Candidates react cautiously to financial plan

updated 2:42 p.m. ET Sept. 19, 2008

GREEN BAY, Wisc. - Presidential rivals Barack Obama and John McCain responded cautiously Friday to a government plan to stop America's dramatic financial upheaval, but exchanged barbs over who was responsible for the turmoil.

Obama laid blame on the administration of McCain's fellow Republican, President George W. Bush. McCain cast some responsibility on the Democrat, citing campaign contributions Obama received from Fannie Mae and Freddie Mac, the mortgage giants rescued by a government takeover.

"Maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems," McCain said of Obama.

The market fell steeply Monday in response to the bankruptcy of storied Wall Street investment bank Lehman Brothers, the decision of a second powerful investment house to sell itself at a fire-sale price, and the Federal Reserve's intervention in insurance giant American International Group Inc. The government seized control of mortgage giants Freddie Mac and Fannie Mae earlier this month.

But Wall Street enjoyed a huge rally Friday after the government said it was creating a plan to rescue troubled U.S. banks from their souring debts. If such a plan is put in place, it could help alleviate the uncertainty that has been sending the markets into tumult over the past week.

McCain has been battling to differentiate himself from the unpopular Bush and his economic policies and to square his long history of advocating deregulation with voter concerns about the crisis in the U.S. financial landscape.

Video Obama blasts McCain on economy Sept. 18: Democratic presidential nominee Barack Obama ties John McCain to an “old boys’ network,” one that he promises to fight. NBC’s Lee Cowan reports. Today show

He made little mention Friday of the massive proposal being crafted by Treasury Secretary Henry Paulson that could amount to a $1 trillion taxpayer bailout of the mortgage industry. Instead, McCain said simply that leaders should put aside partisan differences and "any action should be designed to keep people in their homes and safeguard the life savings of all Americans."

Earlier, he called on the Federal Reserve to stop bailing out failed financial institutions. Addressing a business group in Wisconsin, the Republican presidential hopeful said the Fed should get back to what he called "its core business of responsibly managing our money supply and inflation."

McCain said that to help return the U.S. to fiscal solvency, the powerful central bank should instead focus on shoring up the dollar and keeping inflation low.

Video McCain: We need 'regulatory clarity' Sept. 19: Presidential candidate John McCain lays out his plan to reform the U.S. financial sector and its regulation, and also proposes tax cuts for workers. MSNBC

"A strong dollar will reduce energy and food prices," McCain told business leaders in Green Bay, Wisconsin. "It will stimulate sustainable economic growth and get this economy moving again."

Obama, meanwhile, met in Florida with top economic figures from former President Bill Clinton's administration — including former Treasury secretaries Robert Rubin and Lawrence Summers. The meeting also served as a reminder of the better days of the U.S. economy during the last Democratic administration.

Obama said later that he wouldn't go into precise details of what he would offer if elected, because that could lead to financial turmoil. While backing the authority to move quickly on the credit crisis, Obama made it clear that he laid blame at the feet of the Bush administration.

"For too long this administration has been willing to hit the fast-forward button when it comes to helping distressed Wall Street firms, while pressing pause when it comes to saving jobs and keeping people in their homes," he said. While he backed what he acknowledged would be a huge bailout, he argued for a targeted approach.

Obama has seen a bump in the polls this week over McCain, whose post-convention bounce from his surprise choice of Gov. Sarah Palin as his party's vice presidential nominee has vanished.

McCain has consistently charged that Obama is too inexperienced to sit in the White House. Less than seven weeks before Election Day, Obama's high-profile consultations Friday appeared designed to combat that image, portraying him in a presidential-like setting, grappling with the country's most serious problems and making decisions with the help of a big-name team of experts.

National polls show that McCain's edge has slipped since the upheaval in the U.S. financial landscape. The latest CBS News-New York Times national survey showed Obama leading McCain by a margin of 48 percent to 43 percent — a swing of seven percentage points in just a week. The poll also found Americans believed Obama was more likely than McCain to bring needed change to Washington by a 65-to-37 percentage-point margin.

The latest Gallup Poll daily tracking survey also showed Obama ahead, with 49 percent to McCain's 44 percent. A poll by Pew Research Center gave the Democrat a slight 2 percentage point lead, a statistical tie.

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