WASHINGTON — For Democrat Barack Obama, the Wall Street meltdown is a testament to failed Bush administration policies that his Republican rival would continue. For John McCain, the turmoil is the product of cozy relationships and corruption in Washington that can be cleaned up only by reformers like him and running mate Sarah Palin.
The two presidential candidates have battled for weeks over which one offers the most dramatic change from the current, unpopular administration. On Monday, they seized on the financial chaos to make their cases anew but offered no new proposals.
The McCain campaign quickly released a television advertisement after the disclosure that one financial giant, Lehman Bros. Holdings Inc., had filed for bankruptcy and another, Merrill Lynch & Co., had been bought out. "Our economy in crisis. Only proven reformers John McCain and Sarah Palin can fix it," the ad said.
On the campaign trail in Florida, however, McCain sounded a slightly different note when he said the fundamentals of the economy remained "strong." The Obama campaign immediately pounced on that as evidence that McCain is out of touch with ordinary people.
Speaking in St. Clair Shores, Mich., Obama's running mate, Joe Biden, said: "I could walk from here to Lansing and I wouldn't run into a single person who thought our economy was doing well -- unless I ran into John McCain."
The growing sense of urgency about instability in the housing and financial sectors may pressure both McCain and Obama to flesh out economic policies that have been vague or overshadowed by a blizzard of character attacks and negative campaigning. The last week, for example, has included bickering over the McCain campaign's charge that Obama was making a sexist reference to Palin in talking about "putting lipstick on a pig."
For months, Obama has been calling for increased regulation and accountability for financial institutions. On Monday, he issued a statement that blamed the Bush administration for the problems and implied again that as president he would push for new regulation of the financial services sector.
"Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression," Obama's statement said.
McCain signaled some openness to increased regulation of financial institutions to increase transparency of their dealings -- though he was more cautious than Obama.
McCain, in a statement, said he would "replace the outdated and ineffective patchwork quilt of regulatory oversight," but also that a "highest priority" of his administration would be to ensure that the U.S. "remains the preeminent financial market of the world." Such language is sometimes interpreted as a caution that too much regulation will damage Wall Street's standing as an economic powerhouse.
Both candidates said they supported the federal decision not to bail out Lehman Bros. with taxpayer funding.
There are signs that Obama has not managed to capitalize on economic anxiety as decisively as might be expected. The latest ABC News/Washington Post poll last week showed Obama's advantage on who would best handle the economy had dwindled to 5 percentage points: 47% picked Obama, 42% chose McCain.
"That's shocking," said Bill Whalen, an analyst at Stanford University's Hoover Institution, a conservative-leaning think tank. "If you are a Republican, you should be tagged on the economy. If there is such a thing as Republican Teflon, McCain enjoys it on this matter."
But some of Obama's allies in the labor movement started trying to scratch McCain's Teflon even before the Lehman collapse.
The AFL-CIO has sent a mailing to about 800,000 union voters in battleground states that attacks McCain's proposal to divert some Social Security revenue into private stock and bond accounts. The flier pokes fun at McCain's family fortune, his multiple homes, even his pricey loafers and asks: "If John McCain lost his Social Security, he'd get by just fine. Would you?"
A labor-backed group, Americans United to Protect Social Security, is also trying to capitalize on the market turmoil to question McCain's support for private Social Security accounts. In a statement Monday, the group called the Lehman collapse and the Merrill Lynch sale "perfect examples" of how a privatization would "turn Social Security from a guarantee into a guaranteed gamble."
Times staff writers Peter Wallsten in Washington, Noam N. Levey in Florida and Michael Finnegan in Colorado contributed to this report.