Obama, McCain respond to Wall Street woes

Obama, McCain respond to Wall Street woes
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FINANCIAL TURMOIL

Bankruptcy plans: Lehman Bros. seeks Chapter 11 protection, company says



Markets today: Lehman Bros., other worries sink world, U.S. stocks



$50 billion buyout: Bank of America agrees to buy Merrill Lynch



Fed steps in: Moves to deal with financial crisis | In Europe : European central banks counter Lehman shockwave



$70B loan program: Global banks pool resources to ease credit shortage



AIG: Insurance giant plans major restructuring, report says



Fannie/Freddie latest: No golden parachutes for ex-CEOs of mortgage giants





2008 CANDIDATE PROFILES

2008 Democratic nominee: Sen. Barack Obama of Illinois -- Eyeing the white working class



Barack Obama on the campaign issues: Iraq | Immigration | Health care | Education | Abortion | Gay civil rights



2008 Republican nominee: Sen. John McCain of Arizona -- Saying he won't run from Bush



John McCain on the campaign issues: Iraq | Immigration | Health care | Education | Abortion | Gay civil rights



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WASHINGTON (AP) — Democrat Barack Obama laid into the economic policies of the Republican opposition on Monday and Republican rival John McCain called for a regulatory overhaul of the battered financial sector as Americans awoke to the disappearance of two Wall Street giants.
Obama called the falls of Lehman Brothers and Merrill Lynch & Co. "the most serious financial crisis since the Great Depression" of the 1930s.

The Democrat is battling to overcome a significant boost in the polls for his opponent, who stunned Americans and solidified wavering support among his party's Christian conservative base with the choice of Alaska Gov. Sarah Palin as running mate. After trailing Obama throughout the run-up to both party conventions, McCain has pulled even or edged slightly ahead in national polling — primarily riding the wave of Palin's initial popularity.

Deepening turmoil in the U.S. economy, the No. 1 issue among voters despite the ongoing wars in Iraq and Afghanistan, could resonate in Obama's favor as he tries mightily to link McCain to President George W. Bush, whose stewardship of the United States has left him with near-record disapproval ratings.

McCain and Obama responded Monday to the news overnight that the investment banking firm Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it was filing for bankruptcy protection after attempts to rescue the 158-year-old institution failed. Its businesses in Britain were already placed in administration, said the administrator, accounting firm PricewaterhouseCoop ers.

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Also, Bank of America Corp. said it was buying Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.

Over the weekend, advisers both to McCain and Obama said they did not favor a government bailout of Lehman Brothers like that previously provided to mortgage giants Fannie Mae and Freddie Mac. The government also help engineer the recent sale of Bear Stearns Cos. to J.P. Morgan & Co.

In a statement issued shortly after 6 a.m. on the U.S. east coast, Obama said he did not blame McCain, but "I do fault the economic philosophy he subscribes to. It's a 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."

"It's a philosophy that says even commonsense regulations are unnecessary and unwise, and one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises."

McCain said in a statement issued in advance of market openings that he agreed there should be no taxpayer-financed bailout of Lehman Brothers even as the investment banking giant faced the specter of liquidation.

"It is essential for us to make sure that the U.S. remains the pre-eminent financial market of the world. This will be a highest priority of my administration. In order to do this, major reform must be made in Washington and on Wall Street," McCain said in his statement.

The demise of the independent Wall Street heavyweights came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.

The world's largest insurance company, American International Group Inc., also was forced into a restructuring.

And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

Financial turmoil was overshadowing a campaign that has grown increasingly nasty.

Earlier, Obama's campaign announced it would begin airing a new television ad that challenges McCain's campaign tactics — questionable and, in some cases, untrue assertions about Obama, a first-term senator representing Illinois.

The commercial begins with videotape of McCain saying: "I will not take the low road to the highest office in this land," after which an announcer asks "What's happened to John McCain?"

The 30-second ad then quotes snippets of negative media commentary about the Republican's campaign tactics and concludes: "After voting with Bush 90% of the time proposing the same disastrous economic policies it seems 'deception' is all he has left." The word "deception" is attributed to The Washington Post.

The Obama campaign issued a statement defending the ad, saying it had been forced to call attention to McCain's tactics — " ... one of the most dishonorable, dishonest campaigns Americans have ever seen."

McCain, when challenged on the issue last week, said the contest would not have reached this point had Obama agreed to the four-term Arizona senator's call for weekly joint appearances at town hall meetings.

On Sunday, Obama reported a record $66 million fundraising haul last month, donations that outstripped McCain's take for the month by nearly $20 million. McCain had rolled up $47 million, his own personal best. Obama's campaign said he reached the new record with the help of a half-million first-time givers.

Obama appears to be refocusing his campaign on the issue distinctions between him and McCain after having spent much of the previous week trying to figure out a campaign strategy to blunt the Republican surge in the polls fueled by Palin's addition to the ticket.

Obama was making campaign stops in the battleground state of Colorado on Monday, while running mate Sen. Joe Biden was speaking in Michigan, another closely contested state.

McCain was appearing in Jacksonville, Florida, at his first solo rally since announcing Palin as running mate over two weeks ago. He was greeted by a crowd of several thousand who filled less than a quarter of the Jacksonville Veterans Memorial Arena.

Later he was flying to Orlando to take questions from an audience for the first time since a session in Las Cruces, New Mexico, before he accepted his party's nomination Sept. 4 at the Republican National Convention. Palin was attending a rally in Colorado before flying to Ohio for a fundraising event.




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