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Treasury official defends merger-hungry banks

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NEW YORK — The Treasury official overseeing the government's $700 billion financial bailout plan on Friday defended banks, such as Utah-based Zions Bancorp., that want to use federal money to buy competitors.

Treasury doesn't want to "micromanage" banks that get capital infusions under the bailout, Assistant Treasury Secretary Neel Kashkari said at the Wharton Finance Conference in New York.

"Prudent mergers and acquisitions can be good for our financial system and our communities," Kashkari said.

If a large stable bank acquires a community bank that is struggling, the smaller bank's ability to lend is preserved, he said.

Treasury has said it will devote $250 billion of the bailout money to buy stakes in banks.