With his legislative agenda in limbo, Obama sought to rally Democratic activists still reeling from the loss of a pivotal Senate seat last month and now scrambling to head off a Republican challenge in the November congressional elections.

Obama came out swinging at a meeting of the Democratic National Committee, accusing Republicans of caring more about scoring political points than solving the country's pressing problems like high unemployment.

But Obama presented no new ideas on how the Democrats could overcome obstacles that have stalled his domestic priorities.

The political climate in Washington has become more fractured as lawmakers adjust to a new reality now that the Republicans' gain of a Massachusetts Senate seat has given them the ability to block bills using procedural hurdles.

Hammering one of his biggest challenges, Obama said America can't afford to wait for a financial regulatory overhaul to plug gaps widely seen as the root of the 2008 markets crisis that tipped the economy into deep recession.

He spoke a day after Senate Banking Committee Chairman Christopher Dodd declared an impasse with Senator Richard Shelby, his Republican counterpart in negotiations to reach a compromise on tightening financial rules. The situation leaves Democrats with the option of trying to proceed alone.

If we've learned anything from the devastating recession, we know that wise regulation actually can enhance the market and make it more stable and make our economy work better, Obama said. We can't return to the dereliction of duty that helped deliver this recession.

Obama senior adviser David Axelrod suggested, in an interview to air on C-SPAN on Sunday, that some Republicans were yielding to an enormous lobbying campaign by financial firms opposed to reform.

If the Republican Party makes a decision that they can turn this into a fund-raising device, then it's going to become more difficult, he told the network on Friday.

POPULIST RHETORIC

Venturing out of the White House in a snowstorm to address Democratic leaders at nearby hotel, Obama also renewed his populist critique of big banks and Wall Street, a source of public anger amid the resurgence of large executive bonuses.

He said taxpayers had a right to feel outrage that they had to bail out the financial sector to prevent its collapse.

Obama acknowledged that a healthcare overhaul, which once seemed on the verge of passing, will now be subject to a long and difficult debate. But he pledged: I am not going to walk away from health insurance reform.

His effort to expand health coverage hit a stalemate after Democrats lost their 60-seat supermajority in the Senate. They are now trying to decide on a new course.

The easiest thing to do right would be say this is too hard. Let's just regroup and lick our wounds and try to hang on, Obama said. There are some, perhaps the majority in this town, who say perhaps it's time to walk away.

But he insisted to cheers, I'm not going to walk away on any challenge. We're moving forward.

Obama again urged Republicans to work to find common ground, an appeal that has gained little traction from the opposition, which prefers to paint Obama as a big spender for the congressional election campaign.

With his approval ratings down amid persistently high unemployment, Obama acknowledged that people are frustrated.

I know we've gone through a tough year. But we've gone through tougher, he said, seeking to boost Democrats' morale.

One year into office, Obama has recalibrated his agenda to make job creation his top priority. The Senate begins debate next week on a series of bills to boost employment.

(Additional reporting by Pedro da Costa; editing by Mohammad Zargham and Bill Trott)

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