White House candidates Barack Obama and John McCain promised on Monday to move quickly to reform Wall Street, with both blaming an antiquated regulatory structure for the financial meltdown.
As the Federal Reserve and U.S. Treasury grappled with the worst financial crisis since the Great Depression, Democratic presidential nominee Obama said policy-makers lacked the tools needed to contain the problems and were "making it up as they go along."
"Each problem ends up requiring a patchwork solution," Obama, an Illinois senator, said on his campaign plane as he traveled in Colorado.
A top adviser to McCain, Obama’s rival in the November 4 election, said the Republican nominee believed a network of regulatory agencies should be combined and given broader powers to achieve transparency.
"The Washington regulatory structure over Wall Street is about 70 years old now," said Carly Fiorina, senior economic adviser to the Arizona senator.
"He’s been saying for some time and again today that this would be a top priority — that he will, in his administration, put an end to the abuses that we’re seeing in both Washington and on Wall Street," Fiorina told Reuters in a telephone interview.
Obama has long urged a modernizing of the financial system. He called for it in a speech at NASDAQ a year ago and outlined a plan for an overhaul of Wall Street regulations in March.
McCain, whose economic message usually focuses more on his promise to keep taxes low and reduce government spending, put greater emphasis on Monday on the need for regulatory reform.
The Republican candidate joined Obama in saying it would be a high priority for his administration in the first year.
Fiorina, a former chief executive of computer giant Hewlett-Packard, said McCain would start working on Wall Street regulatory reform within the first 100 days of his presidency.
"There’s a patchwork of various regulatory agencies, which means that no one sees the whole picture, and so he would consolidate and streamline those regulatory agencies and give them more authority and accountability to demand transparency from Wall Street," she said.
Obama said quick action was needed to shore up the shattered faith of investors.
"I think we have to move on it very quickly because my suspicion is the deteriorating confidence in the credit markets, in the financial markets, is not going to immediately bounce back," he said.
STEEP STOCK MARKET DROP
The financial crisis slammed global markets on Monday, with the Dow Jones industrial average sinking 504 points, the steepest drop since the aftermath of the September 11 attacks.
The steep drop followed one of Wall Street’s most agonizing weekends ever, after which Lehman Brothers Holdings filed for bankruptcy and Merrill Lynch accepted a takeover by Bank of America Corp.
Obama also said it was possible more short-term measures might be needed to bolster the housing market, which has been at the center of the crisis, but he said that would depend on whether the markets were stabilized.
Both Obama and McCain sketched out some similar ideas for revamping regulations, including bolstering the power of government agencies such as the Securities and Exchange Commission, streamlining the overlapping responsibilities of regulators and improving transparency.
Fiorina said Obama’s plans were not very specific and might lean toward tightening regulations too much. Aides to the Democratic candidate insist he would seek a balance of boosting oversight where it is needed without curbing free markets.
Obama said in the interview he had not seen McCain’s plan.
But he added: "The advantage I think that voters have when it comes to my plans is they’ve been out there for over a year. This is not something I said in response to today’s crisis."