President Obama and GOP challenger Mitt Romney let off steam, laughing at each other and the tribulations of the campaign trail at a Catholic charity dinner in New York City. NBC's Peter Alexander reports.

President Barack Obama and Republican presidential candidate Mitt Romney took a break from their often rancorous campaigns to poke fun at each other and themselves at the annual Alfred E. Smith Memorial Dinner in New York, Thursday night.

Romney told the formal white tie and gown crowd that, "it's nice to finally relax and wear what Ann and I wear around the house."

Republican presidential candidate Mitt Romney addresses the Alfred E. Smith Memorial Foundation Dinner in New York City.

Through much of the evening, the two candidates sat just one chair down from each other. Only host Cardinal Timothy Dolan separated them, the Associated Press reported.

Romney told the crowd, "I was actually hoping the president would bring Joe Biden along this evening, because he'll laugh at anything."

In discussing how he prepares for the debates, Romney said his strategy was to "find the biggest available straw man and mercilessly attack it; Big Bird didn't even see it coming."

Jason Reed / Reuters President Barack Obama and Republican presidential candidate Mitt Romney meet at the 67th Annual Alfred E. Smith Memorial Foundation dinner in New York, Oct. 18.

Romney playfully jabbed at Obama, saying both candidates rely on crucial people. As Romney put it, "I have my beautiful wife, Ann; he's got Bill Clinton."

After his introduction, Obama asked the crowd to "please take your seats, otherwise Clint Eastwood will yell at them."

Obama talked about his performance in Tuesday night's debate, saying he "felt really well rested after the nice long nap I had in the first debate."

President Barack Obama addresses the Alfred E. Smith Memorial Foundation Dinner in New York City.

He added, "I particularly want to apologize to (MSNBC's) Chris Matthews. Four years ago I gave him a thrill up his leg; this time around I gave him a stroke."

Poking fun at his opponent, Obama talked about being attacked after his overseas trip in 2008 for being "a celebrity because I was so popular with our allies overseas. And I have to say I'm impressed with how Governor Romney has avoided that problem."

Photos: Obama, Romney swap jibes for jokes

The Alfred E. Smith Memorial Foundation Dinner is an annual fundraiser for the charity named after the former governor of New York. The dinner has become a regular stop for presidential candidates dating back to 1960, according to the foundation's Web page.

The Associated Press contributed to this report.