Obama accuses McCain of ignoring Wall St. excesses

GOLDEN, Colo. (Reuters) - Democratic presidential candidate Barack Obama sought on Tuesday to link his Republican rival to the turmoil sweeping Wall Street, and John McCain fired back that Obama had close ties to the troubled mortgage industry.

Obama accused McCain of being an opponent of government regulation who turned a blind eye to market recklessness and McCain answered back that Obama had taken big donations from mortgage giants Freddie Mac and Fannie Mae.

“He put Fannie Mae’s CEO (chief executive), who helped create this problem, in charge of finding his vice president. That’s not change, that’s what’s broken in Washington,” McCain said.

The biggest financial shake-up since the Great Depression -- with the bankruptcy filing of Lehman Brothers Holdings, takeover of Merrill Lynch and the government takeover of the two mortgage giants, has taken center stage on the campaign trail as it further rattles Americans already grappling with high energy costs and a worsening job market.

Both Obama and McCain, his Republican rival in the November 4 election, took a populist tone in campaign speeches, blaming the crisis on greedy people who took excessive risks.

“The news from Wall Street has shaken the American people’s faith in our economy,” Obama said in Golden, Colorado, where he pushed a plan for tighter regulations on Wall Street that he said would restore faith in the markets.

“This is a major threat to our economy and its ability to create good-paying jobs and help working Americans pay their bills, save for their future and make their mortgage payments,” said Obama, an Illinois senator.

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McCain said workers’ livelihoods had been put at “great risk by the greed and mismanagement of Wall Street and Washington.”

“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,” McCain said to loud applause at a rally in Tampa, Florida.

As U.S. markets suffered their worst drop on Monday since the September 11, 2001, attacks in reaction to Lehman’s bankruptcy and Merrill’s sale, McCain joined Obama in embracing a push to clamp tighter rules on Wall Street.


Obama, who has long called for tighter financial regulations, lambasted McCain as a recent convert to the idea. He likened McCain to President George W. Bush, with a history of showing a “scornful attitude towards oversight and enforcement.”

“John McCain cannot be trusted to reestablish proper oversight of our financial markets for one simple reason: he has shown time and again that he does not believe in it,” Obama said.

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The Democratic candidate cited McCain’s closeness to Phil Gramm, a former Texas senator and ardent free-market economist who spearheaded a 1999 law that loosened Depression-era laws to allow banks, investment houses and insurance firms to engage in each others’ businesses.

The McCain campaign countered by highlighting the Arizona senator’s past calls to rein in Fannie Mae and Freddie Mac, the two mortgage giants whose financial troubles prompted their takeover by the federal government.

“Unlike Barack Obama, John McCain has been ahead of the curve in calling for reform of Fannie Mae and Freddie Mac. Barack Obama has never proposed legislation; he became interested in reform only when it became politically expedient,” said Doug Holtz-Eakin, McCain’s senior economic adviser.

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McCain also put forth a proposal on Tuesday to 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.

Obama ridiculed the idea, saying it amounted to “passing the buck.”

“Here’s the thing -- this isn’t 9/11. We know how we got into this mess,” Obama said.

Additional reporting by Jeff Mason in Tampa, Florida; editing by David Alexander and Patricia Zengerle