WASHINGTON (Reuters) - U.S. President Barack Obama, reflecting on government support for the financial sector, said it is dangerous for the economy when companies believe they are too big to fail.

"Having had to step in extraordinary ways, we now have even more potential for moral hazard, where financial institutions think to themselves, 'We can continue to take extraordinary risks ... because we know that we are too big to fail,'" Obama told BusinessWeek magazine in an interview, according to a transcript released on Wednesday.

"I think that's dangerous for the economy and for business."

(Reporting by Jeff Mason; Editing by John O'Callaghan)