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Obama, McCain bemoan stock market crisis; both beneficiaries of Wall Street donations

WASHINGTON — Wall Street's financial meltdown jolted the presidential contest Monday, with Democrat Barack Obama suggesting that Republican John McCain is out of touch for insisting that the fundamentals of the economy are strong.

The candidates' remarks reflect their efforts to gain control of an issue of ever increasing importance to voters - and one that both Obama and McCain are having trouble making their own. In a Gallup poll last week, 48 percent of Americans said Obama can better handle the economy, while 45 percent chose McCain, a significant gain for the GOP nominee: in late August, Obama had a 16 percentage point margin over McCain on the economy.

"Interestingly, even though the economy is the mega-issue of this election, no candidate emerges with a real boost from it," independent pollster John Zogby said. "Americans are split on the best remedies and so the issue kind of neutralizes itself. Thus, the election will election will revolve more on character and leadership traits (than the economy itself)."

Still, the candidates could not ignore the chaos rocking Wall Street on Monday following the bankruptcy filing of Lehman Brothers Holding Inc. and the forced sale of Merrill Lynch to Bank of America. The Dow Jones industrials slid 500 points in their worst point drop since the Sept. 11, 2001, attacks.

Both, however, have been major beneficiaries of financial contributions from Wall Street, according to the Center for Responsive Politics. The nonpartisan watchdog group, which monitors campaign contributions to candidates for federal office, calculates that Obama has received nearly $10 million and McCain close to $7 million from employees of securities and investment firms. Obama raised $370,000 from Lehman Brothers earlier this year, and McCain got almost $300,000 from Merrill Lynch, according to the center's data.

Nonetheless, Obama and McCain both presented themselves as the candidate who could best restore the country's economic health in the wake of the broadening financial crisis caused by the weakness in the U.S. mortgage market. And as their verbal jousting continued throughout the day, especially after McCain asserted that the U.S. economy is fundamentally sound.

"He doesn't get what's happening between the mountains of Sedona where he lives and the corridors of power where he works," Obama said of McCain. "Why else would he say that we've made great progress economically under George Bush? Why else would he say that the economy isn't something he understands as well as he should? Why else would he say, today of all days, just a few hours ago - think about this, we just woke up to news of financial disaster - and this morning he said the fundamentals are still strong. Senator McCain, what economy are you talking about?"

In response, McCain spokesman Tucker Bounds said Obama's attacks on the GOP nominee reflected the "pessimism, defeatism and weakness in the face of the great challenges of our time" that he said have defined Obama's career. "His lack of faith in American works may explain his willingness to raise taxes during a struggling economy, but it is no way to lead our country," Bounds said in a statement.

McCain, campaigning in Jacksonville, Fla., told several thousand supporters that his faith in the American economy has not been shaken by tumbling stock prices or the uncertain fate of Lehman Brothers and Merrill Lynch, two of Wall Street's oldest institutions.

"Our economy, I believe, still, the fundamentals of our economy are strong, but these are very, very difficult times, so I promise you: We will never put America in this position again. We will clean up Wall Street," he said. "The McCain-Palin administration will replace an outdated, patchwork quilt of regulatory oversight and bring transparency and accountability to Wall Street."

Earlier in the day, in a statement, Obama likened the Wall Street meltdown to the Great Depression following the 1929 stockmarket crash. "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," Obama's statement said. "Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged out-sized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression."

McCain's campaign underscored his message with a new TV ad titled "Crisis" with this message: "Our economy in crisis. Only proven reformers like John McCain and Sarah Palin can fix it. Tougher rules on Wall Street to protect your life savings. No special interest giveaways. Lower taxes to create new jobs. Offshore drilling to reduce gas prices."

Obama and McCain have both endorsed the Treasury Department's recent actions to take control of the country's two largest companies - Freddie Mac and Fannie Mae - in an effort to prevent their collapse from dragging other banks down with them. Together, Freddie and Fannie control a staggering $1.6 trillion in home mortgages, about 15 percent of the total market for one of the most critical cogs in the credit machine upon which much of the U.S. economy rests.

Both have also proposed tax cuts, although in general McCain's tax cuts "would primarily benefit those with very high incomes," while Obama "offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers," according to an analysis by the non-partisan Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution.

(Bob Deans contributed to this report.)