White House hopefuls John McCain and Barack Obama have called for wide-ranging reforms in Wall Street following the collapse of Lehman Brothers.
John McCain on Monday insisted US economic "fundamentals" were strong despite a banking crisis and Wall Street meltdown, prompting a scathing rebuke from his White House foe Barack Obama.
"Senator McCain, what economy are you talking about?" Democratic candidate Obama said after the Lehman Brothers bankruptcy sent fear across the globe and spooked investors, wiping 500 points off the Dow Jones Industrial Average.
The crisis, just 50 days before the presidential election, marked a moment of peril and opportunity for the candidates, neither of whom has yet carved out a wide advantage on the economy, which polls show is the top concern of voters.
McCain said that despite the anxiety winging through global financial markets, the underlying conditions of the staggering US economy were sound.
"There has been tremendous turmoil in our financial markets and Wall Street. People are frightened by these events," he told supporters in the battleground state of Florida.
"Our economy I think, still, the fundamentals of our economy are strong, but these are very, very difficult times," Senator McCain said.
"I promise you, we will never put America in this position again. We will clean up Wall Street," McCain vowed, drawing loud cheers from his supporters.
Later, in his second event of the day, in Orlando, McCain stuck by his "fundamentals" argument, but said he was talking about the contribution US workers made to turn the American economy into a global powerhouse.
"Our workers are the most innovative, the hardest working, the best skilled, most productive, most competitive in the world. My opponents may disagree, but those fundamentals of America are strong."
But Obama lacerated McCain's economic strategy, and once again sought to portray him as out of touch and committed to a carbon copy of unpopular President George W. Bush's economic policy.
"What's more fundamental than the ability to find a job that can pay the bills and that can raise a family?
"What's more fundamental than knowing your life savings are secure... and that you'll have a roof over your head at the end of the day?
"It's the same philosophy we've had for the last eight years -- one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else."
McCain's spokesman Tucker Bounds attempted to repair any damage from his boss's earlier remarks, accusing Obama of distortion.
"Barack Obama's short career as a public servant has been defined by pessimism, defeatism, and weakness in the face of the great challenges of our time," Bounds added.
McCain's vice presidential pick Sarah Palin took on the mushrooming financial crisis as she also campaigned in Colorado.
"Washington has been asleep at the switch and ineffective and management on Wall Street has not run these institutions responsibly," Palin said at a rally in Golden, Colorado.
"John McCain and I are going to put an end to the mismanagement and abuses in Washington and on Wall Street that have resulted in this financial crisis.
Between campaign stops in Colorado on Monday, Obama spoke to Treasury Secretary Henry Paulson and was briefed on the markets, spokeswoman Jen Psaki told reporters.
McCain also spoke to Paulson and spoke to his economic advisors, his spokeswoman Brooke Buchanan said.
US shares went into a freefall as part of a global rout after Lehman Brothers had failed to find a buyer during a weekend of crisis talks, and the emergency sale of Wall Street rival Merrill Lynch also rattled investors.
The blue-chip Dow Jones Industrial Average tumbled below 11,000 with a 4.42 percent loss to 10,917.51, its largest one-day point loss since the reopening after the September 2001 terrorist attacks.
The Nasdaq composite plummeted 3.6 percent and the broad-market Standard & Poor's 500 index lost 4.71 percent.
Asian markets plunged as well, with Japanese share prices closing down nearly five percent Tuesday, tumbling to a more than three-year low, and Hong Kong's benchmark Hang Seng Index sinking 5.9 percent in morning trade.
Compounding the anxiety, main rating agencies Standard & Poor's, Moody's and Fitch lowered the credit score of American International Group, one of the world's biggest insurers, whose shares Monday plummeted 61 percent.
The Wall Street Journal reported Tuesday that people close to the situation say AIG may be forced into filing for bankruptcy if it cannot secure billions of dollars in fresh funding by Wednesday.
Date created : 2008-09-16