Obama Unveils Team to Tackle ‘Historic’ Crisis
By JEFF ZELENY
CHICAGO — With the financial crisis looming as a priority of his term, President-elect Barack Obama sought to put his imprint on efforts to stem the turmoil as he introduced his economic team on Monday, nominating Timothy F. Geithner as Treasury secretary and Lawrence H. Summers to head the White House Economic Council.
By naming a team deeply experienced in dealing with financial crises — Mr. Geithner was heavily involved over the weekend in the efforts to stabilize Citigroup — Mr. Obama underscored his determination to assure Americans and foreign investors that he would aggressively step into a leadership vacuum in Washington during the transition.
Moreover, by pledging that his economic team would begin work “today” on recommendations to help middle-class families as well as the financial markets, the president-elect sought to convey an impression of continuity and coordination, so that his administration can “hit the ground running.”
The president-elect also announced that he had chosen Christina D. Romer to head his Council of Economic Advisers and Melody Barnes as director of his White House Domestic Policy Council. Ms. Romer is an economics professor at the University of California, Berkeley, while Ms. Barnes is a longtime aide to Senator Edward M. Kennedy of Massachusetts.
The recent economic news, capped by the Citigroup effort, “has made it even more clear that we are facing an economic crisis of historic proportions,” Mr. Obama said at a news conference. He listed the drop in new home purchases, the surge in unemployment claims to an 18-year high and the likelihood of up to a million further job losses in the coming year.
“While we can’t underestimate the challenges we face,” he said, “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.”
Responding to questions, Mr. Obama said that the struggling automobile industry could not be allowed “simply to vanish,” but that the companies should not get “a blank check” from taxpayers. And he said he was surprised that the auto companies’ chief executives were not better prepared with specific recovery proposals in their appearances last week on Capitol Hill. He also all but promised that the tax cuts pushed through Congress by President Bush would be repealed, or at least not renewed when they are scheduled to expire in 2010.
In an effort to inject confidence into the quavering financial markets, Mr. Obama made certain that his first formal cabinet announcement dealt with the economy, not, as is often the case, with national security or diplomacy.
In announcing the nominations of Mr. Geithner, president of the Federal Reserve Bank in New York, and Mr. Summers, a Harvard economist, Mr. Obama sent a signal that he was set to pursue aggressive, yet centrist policies, in devising moves to help jump-start the economy. He stretched his economic announcement into a two-day affair, planning another news conference on Tuesday to present the rest of his team.
The televised news conference, which came shortly after President Bush made brief remarks at the Treasury Department with Secretary Henry M. Paulson Jr., created a stark image of the transfer of power that is under way in Washington. Mr. Obama and his new team arrived in a room of dozens of reporters, while Mr. Bush stood nearly alone on the steps of the Treasury Department.
“This is a tough situation for America,” Mr. Bush said, adding that he had spoken to Mr. Paulson by phone Sunday while returning from an economic summit meeting in Peru. He said that he would keep Mr. Obama and his team informed of any major decisions, and added that Mr. Paulson was working in “close cooperation” with the Obama team.
Mr. Bush spoke to Mr. Obama on Monday about the rescue plan for Citigroup. Mr. Obama said he had also spoken Monday to Ben S. Bernanke, the chairman of the Federal Reserve.
“The truth is, we do not have a minute to waste,” Mr. Obama said. “These extraordinary stresses on our financial system require extraordinary policy responses.”
But he also sought to emphasize the sort of continuity that the markets can find comforting, vowing to “honor the public commitments made by the current administration.” He said his economic team would consult regularly with Congress and the current administration during the transition. Earlier in the day he spoke to President Bush about Citigroup.
Mr. Geithner worked through the weekend on the plan to stabilize Citigroup. Earlier, he was deeply involved in the bailout of American International Group. So he is intimately familiar with the developing crisis — and the controversial efforts so far to stanch it.
Mr. Obama has said repeatedly that there is “only one president at a time,” but the markets’ apparent concerns at the specter of a do-nothing transition — with neither President nor Mr. Obama seeming to be aggressively steer recovery efforts — has forced him into a more active role.
The Dow Jones industrial average soared Friday by nearly 500 points on word of the Geithner appointment and markets were up again by more than 200 points at midday Monday.
David Stout and Brian Knowlton in Washington contributed reporting.