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Obama names heavyweight economic team

Agence France-Presse | 11/25/2008 2:17 AM

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CHICAGO - President-elect Barack Obama Monday nominated New York Federal Reserve president Timothy Geithner to serve as his Treasury secretary and oversee an ambitious plan to resuscitate the US economy.

Geithner, once confirmed by the Senate, will be joined in Obama's economic team by former Treasury chief Larry Summers as chief White House economic advisor, the president-elect told a press conference.

Obama, who takes office on January 20, told a Chicago press conference, that rebuilding the world's largest economy was not going to be easy, and warned the road to recovery was going to be long.

"We'll need to bring together the best minds in America to guide us and that is what I've sought to do in assembling my economic team," Obama said.

"I've sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold new ideas and most of all, who share my fundamental belief that we cannot have a thriving Wall Street while Main Street suffers; that in this country, we rise and fall as one nation, as one people."

Obama also named Christina Romer, as director of the Council of Economic Advisors, and Melody Barnes, as director of the Domestic Policy Council.

He hailed his team saying Geithner "has earned the confidence and respect of business, financial and community leaders."

"And as one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges," Obama said.

Romer was "best known for her work on America's recovery from the Great Depression and the robust economic expansion that followed," Obama said.

And he praised Barnes for her work directing "a network of policy experts dedicated to finding solutions for struggling middle class families."

Well-traveled insider

Geithner, brings international experience, the insight of a Washington insider and markets technocrat to the key post at a time of acute, global economic peril.

"Tim will waste no time getting up to speed," Obama said, naming Geithner "the chief economic spokesman for my administration" at a press conference on Monday.

The well-traveled president of the New York Federal Reserve has been at the sharp end of US authorities' battle to shore up panicky financial markets by overseeing the central bank's explosion of intervention in recent months.

The 47-year-old -- who also serves as vice chairman of the policy-making Federal Open Market Committee -- was a key player in negotiations which, just before midnight on Sunday, resulted in a US government rescue plan for ailing banking giant, Citigroup.

He played a lead role in the bailouts earlier this year of insurance giants AIG and Bear Stearns, and in the decision to let Lehman Brothers collapse.

But he is also an old Treasury hand, having risen up the ranks of US government from 1988 to 2001 to the peak of undersecretary for international affairs.

"For all the currency traders out there, this means he was in charge of US dollar policy and is steeped in the nuance of the currency markets," Andrew Busch at BMO Capital Markets commented.

"Unlike during rookies' Paul O'Neill or John Snow's tenures, we won't get many mistakes to make easy money," he said, referring to President George W. Bush's first two Treasury secretaries.

If confirmed, Geithner would take over in January from Republican Henry Paulson and become the overseer of a 700-billion-dollar bailout package for distressed banks, which has failed to dim fears of a long and painful recession.

Well before the current crisis erupted in mid-September, Geithner warned that the US and global financial systems were "going through a very challenging period of adjustment."

"The critical imperative today is to help facilitate that adjustment and to cushion its impact on the broader economy," he told Congress, calling for "substantial reforms" to policy, regulation and oversight governing markets.

"The forces that made the system vulnerable to this crisis took a long time to build up, and the system will need some time to work through their aftermath," Geithner added, in one of his rare forays into the limelight.

Geithner was born in Brooklyn, New York in 1961. He attended high school in Bangkok, where his father Peter was working as an Asia expert for The Ford Foundation.

Geithner also spent part of his childhood in Zambia, Zimbabwe and India during expatriate stints by his father at the Foundation and later with the US Agency for International Development.

He went on to graduate in Asian Studies from Dartmouth College, which also schooled Paulson, studying Japanese and Chinese while living as a student in the Asian countries.

"Tim's extensive international experience makes him uniquely qualified" to take up the reins of the US Treasury at a time when the economic crisis was not limited to the United States but affecting economies around the globe, Obama said.

Geithner began his career at Kissinger Associates, a consulting firm created by former US secretary of state Henry Kissinger.

On Bush's arrival at the White House in January 2001, Geithner left the Treasury for the Council on Foreign Relations and also worked at the International Monetary Fund before joining the New York Fed in 2003.

Geithner, who is married with two children, echoes Obama in calling for a balance to be struck between innovation and stability when it comes to managing the unruly financial markets.

"Our financial system has many strengths, and we need to examine ways to build on those while making the system more resilient to future shocks," he said in his July testimony to a House of Representatives committee.

"Until we get through this crisis, it will be hard to make definitive judgments about the appropriate scope and nature of the changes that will be necessary," he said, using the careful phrasing of an arch-technocrat.