Wall Street’s turmoil tests McCain
Obama goes on the attack with a new ad, while the GOP candidate calls for an investigation.
With Wall Street embroiled in crisis, both major presidential candidates have jumped to the fore with proposals.Skip to next paragraph
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John McCain, the Republican, faces the tougher challenge. Fairly or not, as the nominee of the party controlling the White House, Senator McCain faces the prospect of guilt by association. McCain spoke on seven morning talk shows Tuesday, proposing a 9/11-commission-like investigation into what has led to the string of collapses of major financial institutions.
"This is a result of excess and greed and corruption," McCain said on MSNBC. "And that's exactly what is plaguing Americans today. And we got to fix it and we've got to update our regulatory system. We have to have a 9/11 commission to find out what went wrong and to fix what's going to happen in the future so this never, ever happens again."
Barack Obama, the Democrat, had billed an appearance in Golden, Colo., Tuesday as a speech focused on "his plans to revamp our regulatory framework, push back against special interests, and grow the American economy," according to his campaign.
But the headline out of the speech was his rejection of McCain's idea for a commission, calling it "the oldest Washington stunt in the book."
"You pass the buck to a commission to study this problem," Senator Obama said.
As for his own ideas, Obama repeated proposals for financial reform he laid out last March, including a proposal to apply commercial banking regulations to investment banks, hedge funds, and mortgage brokers.
At the very least, the collapse of Wall Street giant Lehman Brothers and the shotgun sale of Merrill Lynch over the weekend, followed Monday by the largest one-day drop in the Dow Jones Industrial Average since the 9/11 attacks, have abruptly ended the campaign's "lipstick on a pig" detour and dampened the all-Sarah-Palin-all-the-time media frenzy.
Obama clearly senses an opening. His campaign jumped on McCain's comment Monday that "the fundamentals of our economy are strong" and produced an ad around that statement. The ad repeats the clip three times, and skips the rest of the sentence – "but these are very, very difficult times."
Obama has typically scored better with voters than McCain on his ability to handle the economy – but not by much, and he does not do as well as generic Democrats versus generic Republicans on the economy.
This is where Obama's youth and relatively short résumé may be holding him back. Thus the effort to put out a little more detail Tuesday on what he would do as steward of the economy and of a financial system in turmoil.
In general, the two candidates take different philosophical approaches toward regulation of financial institutions, with Obama favoring more regulation and McCain consistently favoring deregulation during his 25 years in Congress. In the wake of recent developments, however, both McCain and his running mate, Alaska Governor Palin, have talked about tighter regulation. Obama and McCain agree that the federal government was correct not to bail out the bankrupt Lehman Brothers investment bank.