US President Barack Obama said on Tuesday that pre-emptively taking over troubled banks would end up costing taxpayers more money and undermining already shaky confidence. He dismissed criticism that his refusal to nationalise banks was another example of Washington "coddling Wall Street," and said his stance had nothing to do with politics or ideology.
"Rather, it is because we believe that pre-emptive government take-overs are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence," he said in a speech. US regulators are in the midst of "stress tests" of the largest banks to determine whether they have enough capital to withstand an even deeper recession.
Obama said if banks needed more capital and could not raise it privately, "we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy."