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."

Obama, who took office in January amid the worst economic and financial crises since the Great Depression, defended his young administration against charges of being anti-business.

"A number of those who think we're anti-business seem to forget that it was just three or four months ago when, at great political expense, we yanked them out of the fire," he said.

"And they still, at least if they're in the financial sector, are enjoying a whole bunch of government guarantees that are propping up their business models. So it's hard for me not to be a little skeptical when I hear that somehow we've been anti-business."

Obama said, among other goals, he hoped to update U.S. tax policy.

"I would like to see a lower corporate tax rate. I'd like to see fewer loopholes to go with it so that we don't lose revenue in the process," he said.

The president also said his administration had been successful in stabilizing the financial system.

"I don't think people understand how close we were to the whole thing unraveling, and the degree to which, had it unraveled, we could be in a much worse situation than we're in right now," he said.

"Now that's no consolation for the folks who are out of work or small businesses that are closing. But given how quickly we had to act, how much uncertainty and fear there was out there, in retrospect it is a very significant accomplishment."

(Reporting by Jeff Mason; Editing Bernard Orr)