April 10 (Bloomberg) -- Republican presidential candidate John McCain offered a proposal to address the U.S. housing crisis that he said ``is focused on people,'' not banks.

McCain, accused by his Democratic rivals of lacking a plan to help the faltering economy, said a Democratic bill now before Congress doesn't go far enough in helping individuals.

``The goal should be to help homeowners who are struggling, and only about $5 billion of the bill addresses their concerns in any way,'' McCain said before holding a roundtable discussion at a building and roofing company in rival Senator Hillary Clinton's backyard in Brooklyn, New York. ``I believe a more robust, timely and targeted effort is my home plan.''

McCain proposed giving struggling homeowners a chance to trade their mortgage for a ``manageable loan that reflects the market value of their home.''

``I've made my principles in this area clear,'' he said. ``Tax breaks for builders, funds to purchase homes in foreclosure and tax credits that are not targeted to where the need is greatest do not constitute the federal help that is warranted.''

His Democratic rivals said McCain's approach is inadequate. It's ``a warmed over, half-hearted version of the very plan he criticized,'' Clinton said in a statement. Senator Barack Obama of Illinois, speaking in Gary, Indiana, called it a ``do-nothing approach'' because homeowners need help immediately.

Douglas Holtz-Eakin, McCain's top economic aide, said McCain's plan is broader than what President George W. Bush is proposing. ``It's voluntary at the initiation of the homeowner, so how many people it covers is how many seek out the loan,'' Holtz-Eakin said.

Criminal Probe

McCain, who was introduced by Mayor Michael Bloomberg of New York, also called for a Justice Department task force to ``aggressively investigate potential criminal wrongdoing in the mortgage lending and securitization industry.''

Bloomberg introduced Obama on March 27 when the Democratic candidate gave a speech in New York City on the economy. Bloomberg is founder and majority owner of Bloomberg LP, the parent of Bloomberg News.

In a March 25 speech, McCain said a government bailout of banks should be based ``solely on preventing systemic risk'' and not on helping financial and property speculators.

Surging Defaults

The implosion of the U.S. subprime mortgage market, surging defaults and a glut of unsold houses are depressing property prices, and mortgage-backed securities have spread losses across the global financial system.

The crisis prompted the U.S. Federal Reserve to help engineer a rescue of investment bank Bear Stearns Cos., a move that some in Congress have called a bailout.

The world's biggest financial companies have posted at least $195 billion in writedowns and credit losses tied to subprime mortgages and collateralized debt obligations, according to data compiled by Bloomberg.

Clinton and Obama have offered economic plans that resemble each other.

Clinton has called for a $30 billion, two-year program to help homeowners and communities hit by rising foreclosures. Obama has urged passage of a second $30 billion stimulus plan, including $10 billion to help homeowners facing foreclosure either sell their homes or modify their loans, aid for state and local governments to prevent service cuts and expanded unemployment insurance to cover more workers.

Decline in Contracts

The number of Americans signing contracts to buy previously owned homes declined more than forecast in February, indicating no sign of a bottom in the U.S. real-estate recession that is entering its third year.

McCain today also said the U.S. should stop adding to its Strategic Petroleum Reserve ``with oil at over $100 a barrel.'' There is an adequate supply in the reserve and suspending new purchases would ease demand that is pushing prices higher, he said.

He also renewed his call for overhauling unemployment insurance and programs to help displaced workers and promised to deliver a program for longer-term economic renewal next week.

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

Last Updated: April 10, 2008 17:47 EDT