Candidates seek blame in financial 'crisis'

WASHINGTON -- Presidential candidates Barack Obama and John McCain called Monday for tougher oversight of Wall Street while arguing over the causes of what both called a financial "crisis."

Republican McCain blamed "self-interest, greed, irresponsibility and corruption" at the top of the U.S. financial system. Democrat Obama cited GOP economic policies that he said favor the wealthy at the expense of everyone else.

"It's a philosophy that says even common-sense regulations are unnecessary and unwise," Obama said while campaigning in Grand Junction, Colo.

Obama also blasted McCain for saying "the fundamentals of our economy are strong." The Illinois senator said it shows his Republican opponent is out of touch. McCain said he was referring to the skills and productivity of U.S. workers. "We are going to reform the way Wall Street does business," McCain said during a town-hall-style meeting in Orlando.

The campaigns reshuffled their messages Monday following the collapse of two Wall Street giants. Lehman Bros. declared bankruptcy, while Merrill Lynch merged with Bank of America.

Mark Bloomfield, president of the American Council for Capital Formation, a think tank, said the candidates are not traditional members of their parties: McCain advocates more regulation of big business than many Republicans, while Obama is more free market-oriented than other Democrats.

"They are backing the Federal Reserve and the Treasury and the economic policymakers on stepping in as they have stepped in to date," he said.

McCain's campaign released an ad, called "Crisis," that advocates "tougher rules on Wall Street to protect your life savings." Obama senior economic adviser Austan Goolsbee said McCain has "no record" on financial regulatory issues, adding Obama's plan is "to set the rules of the road and re-establish public trust" in financial markets.

Both candidates opposed any sort of taxpayer bailout of Lehman Bros. Both traced the overall problems of the financial system to the housing crisis, including record numbers of foreclosures due to faulty loans.

Obama has proposed a federal definition of mortgage fraud, with money for state and federal prosecution of offenders. He has also proposed requiring a specific schedule for borrowers of what they owe and when they need to pay.

McCain economic adviser Carly Fiorina said his goal is "to require more transparency and more accountability," to help lenders and borrowers. McCain has also called for increasing required down payments for home purchasers, so they will have more equity invested.

Both campaigns protested the patchwork of federal regulatory agencies over financial institutions, such as the Federal Deposit Insurance Corp. and the Securities and Exchange Commission.

Maya MacGuineas, director of fiscal policy with the non-partisan New America Foundation, said both candidates have made sensible suggestions. The question is what the new regulations may look like, she said, and both candidates may be wise to avoid getting too specific at this point. "The danger here is that this process gets politicized instead of leaving it up to experts," she said. "You want this to be technically driven, not politically driven."