President-elect Barack Obama picked Timothy Geithner, head of the Federal Reserve Bank of New York, to be his treasury secretary, with Lawrence Summers getting a senior White House role, a Democratic aide said.
Summers, former President Bill Clinton’s last Treasury chief, would be positioned to succeed Ben S Bernanke as Fed chairman in 2010. Obama is likely to announce his economic team on November 24, the aide said on condition of anonymity. Geithner is a veteran who has helped lead the effort to end the deepest financial crisis in seven decades and at the same time has spent most of his career outside the public eye. The top task of the new team will be assembling Obama’s pledged stimulus package to buttress an economy that may be in its worst recession in a quarter century.
Obama is assembling “very strong people, very qualified people,” said Allen Sinai, chief economist at Decision Economics in New York. “But the reality of the problems of the economy, the financial markets, our banking system both domestically and globally, and the long list of problems we have to deal with as a society, that is very daunting.”
Geithner, 47, has helped oversee some of the biggest decisions so far in the crisis, as head of the US central bank’s main liaison with Wall Street. Those include the government’s takeover of American International Group Inc., the Fed’s Bear Stearns Cos. rescue, and decision to let Lehman Brothers Holdings Inc. fail in September.
Both Geithner and Summers are veterans of managing financial turmoil, working together on the Asian financial crisis of 1997-98 and staving off a Mexican default earlier that decade. Even with that background, Geithner would be taking on an unfamiliar role: the government’s chief economic spokesman.
“He certainly has relevant experience,” said Alex Pollock, resident fellow at the American Enterprise Institute in Washington and former president of the Chicago Federal Home Loan Bank. “The whole public part of the job, the political part of Treasury secretary, will, I expect, be a challenge.”
Investors gave Obama’s pick a vote of confidence, sending the US stock market’s benchmark index rallying from an 11-year low. The Standard & Poor’s 500 Index jumped 6.3% to 800.03 at the close in New York. The gauge is still heading for its biggest annual decline since 1931.
“Tim is held in high regard in financial circles and has been a thoughtful and