Obama's picks send message

New economic team experienced in handling crises; Bush offers more bailouts

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.

President George W. Bush, meanwhile, said that Washington was ready to help other faltering financial institutions after helping Citigroup.

By naming a team deeply experienced in dealing with financial crises — Geithner was heavily involved over the weekend in the efforts to stabilize Citigroup — 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. Romer is an economics professor at the University of California, Berkeley, while Barnes is a longtime aide to Sen. Edward M. Kennedy of Massachusetts.

Bush said Monday that Washington was ready to jump to the rescue of other financial institutions experiencing "unusually large losses" as it was helping Citigroup, the banking giant that just got a government guarantee for billions of dollars in risky assets and a $20 billion capital injection.

"We have made these kinds of decisions in the past. Made one last night," the president said after having a cup of coffee with Treasury Secretary Henry Paulson at the Treasury Department, next door to the White House. "And if need be, we're going to make these kinds of decisions to safeguard our financial system in the future."

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," 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, Obama said that the struggling automobile industry could not be allowed "simply to vanish." And he all but promised that the tax cuts pushed through Congress by 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 distressed financial markets, 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 Geithner, president of the Federal Reserve Bank in New York, and Summers, a Harvard economist, Obama sent a signal that he was set to pursue aggressive yet centrist policies in crafting moves to help jumpstart the economy. He was stretching his economic announcement into a two-day affair, planning another news conference today to present the rest of his team.

The televised news conference, which came shortly after Bush's brief remarks at the Treasury Department, created a stark image of the transfer of power that is under way in Washington. Obama and his new team arrived in a room of dozens of reporters, while Bush stood nearly alone on the steps of the Treasury Department.

"This is a tough situation for America," Bush said, adding that he had spoken to Paulson by phone Sunday while returning from an economic summit meeting in Peru. He said that he would keep Obama and his team informed of any major decisions, and added that Paulson was working in "close cooperation" with the Obama team.

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 Obama seeming to be aggressively steering recovery efforts, has forced him into a more active role.

On Monday, Wall Street barreled higher for the second straight session, this time in a relief rally over the government's plan to bail out Citigroup Inc., a move it hopes will help quiet some of the uncertainty hounding the financial sector and the overall economy. The Dow Jones industrials soared nearly 400 points and the major indexes all jumped more than 4.5 percent.

The advance gave the market its first two-day advance since Oct. 30-31. Although investors sensed last week that a rescue of Citigroup was forthcoming, investors nonetheless were heartened, even emboldened, by the U.S. government's decision late Sunday to invest $20 billion in Citigroup and guarantee $306 billion in risky assets.

Wall Street's enthusiasm surged not only because the bailout answered questions about Citigroup but also because many observers saw the move as offering as a model for how the government might carry out other bank stabilizations.

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