Here is McCain's plan with the $300 billion bailout plan:

McCain’s mortgage plan would have Treasury buy up $300 billion in actual mortgages. It differs from using the Treasury as a direct financing source–a solution that is more plausible today because Treasury has already become a direct financing source for mortgage giants Fannie Mae and Freddie Mac, has loaned $85 billion to American International Group, and is providing a credit line to the Federal Deposit Insurance Corp.

The $700 billion bailout would buy only the mortgage securities that are weighing down the banks, not mortgages themselves.

McCain's plan, which has quietly undergone revision in recent days, was first announced during Tuesday night's presidential debate with Barack Obama.

"I would order the secretary of the Treasury to immediately buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes, at the diminished value of those homes, and let people make those -- be able to make those payments and stay in their homes," McCain said, adding: "Is it expensive? Yes."

In the immediate aftermath, as pundits scratched their heads, it was unclear how much the plan would cost, whether the government would pay face value for the devalued mortgages, or even if it was legal. Eventually, the Senator ceded that it would require "new money" beyond the funds included in the recent $700 billion economic rescue package.

Here is Obama's objection to McCain's plan:

The plan would cause the government "to massively overpay for mortgages in a plan that would guarantee taxpayers lose money, and put them at risk of losing even more if home values don't recover," Obama economic adviser Jason Furman said in a statement. "The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud."
McCain's proposal would devote nearly half the $700 billion from the recent financial rescue package to buying troubled mortgages directly, rather than indirectly aiding the nation's financial markets.


What Obama proposes:

Obama proposes going after and assess fines against unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans and the proceeds used to help bail out borrowers facing a wave of foreclosures.

Obama said the government should use some of the $700 billion in the newly enacted financial rescue plan to buy up troubled mortgages.
"But we need to do it in a responsible way," he said. The government should not overpay for the mortgages, he said, or reward "the very lenders whose recklessness helped cause this crisis."
Taxpayers should be assured "a share of the benefits when our housing market recovers," he said, and the government should crack down "predatory lenders."


***UPDATE*** as of 2:30 CST. Barack lays out his plan for the economy.

"I'm proposing a number of steps that we should take immediately to stabilize our financial system, provide relief to families and communities, and help struggling homeowners," Obama said at a campaign event in Toledo, Ohio. "It's a plan that begins with one word that's on everyone's mind, and it's easy to spell: J-O-B-S."

Obama's plan comes as aides to Sen. John McCain said their candidate would likely wait to lay out any further plans until the Treasury issues a report or recommendations on what to do with the bailout.

Obama on Monday proposed a temporary tax credit for firms that create new jobs in the United States over the next two years, and penalty-free withdrawals from IRAs and 401(k)s in 2008 and 2009.

Obama called for new legislation that would give families the option of withdrawing as much as 15 percent of their retirement savings --- up to a maximum of $10,000 --- without facing a tax penalty this year or next. He also called for a temporary lifting of taxes on unemployment insurance benefits.

The Illinois senator also proposed a 90-day foreclosure moratorium for homeowners acting in good faith, and a new effort to address the growing credit crisis at the state and local level.

Under the Obama plan, the Federal Reserve and the Treasury would provide much the same kind of backing to state and municipal governments as the recent federal bailout did to the commercial credit market.

"We can't wait to help workers and families and communities who are struggling right now -- who don't know if their job or their retirement will be there tomorrow; who don't know if next week's paycheck will cover this month's bills," Obama said. "We need to pass an economic rescue plan for the middle-class ... and we need to do it right now."

The McCain campaign said Obama's economic rescue plan was a political move that would not provide solutions.