White House economic adviser Lawrence Summers defended the administration's plan to overhaul financial regulations Friday, saying the proposals are not an attack on banks, but an attempt to create a sounder financial system.

The administration's latest proposal — to prevent commercial banks from trading on their own accounts or running hedge funds and private-equity firms — fits in with the overall effort to reduce risk taking, he said. The other aspects involve raising capital requirements and closing regulatory loopholes that have allowed financial firms to play off various agencies.

"We believe that in the context of American system, these kinds of constraints will further serve to reduce risk taking, without in any way interfering with the ability of these institutions to serve their customers," Summers said at the annual World Economic Forum in Davos, Switzerland.

While some financial institutions have played a constructive role in the reform process, there has been some reluctance to change their ways, he said. It does not make sense that banks feel they have enough capital to pay out bonuses but not enough to repay taxpayers for the bailout, he said, referring to the plan to tax big banks.

"There is an obligation on the part of those who benefitted from the government's involvement to carefully consider their obligations to all of their stakeholders," he said, including the overall economy.

Separately, Citigroup CEO Vikram Pandit said Friday that Citi is "quite aligned" with President Obama's proposal to separate traditional banking activities from some investment banking business, such as proprietary trading.

Pandit told CNBC that the president's idea would take the industry in "generally the right direction." He said banks should ask themselves whether a specific trading activity is for the benefit of clients. "If the answer is no, then that's proprietary trading."

Pandit also addressed the government's ownership of Citi stock. Investors have been eager to see the government divest itself of that stock, and Pandit said Friday that the U.S. is "inclined to sell the stock over time."

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