Dawn Crawford vs San Bernardino's Dirty County Politicians and  Officials

WASHINGTON -- Democratic candidate Barack Obama, speaking to a Wall Street audience at the historic Cooper Union for Advancement of Science and Art in New York, called for reform of the nation's regulatory system, immediate relief for homeowners caught in the sub-prime mortgage crisis and a $30-billion stimulus package to boost the economy.

"If we can extend a hand to banks on Wall Street, we can extend a hand to Americans who are struggling through no fault of their own," he said.

Saying the Bush administration had thrown the economy "out of balance," the Illinois senator described the housing crisis as evidence of a painful correction to the distortions of deficit spending.

"When all is said and done, losses will be in the many hundreds of billions," he said. "What was bad for Main Street was bad for Wall Street. Pain trickled up."

Obama said Democratic and Republican administrations had too often caved to special interests, favoring "financial manipulation instead of productivity and sound business practices."

"We let the special interests put their thumbs on the economic scales," he said. "The result has been a distorted market that creates bubbles instead of steady, sustainable growth, a market that favors Wall Street over Main Street but ends up hurting both."

Obama, introduced by New York Mayor Michael Bloomberg, founder of Bloomberg News and other financial enterprises, enunciated a series of "core principles" that he envisioned for the economy -- a crackdown on "trading activity that crosses the line to market manipulation," as was rumored in the Bear Stearns case; a realignment of compensation packages so that "both high-level executives and employees better serve the interests of shareholders"; and a streamlining of "overlapping and competing regulatory agencies."

"We need to regulate institutions for what they do, not what they are," he said. Noting that commercial banks and thrift institutions were subject to guidelines on sub-prime mortgages that did not apply to mortgage brokers, Obama said, "It makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of sub-prime mortgages don't originate from banks."

The worsening economy has been a major theme on the campaign trail during the last few weeks and sparked debate among the presidential candidates about the best prescriptions.

Obama's rival for the Democratic nomination, Sen. Hillary Rodham Clinton of New York, made a major address in Philadelphia this week calling for additional federal action to help struggling homeowners. Today, speaking at Wake Technical Community College in Raleigh, N.C., Clinton proposed a $12.5-billion, five-year program to make job retraining available to all workers dislocated by industry closings.

"We are competing in a new global economy, but our policies to equip American workers for the 21st century are stuck back in the 20th," she said. "It's time for a president who is ready on Day One to be the commander in chief of our economy. Sometimes the phone rings at 3 a.m. in the White House and it's an economic crisis."

As part of what her campaign is billing as a six-day swing to highlight the economy in the upcoming primary states of North Carolina, Indiana and Pennsylvania, Clinton outlined a plan that would provide new initiatives to help workers who have lost their jobs and to provide new on-the-job training for current employees.

"We've been stalled, I would say, for at least seven years," Clinton told a crowd of mostly students, referring to President Bush's tenure. "And you pay the price."

Noting rising costs of gasoline, college tuition and healthcare, she said the Bush administration had given tax breaks to oil companies, ignored the mortgage crisis and allowed the nation's infrastructure to deteriorate.

"No American should be left on the side of the road," she said.

Sen. John McCain of Arizona, who has clinched the GOP nomination, said this week that any bailout for Wall Street should be based "solely on preventing systemic risk."

But Obama, who made no mention of Clinton, said that McCain's plan "amounts to little more than watching this crisis happen" and that it showed his "determination to run for George Bush's third term." And Clinton, who made no mention of Obama, chided McCain for saying that economics was not his strong suit.

McCain responded by criticizing plans by both Clinton and Obama, saying that "there is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face. This is a complex problem that deserves a careful, balanced approach that helps the homeowners in trouble, not big banks and speculators that acted irresponsibly."

On a stage where presidential hopefuls have campaigned ever since Abraham Lincoln spoke there in 1860, Obama reminded his audience that the engine of American economic prosperity was shared progress.

"The core of our economic success is the fundamental truth that each American does better when all Americans do better," he said. "I think all of us here today would acknowledge that we've lost that sense of shared prosperity."

Obama said the recent sustained period of economic growth was the first since World War II that did not produce an income spurt for "typical families."

"Wall Street has been gripped by increasing gloom over the last nine months," he said. "But for many American families, the economy has effectively been in recession for the past seven years," he said. "Americans are working harder for less. Costs are rising, and it's not clear that we'll leave a legacy of opportunity to our children and grandchildren."

Obama, accusing the Bush administration of enacting policies that "essentially said to the American people, 'You are on your own,' " added: "In our 21st century economy, there is no dividing line between Main Street and Wall Street. The decisions made in New York's high-rises have consequences for Americans across the country."

In deregulating business, he said, the United States had "fostered competition but also contributed to massive overinvestment." Citing the examples of Enron and WorldCom, Obama said that simply dismantling the old system without developing a new one "encouraged a winner-take-all, anything-goes environment that helped foster devastating dislocations in our economy."

johanna.neuman@latimes.com;

noam.levey@latimes.com

Neuman reported from Washington, D.C., and Levey from Raleigh, N.C.