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Obama taps heavyweights to help economy out of 'vicious cycle'

(Agencies)
Updated: 2008-11-25 08:03

CHICAGO — President Elect Barack Obama selected a Mr. Defense and a Mr. Offense for his economic team Monday, picking Timothy Geithner as Secretary of the Treasury and Lawrence Summers as director of the National Economic Council.

US President-elect Barack Obama (3nd L) unveils his economic policy team in Chicago November 24, 2008. From left are Treasury Secretary-designate, New York Federal Reserve Bank President Timothy Geithner, Council of Economic Advisers Chair-designate Christina Romer, Obama, National Economic Council Director-designate Lawrence Summers, Domestic Policy Council Director-designate Melody Barnes and Vice President-designate Joe Biden.  [Agencies]

“We do not have a minute to waste,” Obama said in his comments to a nationally televised audience. “Right now our economy is trapped in a vicious cycle.”

The dual selection set up a formidable tag team to take on the global financial crisis. Geithner at Treasury will likely take a defensive role, spearheading the remainder of the $700 billion Troubled Assets Relief Program and decisions to bail out individual financial institutions.

Inside the White House, Summers will be the architect of the administration’s economic stimulus proposals, including what is shaping up to be a multi-hundred billion dollar jobs and infrastructure spending plan.

“Vice President-elect Biden and I have assembled an economic team with the vision and expertise to stabilize our economy, create jobs, and get America back on track,” said Obama. “Even as we face great economic challenges, we know that great opportunity is at hand – if we act swiftly and boldly.”

On the steps of the Treasury Department earlier Monday, outgoing president George W. Bush signaled that he’s working closely with the incoming Obama team.

“I told the President-elect when I first met him, that anytime we were to make a big decision during this transition, he will be informed, as will his team,” Bush said.

Geithner has already been steeped in the bailout efforts made by Treasury Secretary Hank Paulson and the Bush Administration. As recently as last week, he was intimately involved in the negotiations to shape a bailout of Citigroup, which saw a dramatic 60 percent decline in its stock value in recent days, spurring fears that the massive financial institution could collapse and drag the rest of the economy along with it.

Although his career has been dominated by government rather than private-sector posts, Geithner’s role at the New York Fed has put him on the front lines of the economic meltdown. The New York Fed conducts open market operations, buying and selling US Treasury securities, which has given him a first-hand view of the panic in the financial markets as investors flocked to the relatively safe Treasuries this fall.

Timothy Geithner (R), 47, president of the New York Federal Reserve Bank, and former U.S. Treasury Secretary Lawrence Summers (L), 53, arrive at a news conference, where U.S. President-elect Barack Obama announced Geithner would be his treasury secretary, and Sommers would be his director of national economic policy, in Chicago, November 24, 2008. [Agencies]

Summers served as Secretary of the Treasury under President Bill Clinton, where he famously used United States budget surpluses to buy down the federal debt for the first time since the 1920s. Taking office inside the White House next year, Summers will face a harshly altered economic universe in the midst of the worst financial crisis since the Great Depression.

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