Obama, McCain ramp up calls for economic reform

John McCain and Barack Obama scrambled Wednesday to adjust their messages to connect more directly with voters who are struggling financially.

Obama talks directly into the camera in a new, two-minute TV ad on how he'll fix an economy in which “paychecks are flat and home values are falling.” McCain and running mate Sarah Palin softened opposition to government bail outs, accepting the takeover of the nation's largest insurer as unfortunate but necessary to protect ordinary Americans.

“The shot that has been called by the feds – it's understandable but very, very disappointing that taxpayers are called upon for another one,” Palin said during a stop in Cleveland.

Both McCain and Obama advocated cracking down on freewheeling Wall Street practices and for tough new regulations on financial institutions.

Obama ridiculed McCain's calls for more regulation as an eleventh-hour conversion for one who has long championed deregulation.

In Elko, Nev., Obama challenged McCain's vow to take on the “old boy's network. … He hasn't taken them on for the last 26 years.”

The increased emphasis on the economy came on a day when stocks resumed their plunge after Tuesday night's government takeover of American International Group.

“The focus of any such action should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts with AIG,” McCain said in a statement. “We must not bail out the management and speculators who created this mess.”

The turnabout came a day after McCain strongly opposed additional government relief and praised the government's decision not to rescue Lehman Brothers, after intervening to help investment bank Bear Stearns and mortgage giants Fannie Mae and Freddie Mac.

Obama addressed the AIG takeover in Elko, saying the government acted “to prevent an even larger crisis.” Arguing that the U.S. housing market was “in a shambles,” Obama said it was important for the Federal Reserve to ensure that families with AIG insurance are protected. “It must not bail out the shareholders or the management of AIG that were making big profits when times were good.”

In his new ad, Obama says: “In the past few weeks, Wall Street's been rocked as banks closed and markets tumbled. But for many of you – the people I've met in town halls, backyards and diners across America – our troubled economy isn't news.”

While both candidates call for tougher regulation of financial institutions and cracking down on Wall Street abuses, neither has detailed a plan, nor endorsed a proposal for the kind of massive federal intervention that took place in the savings-and-loan crisis of the late 1980s and the early 1990s.