the banks lend to the business again... It is hard for the FED to turn the boat around because banks see this as what it is: A deflationary crash! FED does not control the stock market:

http://www.kondratieffwavecycle.com/economy/the-federal-reserve-does-not-control-the-market/

1. FED makes credit available with low rates

2. Banks are afraid, they do not want to lend because they don't think they will get their money back.

3. Borrowers are afraid, they do not want to borrow because they don't think they can pay it back.

So, what is the problem? Let them not lend, not borrow, no? NO. Because when we borrow, banks create money out of thin air and this money inflates the money supply. Without borrowing, deflationary crash happens.