"We need this to be clean and to be quick," Paulson said in an interview with the US ABC network. He told Fox television America had been "humbled, humbled" by allowing its economy to slide into chaos. Obama was campaigning in North Carolina after declaring a day earlier McCain was in a panic, realising he and his Republican party were philosophically responsible for the near meltdown of the US financial system. The Arizona senator, a 26-year veteran of Congress, shot back that his first-term Illinois Senate colleague was resorting to scare tactics.

But McCain faces the daunting task of trying to square his long history of advocating corporate and financial deregulation - the sort of loose controls many blame for the turmoil on Wall Street. Obama seized on that during a campaign appearance at Bethune-Cookman University in Florida. "There's only one candidate who's called himself 'fundamentally a deregulator' when deregulation is part of the problem," Obama said.

McCain now says more controls are needed to prevent a repeat of the turmoil that sent the stock market plunging, as he tries to recover from a series of gaffes this week, starting with his assessment on Monday that US economic fundamentals were strong. National polls indicate McCain's edge in the US presidential race has slipped since the market upheaval. The latest Gallup Poll daily tracking survey also showed Obama ahead, with 50 per cent to McCain's 44 per cent. Last Sunday, a day before stocks took a dive on Wall Street, McCain and Obama were in a statistical dead heat, with McCain's 47 per cent against Obama's 45 per cent.

Both candidates are busy preparing for their first nationally televised debate on Friday at the University of Mississippi, which offers McCain a chance to reverse his recent slide in the polls. Obama has put McCain on the defensive by targeting some states that have been easy wins for Republicans in recent presidential elections. McCain's political director said yesterday the Republican nominee is increasing staff levels in North Carolina to defend a state that has not gone Democratic for more than three decades. Obama's rise coincided not only with the financial meltdown but with his own more aggressive campaign stance.

"His solution was to blame me for it," Obama said, referring to the economic crisis. "I would say Senator McCain is a little panicked." The Democrat also criticised McCain's ties to lobbyists and his support for partial privatisation of the Social Security pension system, and noted McCain wrote in a trade publication that opening the health insurance market to more vigorous competition nationwide, as was done with the banking industry, would provide more choices.

"So let me get this straight," Obama said. "He wants to run health care like they've been running Wall Street. Well, Senator, I know some folks on Main Street who aren't going to think that's a good idea." But Obama's characterisation was a politically charged oversimplification of McCain's article for the American Academy of Actuaries. In the article, McCain wrote that people should be allowed to buy health insurance across state lines. Obama's comments came as Bush defended a proposed multibillion-dollar financial bailout designed to rescue struggling markets. The bailout will allow the government to buy $US700 billion in toxic mortgages now held by financial institutions and would be the biggest government bailout since the Great Depression.

The White House had hoped for a deal with Congress by the time markets opened tomorrow, but Paulson's remarks suggested it could take more time. The market fell steeply last Monday in response to the bankruptcy of storied Wall Street investment bank Lehman Brothers, the decision of a second powerful investment house Merrill Lynch to sell itself at a fire-sale price, and the Federal Reserve's intervention in insurance company American International Group Inc.

But Wall Street enjoyed a huge rally on Friday after the government said it was creating a plan to rescue troubled US banks from their souring debts. If such a plan is put in place, it could help alleviate the uncertainty that has been sending the markets into tumult over the past week. McCain had a campaign stop slated in Baltimore, Maryland, today, while Alaska governor Sarah Palin, his vice-presidential running mate, was to hold a rally in Florida. AP