Obama names treasury secretary

PRESIDENT-ELECT Barack Obama named the president of the New York Federal Reserve as his treasury secretary today.

Timothy Geithner, whose nomination will need to be confirmed by the US Senate, will take over from Hank Paulson and assume chief responsibility for tackling the most serious economic crisis since the Great Depression.

The statement, which will be followed by a press conference, came just hours after incumbent President George Bush told reporters he had talked with the president-elect over the weekend about rescuing stricken US bank Citigroup.

In the statement, Mr Obama said he and vice president-elect Joe Biden had "assembled an economic team with the vision and expertise to stabilise our economy, create jobs, and get America back on track".

"Even as we face great economic challenges, we know that great opportunity is at hand – if we act swiftly and boldly," Mr Obama said.

"That's the mission our economic team will take on."

Lawrence Summers, the former treasury secretary under Bill Clinton, was also named as director of the National Economic Council.

At a press conference in Chicago, Mr Obama said the US was "facing an economic crisis of historic proportions".

"If we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," he said.

"While we can't underestimate the challenges we face, we also can't underestimate our capacity to overcome them – to summon that spirit of determination and optimism that has always defined us, and move forward in a new direction to create new jobs, reform our financial system, and fuel long-term economic growth.

"We know this won't be easy, and it won't happen overnight.
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.

"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."

"The reality is that the economic crisis we face is no longer just an American crisis, it is a global crisis – and we will need to reach out to countries around the world to craft a global response," Mr Obama said.

He said Mr Geithner, who has served in senior roles at the US Treasury, the IMF and the New York Fed, "offers not just extensive experience shaping economic policy and managing financial markets – but an unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency".

"Tim will waste no time getting up to speed," Mr Obama said.

"He will start his first day on the job with a unique insight into the failures of today's markets – and a clear vision of the steps we must take to revive them."

Mr Obama added that rebuilding the US economy would "require action on a great variety of fronts – from education and health care to energy and social security".

"Without sound policies in these areas, we can neither enjoy sustained economic growth nor realise our full potential as a people," he said.

Mr Obama said work would start immediately because the US did not have "a moment to waste" and its economy was "trapped in a vicious cycle".

"The turmoil on Wall Street means a new round of belt-tightening for families and businesses on Main Street – and as folks produce less and consume less, that just deepens the problems in our financial markets," he said.

"These extraordinary stresses on our financial system require extraordinary policy responses."

He also pledged that his administration would "honour the public commitments made by the current administration to address this crisis".

Mr Obama said a recovery plan was needed "for both Wall Street and Main Street" – "a plan that stabilises our financial system and gets credit flowing again, while at the same time addressing our growing foreclosure crisis, helping our struggling auto industry, and creating and saving 2.5 million jobs".

He went on: "It is my hope that the new Congress will begin work on an aggressive economic recovery plan when they convene in early January so that our administration can hit the ground running.

"With our economy in distress, we cannot hesitate or delay."
He said it "won't be easy" and that there were "no shortcuts or quick fixes to this crisis".

"Full recovery won't happen immediately, he said.

"Despite all of this, I am hopeful about the future. I have full confidence in the wisdom and ingenuity of my economic team – and in the hard work, courage and sacrifice of the American people.

"And most of all, I believe deeply in the resilient spirit of this nation.

"I know we can work our way out of this crisis because we've done it before. And I know we will succeed once again if we put aside partisanship and politics and work together, and that is exactly what I intend to do as president."

In his current post in New York, Mr Geithner has played a key role in the government's response to the financial crisis and has worked closely with both Mr Paulson and Ben Bernanke, chairman of the Federal Reserve.

As a Treasury Department official during the Clinton administration, Mr Geithner dealt with international financial crises and played a major part in negotiating assistance packages for South Korea and Brazil.

Today's press conference was only Mr Obama's second since he became America's first black president-elect by beating Republican John McCain on November 4.

He has stayed away from the cameras, working with aides in Chicago as he sets about establishing his first administration which will take over at noon on January 20.

Earlier, after a meeting with Mr Paulson at the Treasury department in Washington, Mr Bush said: "This is a tough situation for America. But we'll recover from it. And the first step to recovery is to safeguard our financial system."

Referring to the rescue of Citigroup, Mr Bush said: "We have made these kind of decisions in the past, made one last night. And if need be, we're going to make these kind of decisions to safeguard our financial system in the future.

"I talked to president-elect Obama about the decision we made.

"I told the American people, and I told the president-elect when I first met him, that any time we were to make a big decision during this transition, he will be informed, as will his team.

"It's important for the American people to know that there is close cooperation. It's important for the American people to know that we will safeguard the financial system as the first step necessary for economic recovery."

Asked about a rescue package for the nation's troubled car industry, Mr Obama said: "We can't allow the auto industry simply to vanish. We've got to make sure it is there and that the workers, and suppliers, and businesses that rely on the auto industry stay in business.

"What I also have said is that we can't just write a blank cheque to the auto industry. Taxpayers can't be expected to pony up more money for an auto industry that has been resistant to change."

He said he was "surprised" the Big Three carmakers – General Motors, Ford and Chrysler – did not have a better plan when they went before the US Congress and that the Congress did the right thing by asking them to go away and come up with a new proposal.