BLAINE, Minnesota (Reuters) - As the worst financial crisis since the Great Depression hit Wall Street and dominated the U.S. presidential campaign this week, White House hopeful John McCain looked for a fall guy.

He found one in Christopher Cox, a friend and fellow Republican who chairs the Securities and Exchange Commission.

“I would fire him,” McCain declared on Thursday.

Problem solved? Not exactly.

After a week that started with McCain blundering by talking about the ailing economy’s strong fundamentals, the Republican presidential candidate sought a target to blame for Wall Street’s woes and outlined a plan he said would fix the system that caused the meltdown.

That does not mean his strategy was well received.

“He chose the wrong scapegoat,” said James Cox, a professor of corporate and securities law at Duke University who is not related to the SEC chairman.

“It shows a profound ignorance of something (McCain) ought to know about being in Washington, and that is the limited regulatory authority of the SEC.”

McCain’s advisers acknowledged that many agencies shared the blame for the market turmoil but said the Arizona senator had targeted the SEC because of its failed regulatory role.

Republican presidential nominee Senator John McCain speaks at a campaign rally in Cedar Rapids, Iowa, September 18, 2008. REUTERS/Stephen Mally

“The SEC did not do its job,” said Steve Schmidt, the senior adviser who runs the McCain campaign’s day-to-day operations.

“Chairman Cox, who Sen. McCain counts as a friend ... was at the helm of the ship. There was not effective oversight. They’re the regulating agency and there must be accountability put back into our system of politics.”

Market participants, already reeling from the week’s events, were not impressed.

“I’m disappointed ... that both sides, whether its Republicans or Democrats, aren’t saying ‘let’s try to fix this’ first before we try to assess blame,” said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago.

“It’s very frustrating for the financial market to hear this and then be subject to the volatility that ensues afterwards. I wish both candidates would understand that.”

DISTANCE FROM BUSH

The Wall Street Journal, known for its conservative editorial board, said McCain had shown he did not understand the financial crisis.

“This assault on Mr. Cox is both false and deeply unfair. It’s also unpresidential,” it said in an editorial. “In a crisis, voters want steady, calm leadership, not misleading answers that will do nothing to help.”

President George W. Bush, who appointed Cox, stood with the SEC chairman during a televised speech at the White House on Friday, a clear sign of support.

Cox, a former Republican congressman, has said he plans to step down when the Bush administration ends in January 2009.

Whether he chose the right target or not, some Republicans said McCain’s move distanced him from the unpopular president.

“He’s using this as a way to distinguish himself from the Bush administration,” said John Feehery, a Republican strategist. “I don’t think anyone knows who Chris Cox is really outside the beltway (in Washington), but sometimes it’s good to fire somebody.”

Or at least promise to fire somebody.

After discovering a president cannot actually dismiss the SEC chief --- he can be relieved of his chairmanship, but not removed from the commission -- McCain changed his language. In a speech in Wisconsin, he called for Cox to step down voluntarily.

McCain also lobbed criticism at the Federal Reserve, saying it should focus on strengthening the dollar and get out of the business of bailouts.

“The economic crisis has been a real game changer and I think it stalled McCain’s momentum,” said strategist Todd Harris. “Now they’re taking positive steps to get it back.”

Daniel Smith, a political science professor at the University of Florida, said McCain enjoyed a political bounce after he chose Alaska Gov. Sarah Palin as his running mate, but now it was time to go back to his strengths.

“He was granted a reprieve when Obama’s campaign took the bait, took the Palin bait and was off message for a week,” Smith said. “(Now) Obama has focused his attention squarely on the economy, his strong suit. McCain needs to bring the attention back to international affairs.”