MONACA, Pa. -- Democratic Sen. Barack Obama said Monday the economy is in distress while rival Sen. Hillary Rodham Clinton criticized President Bush for failing to exercise leadership to address the nation's economic problems.

"Our economy is in a shambles," Obama said at a town hall meeting at a community college near Pittsburgh. "This economy is contracting, it is heading toward recession. We probably already are in one."

Clinton told reporters in Washington: "At these times of stress and uncertainty we need to be vigilant to do everything in our power to maintain confidence in our financial system. I feel very strongly that we've got to have more urgency to continue the action that was started yesterday."

The comments from the presidential candidates came after the Federal Reserve approved a $30 billion loan for a $2-a-share takeover by JPMorgan Chase & Co. of Bear Stearns & Co. to help keep the stricken investment bank -- one of the nation's largest -- from collapse. The Fed also lowered the rates it charges to loan directly to banks by a quarter-point, following moves last week to lend $100 billion in cash to banks and $200 billion in government bonds to cash-strapped Wall Street investment banks.

"I'm not going to second guess the Fed," Clinton said, either on its steps to consummate the sale of Bear Stearns, on its decision to assume the risk of some of mortgage loans now assumed by JP Morgan Chase or on a decision to cut a key interest rate.

She complained about President Bush's handling of the problems.

"Now we are in the soup and we better get ourselves out of it before the consequences get drastic," she told reporters in Washington.

"Things weren't that great before we tipped into recession," Obama said.

Contending that the current policy was inadequate, Obama reiterated earlier calls to offer tax breaks to companies that "invest right here in Pennsylvania and all across America" and to roll back tax cuts pushed through Congress by President Bush "and give those tax breaks to ordinary Americans who deserve them right now."

As senator from New York, Clinton has received the most money from employees of large Wall Street firms. Bear Stearns employees contributed the most to Clinton with total donations of $152,000. Likely Republican nominee John McCain received $47,000 from Bear Stearns employees and Obama got $36,000.

Obama is the biggest recipient of donations from JPMorgan employees -- Obama received $270,000, Clinton's contributions were nearly $200,000 and McCain's were more than $60,000. According to McCain's latest personal financial disclosure report, his wife and dependent children had between $3 million and $7 million invested in JPMorgan financial instruments.

Clinton said she was "following the developments in our markets closely" after speaking Monday morning with Treasury Secretary Henry Paulson and New York Federal Reserve President Tim Geithner.

"They both outlined the actions that were taken yesterday to insure liquidity and restore confidence in the market. I relayed to them my thoughts and concerns," she said.

Clinton, meanwhile told reporters the Fed decision was an effort to head off "a chain reaction that would have quickly required much more significant resources. ...There is no doubt in my mind that we have to have a sense of collaboration and urgency about what we must do going forward, because this is not over."

Obama, in a separate written statement, said: "The news coming from Wall Street today has confirmed our fears that the financial fallout from the mortgage crisis would spill over into the wider economy."

"Now, as the Federal Reserve does its best to bring stability to the market, we must focus on what we can do to restore the public's confidence in the market and help the millions of Americans who are worried about their jobs, their homes, and their financial future," he said.