Washington - US President George W Bush on Thursday called for overhauling the "outdated" regulatory structures of the financial industry in light of a massive global credit crisis, but warned against reinventing the free market system that has spurred economic growth for decades.

Speaking ahead of an emergency Washington summit of the world's 20 leading economies, Bush offered a broad defence of US-style capitalism and free markets, warning leaders to fix the flaws exposed by the financial crisis rather than abandon the system wholesale.

"Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy," Bush said, according to an advance copy of a speech planned in New York.

Leaders of the Group of 20 nations, which includes a mix of wealthy nations and emerging economies, will meet in Washington Saturday to discuss major reforms to the global financial system as well as more immediate measures to avoid a global recession.

Wall Street has come under fire from all sides for a culture of "greed" that helped spark the crisis. Financial firms took excessive risks in offering loans to homeowners that could not afford them, then sold those loans as part of complex new investment packages.

Bush called for more transparency in the financial industry, strengthening international financial institutions and "adapting our financial systems to the realities of the 21st century marketplace."

He acknowledged that regulators and private credit rating agencies had failed to foresee the collapse of the US housing market that sparked the global credit crisis. But he said free markets remained the best way to foster economic growth.

"It is true that this crisis included failures - by lenders and borrowers, by financial firms, by governments and independent regulators. But the crisis was not a failure of the free market system, and the answer is not to try to reinvent that system," Bush said. (dpa)