More may be needed to stablilse banks - Obama adviser

President Barack Obama's top economic adviser has refused to rule out that more money may be needed to stabilise the US financial…

President Barack Obama's top economic adviser has refused to rule out that more money may be needed to stabilise the US financial system as a deep recession increases banks' losses.

Lawrence Summers, head of the National Economic Council, also said there was no question that tax cuts passed under former President George W Bush needed to be repealed, though he would not be pinned down on exactly when.

"We can make important progress and get started with the support that has been provided," Summers said on NBC's "Meet the Press" when asked whether taxpayers should expect another request for funding to shore up the financial system. "What ultimately will be necessary is something that will play out over time."

House of Representatives Speaker Nancy Pelosi said earlier that "some increased investment" may be needed beyond the $700 billion approved last autumn.

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The bailout fund was first pitched as a way to get bad assets off the banks' books in the hope that doing so would help restore normal lending and get the economy going. Instead, most of the money has gone to buy stakes in banks, and both Democrats and Republicans have complained that the cash was doled out with too few strings attached and insufficient oversight.

But as the economy weakens and unemployment rises, the pile of bad debts on bank balance sheets is likely to grow, which may force Obama's administration to take bolder action.

One idea that has been much discussed on Wall Street is setting up a "bad bank" that would serve as a repository for those assets that are difficult to value or sell. Mr Summers did not comment directly on that concept, although other members of Mr Obama's economic team have mentioned it

Mr Summers said President Obama and his choice for Treasury secretary, Timothy Geithner, would provide more detail on economic policy in the coming weeks, but they said an $825 billion stimulus package working its way through Congress is the proper size and shape to help revive the economy.

Responding to criticism that the package contained too little immediate help, Mr Summers said Mr Obama was committed to spending three-quarters of that sum in the first 18 months.

"We're not going to rush things to the point of being wasteful," Summers said. Items like tax cuts and aid for state and local government would provide quick assistance, he added.