AUGUSTA – With Wall Street’s meltdown threatening the national economy, Republican Susan Collins and Democrat Tom Allen both want more oversight and regulation of the financial markets.

Allen blames the Bush administration for setting the stage for disaster by failing to effectively regulate Wall Street. Collins, who’s seeking a third term, sees a need to reform a “Depression-era regulatory system” and says the crisis grew from a culture of greed and risk taking.

The two candidates in one of the nation’s most closely watched Senate races discussed Wall Street regulation, spending practices known as earmarks that have come under question and international trade in the second series of questions posed by The Associated Press.

In some cases, the candidates’ written responses have been shortened.

Question: Sen. John McCain has called himself “an unapologetic supporter of NAFTA,” while Sen. Barack Obama says he wants to revisit some aspects of the North American Free Trade Agreement. Is NAFTA working or does it need overhauling? What specific changes do you support?

Allen: I am a co-sponsor of the TRADE Act, developed by Congressman Mike Michaud, to review existing trade agreements. I think we have lost way too many jobs in Maine and across the country because of badly developed trade agreements.

I voted against fast track, because it gave the president the power to develop trade agreements that I think have not worked because they didn’t take into account labor standards in other countries or environmental standards in other countries, they didn’t just push our trading partners in the right direction, and also they gave far too much power to giant industries like the pharmaceutical industry.

There needs to be a review of all existing trade agreements. Susan Collins and I differ when it comes to trade agreements. She has supported trade agreements that have caused Maine to lose more than 18,000 manufacturing jobs in the last eight years.

Collins: While NAFTA has resulted in growth of Maine’s exports and imports, the wood, food processing and segments of the metals industries have been hard hit from import competition and have experienced a net loss of jobs. For some businesses and workers, NAFTA has resulted in growth and expansion, for others it has meant layoffs and closed factories.

The Department of Labor stopped accepting petitions under NAFTA’s Trade Adjustment Assistance program in November 2002, so it is difficult to accurately calculate the number of jobs lost as a result of NAFTA. What we do know is that from 1994 to 2002, the DOL certified nearly 4,400 Maine workers for assistance through NAFTA’s Trade Adjustment Assistance program.

In deciding whether or not to support trade agreements, I always evaluate the impact on Maine workers and examine the labor and environmental provisions in each pact. This approach has led me to oppose some trade agreements, such as the Central American Free Trade Agreement, and to support others that have benefited Maine’s agricultural and forest products workers, such as the Chilean Free Trade Agreement.

I believe that current trade laws do not do enough to protect American workers from unfair foreign competition from countries such as China. Along with Democratic Sen. Evan Bayh, I authored a bill to toughen trade laws, in particular to strengthen remedies for subsidized goods from China that undercut American manufacturers.

Question: Given the growth in federal spending, do you support action to restrict earmarks? The federal Office of Management and Budget defines earmarks as funds provided by Congress for projects or programs in which executive oversights are circumvented. They can include funding provisions that do not name a recipient, but are so specific that only one recipient can qualify for funding.

Allen: When people from Maine come to me with worthy projects, I do my best to help. From research and development grants for the University of Maine to help strengthen our lobster, blueberry, potato and forestry industries or to help fund community infrastructure projects, I am happy to make sure Maine has what it needs.

Collins: I have been a strong supporter of increasing transparency and accountability in all government programs and agencies and of eliminating wasteful government spending. I am proud to be an original co-sponsor of legislation which became law in September 2007 that requires heightened disclosure of earmarks. It requires that any earmarks in legislation disclose the name of the member of Congress who proposed the earmark as well as requiring an explanation of the essential governmental purpose of the earmark. It is my hope that by making that information available on the Internet, this provision would shed sunlight on the source of and reason for these earmarks, and allow them to be fairly evaluated by the public.

When subjected to thorough scrutiny and transparency, earmarks can be an appropriate exercise of congressional budget authority. For example, Maine has benefited from a large number of worthwhile earmarks that I helped secure to advance conservation, health care and economic development …

Question: Setting aside the merits of the $700 billion bailout of the nation’s financial industry, do you support increased government oversight and bolstered regulation of the financial services industry over the longer term? If so, should those include increased restrictions on salaries of executives whose companies share benefits of the bailout?

Allen: This crisis is a vivid illustration of what happens when the federal government refuses to do responsible regulation and oversight of the financial markets … The Bush Administration and its allies like Susan Collins have held a consistent philosophy that free markets work best without government regulation and oversight. This crisis clearly illustrates that their philosophy does not work.

Congress must address the root causes of the Republicans’ failure to do oversight and to regulate our financial markets. We can no longer sit by as corporate America assumes all the profit but wants taxpayers to assume the risk. I am working for bold corporate reforms for transparency, to rein in compensation and to strengthen fraud laws. We must make sure this never happens again.

Collins: As a former Maine financial services regulator, I believe that this legislation is only a necessary first step. Further action is needed to reform the outmoded, Depression-era regulatory system. The roots of the crisis lie in a culture of greed and risk-taking on Wall Street; a decade-long real-estate bubble, relaxed lending standards, insufficient regulation of Freddie Mac and Fannie Mae, and individuals who borrowed more money than they could afford to repay. In some cases, outright fraud may be involved, which must be aggressively pursued.

While Congress finally acted in July to create a new regulator for Freddie Mac and Fannie Mae, more needs to be done to better regulate the complex financial instruments used by Wall Street executives for their private gain, to oversee mortgage origination practices, and to protect taxpayers from poor decisions made by the financial mortgage giants, Freddie Mac and Fannie Mae, and by other large financial institutions.