By MARK PAZNIOKAS
U.S. Rep. Christopher Shays, R-4th District, and his Democratic challenger, Jim Himes, scrambled Thursday to stay ahead of a financial crisis likely to dominate the closing weeks of the campaign season.
With this Fairfield County district's heavy reliance on Wall Street for jobs and investment income, the crisis is forcing Shays and Himes to quickly rewrite their battle plans, as are the presidential campaigns.
Himes, a former Goldman Sachs vice president, highlighted his Wall Street background during a news conference at Norwalk City Hall, where he faulted Shays and congressional Republicans for deregulating the markets.
" Chris Shays was among those who bought into the Republican anti-regulation ideology," Himes said. "He said, and this is a quote, 'The last thing I like seeing is regulation.'"
Shays, a member of the House Financial Services Committee, responded by releasing a letter he wrote in 2006 questioning a banking regulator's decision to allow banks to develop commercial real estate projects.
He offered the letter as evidence of a greater concern about the ability of government to stave off a banking crisis similar to the savings and loan debacle of the 1980s.
"Simply put, at the very heart of these banking scandals were banks investing in real estate deals and I am concerned whether American taxpayers will once again face this type of risk," Shays wrote in his letter.
In the 4th District and on the presidential campaign trail, Democrats and Republicans tried to distance themselves from the passage in 1999 of legislation repealing key provisions of the Glass-Steagall Act, a Depression-era reform of the financial markets.
The repeal erased many of the barriers between insurers and commercial and investment banks, a change that many critics say set the stage for the current financial services crisis.
Himes noted Thursday that the repeal of Glass-Steagall was "fully supported by Chris Shays." But in response to questioning, Himes said that repeal, which also was supported by President Clinton, was "not an inherently bad notion."
His objection, he said, was the failure by Congress to impose a suitable regulatory structure.
The exchanges between Himes and Shays echoed a new focus on the economy by the presidential candidates and a sense that a week of extraordinary financial headlines has been a game-changer.
"It's sad that it's taken a Wall Street meltdown to do it, but at last the presidential campaign is off trivialities - as in 'lipstick on a pig' - and is focused on America's dire economic problems," commentator Morton Kondracke wrote Thursday.
Ken Dautrich, a political analyst at the University of Connecticut, said the crisis in the financial markets does not lend itself to easy solutions, but politicians are obligated to weigh in.
"It's a complicated subject, but people don't need to understand the complications to know it's a big problem," Dautrich said. "More people have bought into the stock market now than ever before."
Whatever the root causes, millions of voters understand that their retirement accounts are worth dramatically less than a week ago, Dautrich said.
"The average voter says, 'Things are messed up, and I'm feeling the impact of it.' So, I think this issue matters more than anything else," Dautrich said.
Himes called Thursday for a "competent, smart and streamlined regulatory apparatus," but he was equally intent on portraying Shays as out of touch for insisting that the fundamentals of the economy remain strong.
"He could not be more wrong," Himes said.
Michael Sohn, Shays' campaign manager, said the congressman believes that the fundamentals are strong, but that better oversight of the markets is needed.
And Shays, the only House Republican in New England to survive a Democratic wave two years ago, wants to portray that issue as beyond partisanship.
"This isn't a party issue," Sohn said. "The way we move forward at times like this is Democrats and Republicans working together."