US president-elect Barack Obama has chosen seasoned policymakers Timothy Geithner and Lawrence Summers as his two top economic lieutenants to direct the fight to rescue the economy and stem the worst financial crisis in more than 70 years.
Obama plans to nominate Geithner (47) president of the New York Federal Reserve Bank and a former Clinton administration official, as Treasury secretary, a transition official said on Saturday.
A main part of his portfolio will be managing the $700-billion bailout for the troubled financial industry.
Summers, who served as Treasury secretary under former president Bill Clinton, will become director of the White House National Economic Council, the official said.
The 53-year-old Summers, who gained Obama’s trust by helping to guide his response to the financial meltdown during the campaign, will play a broad role in shaping policy and coordinating among other economic advisers.
The two Clinton-era veterans have worked closely together and both command wide respect in financial markets, which could take comfort in the announcement. Obama plans to formally unveil the picks at a news conference on Monday.
US stock prices, which took a pounding most of this week, rallied more than 6% on Friday after word leaked out that Geithner appeared set to take the helm at Treasury.
The picks come after Obama announced plans earlier on Saturday for an aggressive, two-year economic stimulus package as he warned that the economy was at risk of huge job losses and broadly falling prices if swift action is not taken.
Obama, a Democrat who succeeds Republican President George Bush on January 20, has not given a price tag for the package. He plans to work with aides to craft it over the coming weeks.
But the proposed package of middle-class tax cuts and spending on projects like roads and bridges may be a tough sell, even in a Democratic-led Congress. It would layer on even more borrowing at a time when government debt is skyrocketing.
Strong personalities
The choices of Summers and Geithner fit a pattern for Obama in filling top administration jobs with people of high stature and in many cases, strong personalities.
He is on track to nominate his former White House rival and former first lady Hillary Clinton as secretary of state soon.
For White House national security adviser, he is leaning toward selecting retired General James Jones, the former Nato commander and Marine commandant.
When Obama won the election on November 4, both Geithner and Summers were viewed as frontrunners to lead the Treasury.
Geithner was seen as a rising star when he served as the point person on the international economy at Treasury during the 1990s. Summers, his boss at the time, helped champion Geithner’s career.
Obama had been weighing a choice between two men who were close but had contrasting styles, with Summers known for his blunt-spokenness and intense personality and Geithner coming across as more even-tempered, like Obama himself.
The president-elect ultimately chose to hire both of them.
The Obama aide described Geithner as someone who ”fully understands the complexities” of the financial crisis.
Geithner will also serve as the main US spokesperson on the dollar and the country’s top economic diplomat, engaging closely with China and other big economic powers.
Another part of the job will include delving into a newly begun global conversation about how to revamp financial institutions and a regulatory structure established at the Bretton Woods conference at the end of World War II.
The Obama aide praised Summers as ”one of the most powerful economic minds in the country” and someone crucial to coordinating the response to the crisis.
Both men bring some baggage.
Geithner’s role from his perch at the New York Fed in helping to manage the financial crisis has detractors as well as supporters. Some critics fault the decision to help finance the takeover of Bear Stearns, while others criticise the Fed and Treasury for deciding not to step in to save Lehman Brothers in mid-September.
A number of analysts believe the financial crisis would not have snowballed the way it did if Lehman had not collapsed.
Summers, who became president of Harvard University after he served at Treasury, had a rocky tenure there. His management style was seen by some as too brash and he angered female faculty members after he suggested men might have more innate ability in science and engineering than women.
But many who worked with him at Treasury found him an able leader who sought out fresh opinions and creative approaches. – Reuters