September Surprise

J. Jennings Moss writes from New York: Presidential campaigns normally have to wait until sometime in October when they get rattled with a game-changing play. Not this year, when the simmering crisis on Wall Street erupted over the weekend.

Faced with the news that Lehman Brothers filed for bankruptcy, Bank of America said it would buy Merrill Lynch, and A.I.G. sought a lifeline, both the Obama and McCain campaigns fired off serious-sounding statements that tried to suggest they could fix the problems. Too bad neither candidate really said that much.

John McCain, the Republican nominee, says his campaign is "carefully monitoring the financial markets"--which makes it sound like he's watching a hurricane in the Gulf of Mexico make its way to the U.S. coastline. He says "major reform" is needed in Washington and on Wall Street. "We cannot tolerate a system that handicaps our markets and our banks and places at risk the savings of hard-working Americans and investors. The McCain-Palin Administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street," he said.

The Democrats' man, Barack Obama, also invoked the idea of reform with his statement, all while taking the expected shot at the Bush White House. "Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression."

So what would he do? "For years, I have consistently called for modernizing the rules of the road to suit a 21st century market - rules that would protect American investors and consumers. And I've called for policies that grow our economy and our middle-class together. That is the change I am calling for in this campaign, and that is the change I will bring as President."

Polls consistently show that the economy is the top issue of concern to voters. With Wall Street in turmoil, who gains the biggest advantage? Hard to say as the media and the chattering class on both sides seem stuck on the personality and the policies of Sarah Palin, McCain's running mate. So far, polls differ on which candidate might get the political gain from the nation's financial troubles.

Mike Allen at Politico.com sized it up this way: "Just like the markets, however, each candidate faces an enormous downside risk: Troubled times could make voters less likely to take a chance on Obama, with his shorter time in Washington. McCain could pay the price for the economic disruption on a Republican's watch, or if he looks like he doesn't have the energy and creativity to reassure a worried nation."

Already, the McCain campaign has a new campaign video titled "Crisis" that builds McCain and Palin as reformers. Today, the Obama campaign also released a new video, but this one goes after McCain for his campaign tactics.

J. Jennings Moss

For more on the crisis on Wall Street, read these:

-- Shock to the System.
-- Investment Bank, R.I.P.
-- Paulson Pulls It Out.
-- Day of Reckoning on the Street.
-- Market Movers: Wall Street Huddles for Safety.
-- Helicopter Ben Strikes Again.