COLORADO - DEMOCRATIC White House hopeful Barack Obama on Tuesday promised a regulatory crackdown on reeling Wall Street, vowing to purge a financial system he said was breaking the American economy.

The Illinois senator promised stricter oversight to rein in excesses cascading through the global financial system and again rebuked his Republican foe John McCain for arguing the US economy remained fundamentally 'strong'.

A new Obama ad repeatedly showed the Arizona senator making the remark, superimposed with news-style captions highlighting the collapse of investment giant Lehman Brothers along with mounting job losses and home seizures.

Addressing just under 2,200 supporters here, Mr Obama said the crisis 'is nothing less than the final verdict on an economic philosophy that has completely failed.'

'It's time to put an end to a broken system in Washington that is breaking the American economy. It's time for change that makes a real difference in your lives,' he said.

'If you want to understand the difference between how Senator McCain and I would govern as president, you can start by taking a look at how we've responded to this crisis'.

'Because Senator McCain's approach was the same as the Bush administration's - support ideological policies that made the crisis more likely, do nothing as the crisis hits, and then scramble as the whole thing collapses,' Mr Obama said.

'My approach has been to try to prevent this turmoil.'

The McCain campaign countered however that Mr Obama had offered 'nothing new' in his remarks which came after global stocks tumbled for a second day on the Lehman Brothers collapse and fears of more failures in the financial industry.

Mr Obama called for a '21st century regulatory framework' to govern Wall Street, which has benefitted from two decades of deregulation since Republican President Ronald Reagan.

Under his plan, mortgage brokers and investment houses would come in for the same regulatory supervision as commercial banks.

Minimum capital requirements would go up for all firms, and credit risk agencies would be monitored to prevent conflicts of interest.

The Securities and Exchange Commission should be given new powers to stop 'trading activity that crosses the line to market manipulation,' which has been 'especially problematic' in this crisis, the Democrat said.

And bankruptcy laws would be reformed to make it easier for families facing repossession to stay in their homes, he said.

Bankruptcy judges cannot allow a family owning just one home to stave off financial failure by writing down the value of the mortgage.

'If you own seven homes, the judge is free to write down any or all of the debt on your second, third, fourth, fifth, sixth or seventh homes,' Mr Obama said in a broadside at the McCain family's extensive property portfolio.

'Now that may be of comfort to Senator McCain, but that's the kind of out-of-touch Washington loophole that makes no sense. When I'm president, we'll make our laws work for working people.'

Mr Obama said Mr McCain was offering 'the oldest Washington stunt in the book' by proposing to appoint a presidential commission to make recommendations on the financial crisis.

'But here's the thing - this isn't 9/11,' Mr Obama said, referring to the September 11 attacks of 2001.

'We know how we got into this mess. What we need now is leadership that gets us out. I'll provide it, John McCain won't, and that's the choice for the American people in this election.'

McCain spokesman Tucker Bounds dismissed the Democrat's prescriptions for recovery.

'Barack Obama offered nothing new except for sharp criticisms of the most fundamental elements of the American economy and pessimism about genuine efforts to restore our country's prosperity,' he said.

'More important than understanding that raising taxes on small businesses during a struggling economy is a bad idea, is respecting the strength of American workers and ingenuity,' Mr Bounds said.

'Sadly Barack Obama demonstrates neither.' -- AFP