GRAND JUNCTION, Colo. (Reuters) - As fears of a meltdown jolted Wall Street, U.S. presidential candidates sparred on Monday over who could best restore financial health, with John McCain pledging reform and Barack Obama painting him as out of touch.
The two nominees for the November 4 election focused on the economy after a weekend of stunning developments reshaped Wall Street, with venerable investment bank Lehman Brothers Holdings Inc moving to bankruptcy and rival Merrill Lynch agreeing to be bought by Bank of America.
The broadening financial crisis caused by the weakness in the U.S. mortgage market prompted global stock markets to plummet on Monday, even as U.S. officials and the candidates sought to reassure consumers.
The economy is voters’ No. 1 issue and both McCain, a Republican, and Obama, a Democrat, have sought to address concerns about high gasoline prices, the credit crunch caused by the mortgage crisis and increasing joblessness.
It was unclear which candidate voters might be more likely to turn to in an ongoing climate of economic turmoil. Polls generally show voters believe Obama would do a better job than McCain in handling the economy, but his lead on economic issues has been shrinking.
“The fundamentals of our economy are strong, but these are very, very difficult times and I promise you we will never put America in this position again,” McCain told a rally in Jacksonville in the electoral battleground state of Florida.
“We’re going to reform the way Wall Street does business and put an end to the greed that has driven our markets into chaos,” he told an Orlando rally. “We’ll put an end to running Wall Street like a casino.”
Obama blamed the crisis on Republican opposition to sensible market regulation — a philosophy he said McCain shared — and ridiculed his rival’s statement that the country’s economic fundamentals were sound.
“He just doesn’t get what’s happening between the mountain in Sedona where he lives and the corridors of power where he works,” Obama told a rally in Grand Junction, Colorado. “Why else would he say today of all days ... that the fundamentals of the economy are still strong?”
“Sen. McCain, what economy are you talking about?” he added.
The McCain camp shot back, accusing Obama of distorting his comments. McCain himself later attempted to clarify his comment, saying that when he spoke about the economic fundamentals being strong, he meant the American worker, innovation, entrepreneurship and small business.
“Those are the fundamentals of America and I think they’re strong,” he said. “But they are being threatened today.”
Obama described the situation facing Wall Street as “the most serious financial crisis since the Great Depression.”
“I certainly don’t fault Sen. McCain for these problems. But I do fault the economic philosophy he subscribes to,” he said. “It’s a philosophy that says even common-sense regulations are unnecessary and unwise.”
Obama and McCain both said they did not favor a taxpayer-funded bailout of Lehman Brothers, despite earlier government intervention to take over mortgage giants Fannie Mae and Freddie Mac and to facilitate the sale of investment bank Bear Stearns.
Obama has long called for an overhaul of Wall Street regulations, saying the subprime housing crisis and other problems stemmed in part from lack of transparency and accountability in the financial system.
“The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren’t minding the store,” he said.
McCain, whose economic message usually focuses more on his promise to keep taxes low and reduce government spending, put more than his usual emphasis on Monday on the need for regulatory reform.
His campaign released an ad titled “crisis” that promised tougher rules covering Wall Street to protect citizens’ savings.
Additional reporting by Jeff Mason in Orlando; writing by David Alexander; editing by David Wiessler