Obama vows strong new financial regulations

US President-elect Barack Obama yesterday said he would put strong new financial regulation at the centre of his economic recovery programme to force more accountability on the banking industry.

Mr Obama again warned that the US economic crisis, which saw the country lose more than half a million jobs in November alone, would worsen before it gets better.

"As part of our economic recovery package what you will see coming out of my administration, right at the centre, is a strong set of financial regulations," Mr Obama said in a taped appearance on NBC's Meet the Press television show.

"Banks, ratings agencies, mortgage brokers, a whole bunch of folks (will) start having to be much more accountable and behave much more responsibly.

"We've got to have transparency, openness, fair dealing in our financial markets and that's an area where I think over the last eight years we've fallen short."

Mr Obama, who takes office on January 20, began outlining his economic recovery plan on Saturday, saying he aims to create at least 2.5 million new jobs by 2011 and launch the largest US infrastructure investment since the 1950s.

Yesterday he did not put a price tag on the plan, which analysts say could cost at least $500 billion. But he acknowledged the costs would be "substantial" and would hike the budget deficit at least in the short term.

"We've got to provide a blood infusion to the patient right now to make sure the patient is stabilised," Mr Obama said. "We can't worry short term about the deficit... We've got to make sure the economic stimulus plan is large enough to get the economy moving."

Mr Obama was disappointed that US moves to avert a deeper crisis have so far done little to help average homeowners, and said he still regarded a possible moratorium on home foreclosures as an important policy tool.

Other options, such as encouraging banks to renegotiate mortgage terms with cash-strapped homeowners, could also help to strengthen the financial system, he said.

"Moving forward we have to have a housing component to any actions that we take. If we are only dealing with Wall Street and we're not dealing with Main Street, then we're only handling one half of the problem."