WASHINGTON: US President Barack Obama has said he would veto any finance bill that does not contain "real reform," as he moved to overhaul the country's banks in the wake of a massive economic crisis.

"We can't allow financial institutions, including those that take your deposits, to take risks that threaten the whole economy," he said in a nationally televised State of the Union address.

Obama urged lawmakers to pass a bill that would give the government sweeping new powers to liquidate firms, increase capital requirements and place limits on short-term debt held by banks.

"The House has already passed financial reform with many of these changes. And the lobbyists are already trying to kill it," Obama said. Related article: Obama makes State of the Union address

"Well, we cannot let them win this fight. And if the bill that ends up on my desk does not meet the test of real reform, I will send it back until we get it right," he said to applause from lawmakers.

Facing widespread public outrage at the large profits and bonuses reported by banks bailed out by the government, Obama has started the new year with moves to limit the size of financial companies that were deemed "too-big-to-fail." Related article: Obama demands jobs legislation without delay

He has also vowed to split investment and commercial banks and introduce a levy on the biggest financial firms to recoup 700 billion dollars in taxpayer money which propped up the sector as it teetered on the brink of collapse. Related article: Obama promises 30 billion fund for small businesses

But Obama denied his administration had launched an offensive against the financial sector.

"I am not interested in punishing banks, I'm interested in protecting our economy," he said.

"A strong, healthy financial market makes it possible for businesses to access credit and create new jobs. It channels the savings of families into investments that raise incomes. But that can only happen if we guard against the same recklessness that nearly brought down our entire economy."

The new rules would allow the government a middle path between a massive bailout of troubled firms and allowing large companies to collapse, introducing a process for the ordered winding down of their operations under government protection. Related article: Obama pledges to double US exports