As my former colleague Howard Wolfson notes, it’s 3am on Wall Street and the commentariat is going to be looking at how the candidates react.  We’ve seen moments like this one before on the campaign trail – In Georgia, during Gustav and most recently Ike.  And it’s playing out again today on Wall Street.  But what are the candidates to do?  Issue a ten-point plan?  Give statements in front of a blue background and flags? Yawn.

The Lehman collapse, et al is a major moment and the first campaign to cast it in terms of the overall need for change will be the one who benefits the most.  Specific policy prescriptions are important but not sufficient for communicating what kind of president a candidate will be during troubled times.  So what does this mean in practical terms?

One of the reasons change is such a powerful word today in American politics is due to the fact that America’s infrastructure, industries, and institutions are in desperate need of an upgrade.  From an overstressed energy grid to our health care system to the auto industry, many of the elements that drive and regulate the American economy are simply obsolete or are going to be soon.  As a result, you see skyrocketing costs, blackouts, bankruptcies, etc.  When it comes to the three “I”s, America is using a Commodore 64 when it should be using a Mac.

And what is happening on Wall Street today is a function of the decline of these three “I”s. As my former boss Chuck Schumer has noted, the financial regulatory system is a mess and hasn’t kept up with the innovation of financial instruments.  All of the major blow-ups are happening in markets that are either not federally regulated or are with products that are ahead of the regulation curve.

The candidate who gives the speech casting his individual policy prescriptions under this larger narrative and declaring that his presidency is going to be about upgrading the nation is going to be the one that emerges from the Lehman situation looking presidential and up to the job.

As a tactic, it’s the only way to break through and as a strategy, it solves problems that each candidate is having.  For Obama, it fuses his change rhetoric with his dozens of policy prescriptions and gets the conversation back to issue #1 – the economy.  (Plus, the press almost always rewards him with glowing coverage when he delivers major speeches.)  For McCain, it shows that he’s not out of touch and provides a way to subtly distance himself from Bush (the man who failed to recognize the need for any of these upgrades).