WASHINGTON (Reuters) - President Barack Obama told top US bankers yesterday they owed it to the country to help lift the economy out of crisis by lending more money to small businesses in need and embracing financial reforms.

"Given the difficulty that business people 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," Obama said.

After speaking at the White House to executives of a dozen major financial firms, Obama said that, having benefited from taxpayer bailouts, they owed "an extraordinary commitment" to help rebuild the economy.

He said that meant finding ways to help credit-worthy small to medium-sized businesses get the loans they need. Obama said he was receiving letters from small firms saying they could not get loans.

US business lending has plummeted since the financial crisis struck from a peak of $1.65 trillion in October 2008 to around $1.35 trillion earlier this month.

Having complained about "fat cat bankers" taking big bonuses, Obama said he also told the executives he had no intention of allowing lobbyists for the institutions to thwart legislation on financial reforms.

"If they are willing to fight common sense consumer protections, that's a fight I'm willing to have," a stern Obama told reporters after a meeting he described as candid.

The bankers appeared chastened afterwards, promising to expand credit for small businesses and insisting they supported regulatory reform.

"We realised we're under the microscope to show every step that we take, to do a better job of listening to customers, paying attention to their needs and being more available than we have been in the past," said US Bancorp chief executive Richard Davis.

Americans are outraged at the bonuses paid to executives of big banking firms. Many blame Wall Street recklessness for the worst financial crisis since the Great Depression and creating an economic mess that has led to double-digit unemployment. Obama, whose public approval ratings are below 50 percent, the lowest of his presidency, is annoyed that some of the public's anger at Wall Street firms is being directed at his administration for continuing the financial rescue package begun during the Bush administration.

In a sign of the discomfort big financial firms have experienced as recipients of taxpayer bailout funds, Citigroup announced yesterday a plan to repay the money it owes the government, which will allow it to escape restrictions on executive pay.

Criticised over its support for the $700 billion financial rescue package, the White House has sharpened its rhetoric toward the financial industry and sought to distance itself from accusations it was too close to Wall Street.

The meeting in the White House Roosevelt Room lasted one-and-a-half hours, longer than expected. Three of the 12 executives scheduled to attend took part by phone after their flight was cancelled because of foggy weather.

Bank of America Corp yesterday announced a pledge to increase loans to small and medium-sized business by at least $5 billion over the next year.

Some analysts said credit availability was not the biggest problem.

"You can't create loan demand if people aren't confident in the economy," said Anton Schutz, president of Mendon Capital in Rochester, New York.

Davis said the firms "agree viscerally" more lending needs to be done but want to make sure they do not put the financial system back in harm's way.

White House spokesman Robert Gibbs acknowledged the banks are facing pressure from regulators to adhere to strict capital requirements that constrain their ability to lend.