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Wall Street crisis revs rhetoric on economy

Barack Obama took aim at John McCain's economic philosophy Tuesday, charging that the Republican presidential candidate would extend Bush administration policies that helped foster Wall Street's turmoil, while McCain proposed creating a blue-ribbon commission to study the nation's deepening financial crisis.

The candidates dueled as the financial world struggled to recover from the Wall Street shocks of Monday, when the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America sent markets reeling and raised new fears of recession.

The upheaval, along with the recent government takeover of mortgage giants Fannie Mae and Freddie Mac, stirred the presidential campaigns. Democratic nominee Obama detailed his remedies Tuesday in a speech in Colorado, while McCain spoke in Tampa, Fla.

In some ways, the candidates sounded alike.

“Too many firms on Wall Street have been able to count on casual oversight by regulatory agencies in Washington,” McCain charged.

“When regulators are chosen for their disdain for regulation and we gut their ability to enforce the law,” Obama said, “then the interests of the American people are not protected.”

They agreed regulators are hamstrung by outmoded laws.

“Let me be clear,” Obama said. “The American economy does not stand still, and neither should the rules that govern it.”

Said McCain: “These regulatory agencies were fine maybe in the 1930s,” he said in a CNN interview Tuesday.

But there were two major areas of contrast: McCain wants a commission, and Obama blames Republicans for the current crisis.

“We have to have a 9-11 Commission, and we have to fix this alphabet soup of regulatory agencies that's left over from the 1930s. We can come back from this,” McCain said.

The Sept. 11 commission, headed by former New Jersey Gov. Tom Kean, a Republican, and former Indiana Rep. Lee Hamilton, a Democrat, studied the causes of the 2001 terrorist attack and offered a series of recommendations to help prevent another.

Obama scoffed at McCain's idea.

“Senator McCain offered up the oldest Washington stunt in the book: You pass the buck to a commission to study the problem,” Obama said. “But here's the thing: This isn't 9-11. We know how we got into this mess. What we need now is leadership that gets us out. I'll provide it; John McCain won't.”

Obama pledged to “streamline our regulatory agencies” in a way that “will provide better oversight and reduce costs,” but he gave no details. In a fact sheet, the Illinois senator noted only that the new system must be “one that reflects 21st-century markets and that is capable of identifying where risks actually reside.”

Obama also wants more attention paid to credit rating agencies, which said that mortgage-backed bonds, and the banks that issued and purchased them, were safe when they were not.

McCain promised “constant access to the books and accounts of our banks and other financial institutions.”

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