McCain adopts populist tone, regulation zeal

U.S. Republican presidential nominee Senator John McCain (R-AZ) speaks at a rally in Vienna, Ohio September 16, 2008.

GRAND RAPIDS, Michigan (Reuters) - Whether from political expediency or a genuine shift in philosophy, the crisis on Wall Street has driven White House hopeful John McCain to embrace something long anathema to him and his Republican party: regulation.

The Arizona senator, who has struggled to demonstrate his command of economic issues this election year as the economy has dominated voter concerns, promised a broad overhaul this week of decades-old rules governing financial markets.

At campaign events and in television appearances, the self-described "proud conservative" sounded a populist note, arguing that support for struggling workers should take precedence over putting taxpayer money into failing firms.

"I'm here to send a message ... to Washington and to Wall Street: we're not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayers' dollars to Wall Street," he said on Wednesday during a visit to a General Motors auto assembly plant in an electoral battleground state.

The populist tone and regulatory push mark a departure for McCain. "I'm always for less regulation," the four-term senator told the Wall Street Journal in March, although he said he understood the need for government oversight in some cases.

But times have changed. With the bankruptcy of Lehman Brothers Holdings, sale of Merrill Lynch, and government bailout of insurer AIG all in a span of some three days, McCain -- who portrays himself as a reformer in Washington -- now aims to be a warrior on Wall Street as well.

At rallies in Florida and Ohio he criticized corporate greed, knocked chief executives for taking big payouts from ailing enterprises, and accused the financial crisis' perpetrators of disregarding basic rules of sound finance.

"In my administration we're going to hold people on Wall Street responsible and we're going to enact and enforce reforms that make sure that these outrages - and they are outrages - never happen in the first place," he said in Tampa, Florida.

"Under my reforms, the American people will be protected by comprehensive regulations that will apply the rules and enforce them to the full."

NEW OR NOT?

Barack Obama, McCain's Democratic rival in the November 4 presidential election, accuses McCain of being a latecomer to the regulatory reform cause. The Republican's advisers deny that, citing his early calls to revamp mortgage giants Fannie Mae and Freddie Mac, taken over by the government 10 days ago.

"This is not a new subject for him," senior economic adviser Carly Fiorina, the former chief executive of Hewlett-Packard, told Reuters in an interview, citing speeches McCain made in February.

"He was talking (then) about reform of regulation for Wall Street, talking about Fannie and Freddie - so it's not new."

But the emphasis is.

McCain, whose expertise is in national security, normally highlights plans to reduce spending and keep taxes low when addressing economic issues at campaign events.

Eduardo Canedo, a historian at Princeton University who studies deregulation, expressed doubt about a conversion.

"To the extent that he has shown interest in banking policy, McCain has been a committed advocate of economic deregulation throughout his legislative career," Canedo said, adding that McCain's history suggested he was more likely to veto greater financial oversight than instigate it.

"His regulatory policies will likely continue to promote a laissez-faire approach to government intervention in the marketplace."

McCain advisers dispute that, and his legislative record does include regulatory proposals, including one to reduce greenhouse gas emissions from factories.

New or not, McCain's critique of Wall Street and call for reform is playing well with many supporters.

"As times change, things need to change with them," said John Pigman, 63, at a rally in Ohio on Tuesday night. "The financial (crisis) right now is a fairly serious problem and something needs to be done about that."

(Editing by Patricia Zengerle)