Lehman Brothers Collapse Haunts John Kasich in Ohio Governor's Race

May 12, 2010 -- Republican John Kasich, the former congressman and Fox News host who is running for governor of Ohio, used to tout his eight years at Lehman Brothers.

But in the wake of the firm's collapse, it's Democratic Gov. Ted Strickland who is putting Kasich's Wall Street ties front and center in one of the marquee races of 2010.

"Lehman Brothers wasn't a victim of a shaky economy, they were the architects," Strickland said. "[Kasich] may not think $400,000 is a huge bonus. But to the average Ohioan, it is a huge bonus, especially when you're working for a company that is going down the tubes and costing Ohio pensions lots of money."

Election Day is almost six months away. But voter anger over the bad economy and the Wall Street meltdown is already being felt around the country.

ABC News 2010 Election Map: Follow the House, Senate and Governor's Races

A few days ago, Utah Sen. Bob Bennett, a Republican, was booted from office after voting for the Wall Street bailout in 2008.

Out in California, state Insurance Commissioner Steve Poizner, a Republican candidate for governor, is using GOP rival Meg Whitman's ties to Goldman Sachs to give the former eBay CEO a real run for her money. Watch Poizner's ad here.

Wall Street's role in precipitating the economic downturn is in particularly sharp focus in Ohio because of Kasich's role as one of the managing directors of Lehman Brothers, the global financial services firm that declared bankruptcy in September 2008.

Strickland, who spoke with ABC News while in Washington, D.C., to raise money for his campaign, is trying to keep Kasich's Wall Street ties in front of voters by making them the subject of a television ad launched last week and a major speech delivered on Wednesday.

The Columbus Dispatch reported this week that Kasich tried to persuade two state pension funds in 2002 to invest with Lehman Brothers while he was the managing director of the investment banking house's Columbus office.

The collapse of Lehman Brothers eventually cost Ohio's pensions nearly $500 million.

Kasich's campaign was quick to note, however, that his efforts in 2002 did not lead to state pension funds investing with Lehman Brothers in later years. The Columbus Dispatch concluded in its story that there is "no evidence to contradict Kasich's assertion."

While pushing the pension issue, Strickland is also keeping up the drumbeat for Kasich to release all of his tax returns.

"John Kasich is the son of a mailman and I'm the son of a steel worker, but that's where the similarity ends because I never forgot where I came from and I think John Kasich did," Strickland said. "People need to know the source of his wealth and his associations and who he may be indebted to."

Kasich is hitting back with two arguments. For starters, he says that the governor is simply trying to "shift the attention" away from the 430,000 jobs that Ohio has lost under Strickland's watch. Kasich is also attempting to deflect the attack by downplaying the role he played at Lehman Brothers.

"Blaming me for Lehman Brothers is like blaming a car dealer in Zanesville for the collapse of General Motors," said Kasich.

Strickland is unimpressed with Kasich's "Zanesville" defense. The Democratic governor, a former prison psychologist, says that his GOP rival cannot have it both ways.

In Strickland's view, either Kasich was playing an important role at the company or else he was earning large sums for doing nothing.

"Was he a relevant player at Lehman?" asked Strickland. "And, if he wasn't, what did he do to deserve a bonus of over $400,000 at a time when the company was getting ready to go down the tube? I just think those are fair questions for me as his opponent to ask."

Beyond attacking Kasich for his work at Lehman Brothers, Strickland is also chiding him for flirting with the gradual elimination of the state income tax.

Kasich has said he sees the idea, which he has not fleshed out in detail, as a game-changing economic strategy that could attract investment and new jobs to Ohio, which has been economically ravaged by the loss of manufacturing jobs.

Strickland said the financial practices at Lehman Brothers, where they were selling their own loans to themselves to make it look like they had more money and less debt, and Kasich's tax plan are both part of a "hot dog approach to the economy."

"The state income tax over the last 10 years has been 46 percent of total revenue. To talk about eliminating the state income tax -- say he did it in eight years -- it would represent a devastating, cataclysmic result on libraries, schools, public safety, everything the state of Ohio has a responsibility to support," Strickland said. "All the public services would be decimated."

Strickland, one of Hillary Clinton's most prominent backers in 2008, said he sees the fight for the Ohio governor's office as having the potential to reverberate beyond the Buckeye State.

Kasich, a former chairman of the House Budget Committee, briefly explored running for president in 2000, and Strickland said his GOP rival may still have his eye on the White House.

"I think that's a reasonable assumption," said Strickland when asked about the prospect of Kasich running for president again, possibly in 2016. "I don't know what's in his heart, what's in his mind. But he's a very ambitious guy, so I think it's reasonable to assume he may still harbor those desires to be president."

ABC News' Matt Loffman contributed to this report.