The meltdown of some of Wall Street’s biggest financial institutions this month didn’t just send shock waves around the world. It’s an event that could end up defining an election.

Forget possible war with Iran or in Pakistan. Forget the oil-price spikes and unsettled Middle East. Wall Street’s woes either will be the grease that slides Democrat Barack Obama into office on a message of “throw out the bums” who allowed this mess – or the final straw for worried consumers tipping support into Republican John McCain’s camp as the standard-bearer of “experience.”

Both camps are playing the Wall Street mess that way. Yet once you peel away the campaign sniping and rhetoric, the two leading presidential contenders are remarkably alike in their (admittedly vague) prescriptions for financial regulatory reform.

Obama and McCain both favor streamlining Depression-era bureaucracy and creating greater accountability for financial institutions and tougher oversight of riskier, cutting-edge investments. While that may represent an about-face for McCain and a vindication for Obama’s warnings of a year ago, the truth is that both the Democrat and Republican now offer a similarly moderate vision of how to keep Wall Street greed from pulverizing the markets and shedding more jobs, without forcing taxpayers to pay even more to keep the dominos in check.

Still, with Obama and McCain having such differing outlooks on the larger tax-and-spend equation, the real question may be how each would proceed on regulatory reform, once in office.

Sen. John McCain

Quote: “We don’t need a dozen federal agencies doing the job badly … we need the best federal agencies to do their jobs right.”

What he’s said lately: In a Florida rally this week, McCain blamed “reckless conduct, corruption and unbridled greed” for undermining Americans’ well-being. He promised to fix “the top of our economy” with better regulations.

What he’s proposing: Like Obama, McCain hasn’t spelled out exactly which new regulations he would support. He calls for a 9/11-like economic crisis panel to probe what caused the bottom to fall out of Wall Street’s investment banks, and says he will curb “wild speculation,” limit risky loans and guarantee government regulators “constant access” to financial institutions’ books.

What he’s done in the past: McCain has been one of the Senate’s most consistent supporters of financial deregulation and a key backer of the 1999 law that lifted many limits on how banks, investment houses and insurance firms could do business. He then turned around to support the post-Enron crackdown on Wall Street accounting rules, although The Washington Post reports he appeared to disavow that stance last year.

Flip-flop meter: McCain’s newfound admiration of economic regulation after years spent opposing government intrusions has the meter spinning.

What the opposition emphasizes: The Obama campaign zinged the McCain camp this week with an ad charging he is out of touch for saying “the fundamentals of our economy are strong” at a time when average Americans are finding it harder to make ends meet.

The context: John McCain is wealthy, largely through his wife, who is heir to a brewery fortune. So wealthy, he’s had trouble remembering how many houses they own. That may not endear him to Americans at a time of tight housing markets, plummeting home values and rising foreclosures. Especially when McCain once admitted, “The issue of economics is not something I’ve understood as well as I should.” This week, McCain tried to counteract the impression he was indifferent to economic hurt, saying – rather lamely – that he had American workers in mind when he said the “fundamentals” were strong. Another way of looking at McCain’s boosterism, however, is that it’s in line with presidents like FDR who viewed shoring up public confidence during hard times as at least as important a part of their jobs as reviving spending and employment.

The team: Republicans are likely to put solidly middle-class “hockey Mom” VP candidate Sarah Palin out front in talking about issues of economic pain, while hoping few notice she comes from a state brimming in oil surpluses and earmarks.

Sen. Barack Obama

Quote: “The crisis serves as a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary.”

What he’s said lately: In a statement, Obama called The Wall Street turmoil the “final verdict on the failed economic philosophy of the last eight years” and skewered McCain for previously advocating fewer government regulations. Yet Obama also has suggested, in line with the Bush administration, that taxpayers cannot bail out every private Wall Street firm for risks their CEOs knowingly undertook.

What he’s proposing: Like McCain, Obama hasn’t spelled out exactly which new regulations he would support. His campaign plank says he’d revisit 1999 financial deregulation “to guard against the potential for conflicts of interest, to insist on transparency, (and) to ensure proper oversight of new and complex financial products (and of) the dramatic rise of investment banks and nonbank financial institutions, like hedge funds and Structured Investment Vehicles.” He also promises more protections for ordinary investors and greater scrutiny of debt-rating agencies.

What he’s done in the past: To some, Obama is looking like a genius for having made regulatory modernization and an end to market-distorting manipulations a major campaign plank a year ago, before the full dimensions of Wall Street’s peril was known.

Flip-flop meter: McCain’s campaign detects a major flop in Obama’s apparently newfound willingness to preserve some Bush tax cuts and “accelerate those tax cuts through a second stimulus package. Get more money into the pockets of ordinary Americans, see if we can stabilize the housing market,” as Obama put it earlier this month on ABC-TV. However, it’s hard to tell, since Obama regularly calls his package of higher taxes for the wealthy “tax cuts” (for the poor).

What the opposition emphasizes: McCain calls Obama’s plans to expand government spending and to “increase” taxes a throttle on the economy. “Now’s the time to grow the economy, and my plan does that. Sen. Obama’s does not,” McCain said in Michigan this week.

The context: Credit Barack Obama for pulling on his hip waders to tackle the Wall Street regulatory mess early on, before the problem caught a lot of public attention. His proposals for cracking down on Wall Street’s anything-goes mentality and strengthening capital requirements at financial institutions appear prescient in the current crisis, and make John McCain look like he’s playing catch-up. Obama knows the lingo and in fielding detailed questions during the Democratic primary, appeared to have a good grasp for what later happened: how the corrupted elements of U.S. financial markets created a wider liquidity crisis in the wake of the housing meltdown.

On the other hand, reform is all about making choices, and Obama’s short resume in Washington leaves it unclear which of the many expensive mandates he’s advocating will take priority – especially with his wishy-washy terminology about “tax cuts” clouding the picture of whether there will be any extra revenue to spend.

The team: The Dems already are using VP candidate “regular” Joe Biden, originally from a working-class Pennsylvania city, to attack Republican economic policies on main streets from small-town Ohio across other battleground states.

Elizabeth Sullivan is foreign affairs columnist and an associate editor of the editorial pages for The Plain Dealer of Cleveland. E-mail [email protected].