The U.S. Treasury doesn't intend on micromanaging banks, despite the government's recent purchases of equity in financial institutions, a Treasury official said on Wednesday.

Neel Kashkari, the Treasury's Interim Assistant Secretary for Financial Stability, said that while rescuing banks is a precondition of economic recovery, the government shouldn't meddle with the business decisions being made by those banks.

"However well intended, government officials are not positioned to make better commercial decisions than lenders in our communities," Kashkari said in testimony before the U.S. House Committee on Oversight and Government Reform.

He said the Treasury regrets having to repeatedly rescue giant banking firms, such as Bank of America and Citigroup, but that "the choice was clear when the consequences of inaction were so severe."

He added that banks are now lending, just "not as much as we would like."

By Stephen Huebl and edited by Sarah Sussman
©CEP News Ltd. 2009