Santelli Blasts Obama's Warning on Taking 'Reckless Risks' as 'Un-American'

Should it be the role of the government to determine what amount of risk is appropriate in the private sector? President Barack Obama could have been interpreted as suggesting that much in comments he made about TARP repayments on June 9.

CNBC’s Rick Santelli responded to those comments earlier in the day from Obama, “that those who seek reward do not take reckless risks.” Santelli said on CNBC’s “Power Lunch” that it’s not the role of the government to make those judgments.

“It makes me a little nervous and some of the people on the floor express this – whether it was the end of the last administration or the current administration, you know to really understand what’s wrong and what needs to be right – that statement’s very un-American,” Santelli said. “You know, why should the government think they know the magic blend of risk and reward? It’s the government’s role not to fall asleep at the switch, not to have products that are unregulated and to have speed limits.”

The Chicago Mercantile Exchange reporter interpreted the president’s comments as a sign that government should have a say in how much risk can be taken for the good of the public – something that should not be the role of the government, he explained.

“But it’s every American institution, individual’s right to take as much or as little risk as they want. It’s the government’s job to protect the bystanders from the effects in either direction. If shareholders and the bank want to get crazy risk they need to accept and be able to only get payback for that. It shouldn’t spread outside the system. This is a major philosophical issue.”

According to Santelli, Obama’s actions and those from former President George W. Bush at the end of his administration contradict the principles of free-market capitalism and for any government bureaucracy to attempt to determine risk and reward would be impossible.

“The end of the Bush and this current administration – it just doesn’t seem like free-market capitalism,” Santelli continued. “They think they know all the metrics and I just don’t think it’s possible for any government to keep up with the financial community outside of good but very few well-guarded regulations.”

Santelli was asked if he would have let Lehman Bros fail, an event which many blame for setting the dominos in motion that have led to the current financial problems.

“I think it was needed,” Santelli said. “I think it was needed. You know what, we can’t have all of this go away without experiencing pain. Even Europe is canceling programs. I disagree, Lehman needed to fail.”

He said the ultimate sin by the federal government was its role in picking winners and losers.

“I just think it was bad the government decided who did and who didn’t fail,” Santelli added. “Bear Stearns or Lehman or Goldman – that choice of who should, I didn’t agree with that.”