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Obama to set conditions for banks Obama predicts more bank failures
(about 3 hours later)
President Obama has asked Treasury Secretary Timothy Geithner to compile a set of guidelines for banks receiving taxpayers' money. US President Barack Obama has warned that more US banks are likely to fail, as the full extent of their losses in the economic crisis becomes clear.
"If a bank or a financial institution is getting relief then they've got to abide by certain conditions," he said in an interview with NBC News. Speaking to NBC News, Mr Obama said "some banks won't make it" but stressed that people's deposits would be safe.
He has also asked Treasury Secretary Timothy Geithner to draw up guidelines for banks receiving taxpayers' money.
"If a bank or a financial institution is getting relief then they've got to abide by certain conditions," he said.
The president has been critical of bank executives receiving bonuses despite taking government bail-outs.The president has been critical of bank executives receiving bonuses despite taking government bail-outs.
He also said that "some banks won't make it" through the current crisis. We can expect that we're going to have to do more to shore up the financial system President Barack Obama
In an interview with NBC to be aired on Monday, Mr Obama said it was likely the banks had not yet fully acknowledged the extent of their losses.
"The banks, because of mismanagement, because of huge risk-taking, are now in a very vulnerable position," he said."The banks, because of mismanagement, because of huge risk-taking, are now in a very vulnerable position," he said.
"We can expect that we're going to have to do more to shore up the financial system.""We can expect that we're going to have to do more to shore up the financial system."
He also made it clear he was taking responsibility for turning round the US economy before the next presidential election in 2012, saying he could only expect one term in office if it was not fixed in the next three years.
Stimulus packageStimulus package
The interview was short on details with the president declining to comment on whether he planned to create a "bad bank" to buy toxic assets from other financial institutions. The interview was short on details, with the president declining to comment on whether he planned to create a "bad bank" to buy toxic assets from other financial institutions.
He said that he did not want to pre-empt an announcement planned for "next week".He said that he did not want to pre-empt an announcement planned for "next week".
The president and Vice President Joe Biden are due to meet congressional leaders later on Monday to encourage them to move forward on an $800bn (£567bn) economic stimulus package. The president and Vice-President Joe Biden are due to meet congressional leaders later on Monday to encourage them to move forward on an $800bn (£567bn) economic stimulus package.
He said he was confident that Republicans would be able to support the final version of the legislation, although it passed in the House of Representatives without a single Republican vote. Mr Obama said he was confident that Republicans would be able to support the final version of the legislation, although it passed in the House of Representatives without a single Republican vote.
The plan will be scrutinised by the Senate this week.The plan will be scrutinised by the Senate this week.
It is unlikely that it will be able to pass the Senate without Republican support because the Democrats do not have the majority that they would need to vote down any potential delaying tactics.It is unlikely that it will be able to pass the Senate without Republican support because the Democrats do not have the majority that they would need to vote down any potential delaying tactics.
Economic woesEconomic woes
President Obama's comments came as fresh official data indicated the problems facing the wider US economy show no signs of lessening. Mr Obama's comments came as fresh official data indicated the problems facing the wider US economy show no signs of lessening.
US consumer spending fell for a sixth consecutive month in December, according to the Commerce Department.US consumer spending fell for a sixth consecutive month in December, according to the Commerce Department.
Although the decline was expected, the 1% drop was worse than the 0.9% contraction predicted by analysts.Although the decline was expected, the 1% drop was worse than the 0.9% contraction predicted by analysts.
Meanwhile, construction spending fell for a third month in a row in December, dropping 1.4%.Meanwhile, construction spending fell for a third month in a row in December, dropping 1.4%.