The second encounter between Democrat Barack Obama and Republican John McCain will be conducted town-hall style, with the candidates answering questions posed by undecided voters seated around them.

And voters tend to ask about issues they see as directly affecting their own lives, including taxes, Social Security, health care and the economy.

In such a setting, a candidate who launches a personal assault risks looking disrespectful to the voters. This might keep Obama and McCain from doing the kinds of things their campaigns have been doing recently.

Or it might not.

Yesterday, both sides were playing rough and ugly.

Obama denounced McCain and his team for opening the current round of character-based politics - which included mention of Obama's former pastor - even as the Illinois senator's own campaign reminded voters about a 20-year-old episode in McCain's career.

At the same time, the Republican nominee said the Democrat still had plenty of questions left to answer.

In Asheville, N.C., Obama told reporters that McCain was trying to divert attention from the ailing economy by talking about character.

"The notion that we would want to brush that aside and engage in the usual political shenanigans and smear tactics that have come to characterize too many political campaigns is not what the American people are looking for," Obama said.

In Albuquerque, N.M., McCain told supporters that the questions he had raised about Obama were legitimate.

"All people want to know is: What has this man ever actually accomplished in government?" McCain said. "What does he plan for America? In short: Who is the real Barack Obama? But you ask such questions, my friends, and all you get in response is another angry barrage of insults."

Sarah Palin, the GOP vice presidential nominee, got this started Saturday, criticizing Obama over a New York Times story about his relationship with William Ayers.

In the 1960s and 1970s, Ayers led the Weather Underground, a radical group responsible for several domestic bombings. In 1995, after becoming an education professor at the University of Illinois-Chicago, he hosted a fund-raiser to help Obama's first run for office.

At a rally yesterday in Clearwater, Fla., Palin said the relationship caused her concern.

"I am just so fearful," she said, "that this is a man who does not see America as you and I see it, as the greatest force for good in the world."

The Times story concluded that Obama and Ayers "do not appear to have been close." Obama has condemned Ayers' past activities.

Palin also brought up Obama's relationship with the Rev. Jeremiah A. Wright Jr. In an interview published yesterday, she told New York Times columnist William Kristol that there should be more talk about it.

Obama left Wright's church last spring in response to videotapes in which the clergyman made anti-American and anti-Semitic comments from the pulpit. The Obama-Wright connection drew considerable attention during the Democratic primaries.

Democratic governors attending a policy conference in Philadelphia yesterday criticized Palin and McCain. Gov. Martin O'Malley of Maryland accused them of engaging in "full-bore character assassination" and said McCain did not "even have the guts" to say it, but "hides himself behind his vice presidential candidate."

The Obama campaign also put out a 13-minute Web documentary about McCain's involvement in "the Keating Five," a group investigated by the Senate ethics committee. The five senators were accused of having intervened improperly in 1987 on behalf of a savings and loan that ultimately collapsed, costing the Treasury $2 billion.

McCain was found by the committee only to have exercised "poor judgment." The attorney who represented him, John Dowd, told reporters yesterday: "The bottom line was that John had not violated any rule of the Senate or any law of the United States."

The town-hall format has produced some of the most compelling and least predictable presidential debates; voters have a way of asking questions that journalists don't.

That was most vividly demonstrated in 1992, when President George H.W. Bush, who was seeking reelection, stumbled over an oddly worded query about the economy and the national debt. He then compounded the error by twice looking at his watch, as if to suggest he was eager for the show to be over.

This year, the whole idea of town-hall debates has figured prominently in the McCain-Obama dialogue.

In June, McCain invited his rival to join him in 10 town-hall appearances through the summer. Obama refused, though he made a modest counteroffer that McCain did not regard as serious. The Arizona senator has used the refusal against Obama ever since.

The Arizona senator has conducted hundreds of town-hall sessions in his two presidential campaigns and seems to thrive on the give-and-take.

Obama's campaign manager, David Plouffe, has called McCain the "undisputed town-hall champion." The expectations game, though, probably doesn't matter much, not in a campaign in which the financial crisis has reminded the electorate of the stakes.

Staff writer Stacey Burling contributed to this article.