Oct. 8 (Bloomberg) -- Republican John McCain and Democrat Barack Obama collided over regulation, taxes and the financial crisis in last night's debate, holding back on the personal attacks that have intensified in the campaign's recent weeks.

The two senators stuck to familiar themes, and the event lacked any of the fireworks each side said it was prepared to deliver. McCain stressed his record of seeking bipartisan compromise on issues from campaign finance to climate change, while Obama vowed to reverse the policies of the last eight years that he said helped create the mortgage crisis.

``I've fought excess spending. I've fought to reform government,'' said McCain, who also pledged to buy mortgages of homeowners facing foreclosure and renegotiate them. Obama said he best understood the plight of working-class Americans, promising a middle-class ``rescue package'' and tighter regulations on the financial industry.

Just four weeks before the election, Obama is gaining in the polls, and if McCain's task was to produce a game-changer, he didn't get one in the second of their three debates.

``Was this debate enough to shift the momentum away from Obama? I don't think so,'' said Charlie Cook, editor of the nonpartisan Cook Political Report in Washington.

Same Course

Neither candidate altered the course of the race, said Alan Schroeder, author of ``Presidential Debates: Forty Years of High- Risk TV.''

``It puts everything back to where it was 90 minutes earlier, and that's good for Obama,'' Schroeder said.

Two post-debate surveys gave Obama the edge in the event. A poll of 516 uncommitted voters by CBS News and Knowledge Networks found that 40 percent thought Obama won, compared with 26 percent who saw McCain as the victor. A CNN-Opinion Research Corp. survey of 675 debate-watchers found 54 percent said Obama did the best job in the debate, compared with 30 percent for McCain.

The event drew 42 percent of the television audience in the 55 markets monitored by the Nielsen Co., a higher rating than the 34.7 rating garnered by the first debate. It still is lower than the rating for last week's vice presidential debate between Delaware Senator Joe Biden, Obama's running mate, and Republican Alaska Governor Sarah Palin, which drew 45 percent.

The town hall-style forum at Belmont University in Nashville, Tennessee, focused largely on the economy, yet also touched on health care, energy and foreign policy. Each candidate answered questions from the audience.

Mortgage Plan

When asked about the quickest way to help Americans struggling with financial ruin, McCain said he would order the Treasury Department to purchase bad mortgages to keep people in their homes.

``And it's my proposal, it's not Senator Obama's proposal, it's not President Bush's proposal,'' McCain said. His campaign estimates it would cost about $300 billion, some of which could be diverted from an existing $700 billion rescue package.

While there may be differences in the details, the idea is similar to a program put in place during the Great Depression and floated by others in Congress -- including Obama.

``We should consider giving the government the authority to purchase mortgages directly instead of simply mortgage-backed securities,'' Obama said Sept. 23 in discussing elements of the bailout package.

`That One'

Some of the antipathy present on the campaign trail found its way into the debate. At one point McCain criticized an energy bill ``loaded down with goodies.''

``You know who voted for it?'' he asked the audience. ``You might never know. That one,'' he said, gesturing toward Obama.

McCain repeatedly attacked Obama's record, saying the Democrat would raise taxes and has never bucked his party's leadership.

Obama responded by saying McCain has been in Washington for 26 years and hasn't been able to bring about changes in government. ``It's easy to talk about this stuff during a campaign,'' Obama said.

The face-off came as national and state polls show that worries about the economy have bolstered Obama's standing with voters.

Some of the most forceful moments for the Democrat came when he challenged McCain on foreign policy, particularly on what he called his ``cheerleading'' for the war in Iraq. Obama said McCain's stance on Iraq would keep the U.S. mired in a conflict that's draining economic and military resources.

Economy and Power

``It was the wrong judgment,'' Obama said, adding later that ``there has never been a nation in the history of the world that saw its economy decline and maintained its military superiority.''

McCain went on the offensive early, in an answer to a question about how the government plan to rescue Wall Street would help taxpayers.

He blamed ``Senator Obama and his cronies'' for encouraging Fannie Mae and Freddie Mac to jump into the subprime-mortgage market while taking campaign contributions from the two mortgage giants.

``One of the real catalysts, really the match that lit this fire, was Fannie Mae and Freddie Mac,'' McCain said.

Obama said the rescue package signed by President George W. Bush on Oct. 3 would free up credit markets to help businesses pay employers and suppliers.

``Now, I've got to correct a little bit of Senator McCain's history, not surprisingly,'' Obama said in response to McCain's attack. He cited McCain's past support for lessening government regulations and noted reports that a lobbying firm owned by McCain's campaign manager, Rick Davis, did work on behalf of Freddie Mac.

Government Mandates

The candidates disagreed on health care, with Obama calling it a ``right'' and McCain saying he is wary of government mandates. McCain said Obama's plan for universal coverage would extend too much power to the government and end up hurting small businesses; Obama criticized McCain for voting against an expansion of government health insurance for children.

Both candidates lauded billionaire investor Warren Buffett when asked who they would choose as Treasury secretary.

``Warren would be a pretty good choice,'' Obama said, after McCain raised Buffett's name and that of former EBay Inc. Chief Executive Officer Meg Whitman. Buffett supports Obama, while Whitman is backing McCain.

The latter part of the debate focused more on foreign policy. Each candidate was asked whether Russia is an ``evil empire.'' Obama said the country has engaged in ``evil behavior'' and might be dangerous. McCain responded ``maybe'' and said much depends on how the U.S. responds to Russia.

Heated Rhetoric

The two met as the campaign over the past several days has grown increasingly heated and personal.

Palin, McCain's running mate, has criticized Obama for his association with William Ayers, a former member of the Weather Underground radical group. Palin said Obama is someone who would ``pal around with terrorists who targeted their own country.'' Obama once served on a charity board with Ayers, and has denounced the bombings by the Weather Underground, which took place when Obama was a child.

Obama's campaign responded by launching a Web site about McCain's relationship with former savings-and-loan executive Charles Keating during the 1980s collapse of the industry, looking to draw comparisons between today's market upheaval and McCain's role in the S&L scandal.

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Catherine Dodge in Washington at cdodge1@bloomberg.net

Last Updated: October 8, 2008 12:06 EDT