FINANCIAL MARKETS

McCAIN says he favors more controls on what he calls Wall Street greed and has urged the firing of Securities & Exchange Commission Chairman Christopher Cox, who he says should have been doing more to prevent the crisis. 

OBAMA is promising to overhaul regulation of the financial services industry, as well as all federal contracting. He also wants to create a mechanism for identifying and evaluating the effectiveness of all corporate subsidies and tax breaks.

McCAIN has long been an opponent of regulation, by and large, telling the Wall Street Journal earlier this year that he was "fundamentally a deregulator," but he has shifted his stance recently in light of the financial market crisis, calling for more transparency in the balance sheets of financial institutions and a beefed up SEC. Like McCAIN, OBAMA favors strengthening the SEC to increase transparency at investment banks and other firms. 

OBAMA has been calling for more regulation of financial lending and investment institutions since early 2006 when he addressed the subject as the mortgage and foreclosure crisis began widening.

Both candidates favor a more streamlined approach to financial regulation, wanting to consolidate, for instance, the many government oversight and enforcement offices into a single entity.

OBAMA wants to extend commercial banking regulations to investment banks, mortgage brokers and hedge funds and may favor restrictions on how much borrowing investment houses are allowed to do in comparison to real, liquid assets.

OBAMA also wants a permanent commission to review financial market activity and practices and warn of emerging dangers. OBAMA also would increase oversight of the two large credit-rating groups, Standard & Poor's and Moody's.

McCAIN would rely less than OBAMA on a host of new regulations, though, saying regulatory overreach slows the economy further. As chairman of the Commerce Committee, for instance, McCAIN often took steps to ease business regulation, such as on the telecommunications and media broadcast industry. His closest economic advisors are well connected with the financial industry and would advise him away from an aggressive regulatory course, although he would use the prospect of heavy regulation as a threat if investment firms don't adopt stricter rules on their own.

McCAIN has also called for creation of a blue-ribbon panel to determine what went wrong with the markets and to recommend a course of action. OBAMA has derided that as passing the buck, saying such a commission would delay necessary action.