McCain lays out principles for Wall Street reform

MIAMI (Reuters) - Republican presidential nominee John McCain said on Tuesday he would set up a commission like the one that investigated the September 11 attacks to study what led to the current U.S. financial crisis and offer solutions.

McCain would craft Wall Street reforms based on several principles including better corporate governance, consumer protection, a "derivatives clearing house" and an effective safety and soundness regulator for every financial institution, a senior adviser to the Arizona senator said.

"We're going to need a 9/11 Commission to find out what happened and what needs to be fixed," McCain said on the ABC's "Good Morning America" a day after the financial crisis slammed global markets.

"I warned two years ago that the situation was deteriorating and was unacceptable, and the old boy network and the corruption in Washington is directly involved," he said.

Markets have plummeted over the past two days as financial services firms have succumbed to a credit crunch brought on by the ailing U.S. housing market.

Lehman Brothers Holdings filed for bankruptcy and Merrill Lynch accepted a takeover by Bank of America Corp. Shares of giant insurer American International Group Inc. tumbled 50 percent on Tuesday after its credit ratings were slashed.

Douglas Holtz-Eakin, McCain's senior policy adviser, told reporters a broad set of principles would guide a McCain administration's regulatory reform, but he declined to outline specific proposals.

Holtz-Eakin also defended McCain's assertions about the fundamentals of the U.S. economy being strong and cited the Republican presidential candidate's work on the Senate Commerce Committee, which oversees telecommunications, as part of his qualifications to lead the country through a financial crisis.

"You're looking at the miracle that John McCain helped create," Holtz-Eakin told reporters while holding up a Blackberry device.

Holtz-Eakin said McCain's economic policies to keep taxes low and boost trade with foreign countries would help secure economic fundamentals necessary to steer the nation out of its financial crisis.

The Obama campaign has said repeatedly that McCain did not understand the real problems facing the American economy. The Illinois senator jumped on McCain's comment on Monday about the fundamentals of the U.S. economy being strong as further evidence that the Arizona senator was out of touch.

(additional reporting by Andy Sullivan in Washington; editing by David Wiessler)