Money's on Obama - The Financial Team

AS SEEN IN THE ETOWNIAN

Throughout the current mortgage and loan crisis, much attention has been paid to George W. Bush-appointed treasury secretary, ex-Goldman Sachs chairman Henry “Hank” Paulson. The Secretary of the Treasury holds influence over the allocation of government funds, and as such Paulson has developed a “rescue” or bailout plan for the U.S. economy, including certain major corporations. This important individual and their staff members, along with the Federal Reserve Bank (or “Fed”, our country’s central bank), maintain a major influence upon the regulations and planning of our economy. For example, former Fed chairman Alan Greenspan has been credited with overseeing the economic growth of the late 1990s.

It is customary for an incoming president to appoint their own cabinet of secretaries of the constituents of the executive branch. By inauguration day, President Barack Obama had finalized all of his selections for his Cabinet with the exception of the void left by embattled commerce secretary nominee Bill Richardson, and has made his selection for treasury secretary in New York Federal Reserve Chairman Timothy Geithner. Geithner is credited for his diplomatic dealings with the governments of Asian countries during that region’s 1997-98 financial crisis, in addition to his orchestration of the early 2008 buyout of investment bank Bear Stearns by J.P. Morgan and development of the proposed $800 billion “troubled assets relief program”. He also appointed former Harvard University president and Clinton Administration official Lawrence (Larry) Summers head of the National Economic Council, Christina Romer as Council of Economic Advisers Chair, and Melody Barnes as Domestic Policy Council Director. Each of his selections are accomplished in their fields - Romer and her husband are well-regarded economics professors at the University of California at Berkeley, and Barnes has served as a counsel to Massachusetts Senator Ted Kennedy as well as the Executive Vice President for Policy at the Center for American Progress.

Pundits on both sides of the political spectrum have lauded President Obama’s selections for his financial team, with Geithner being widely recognized for his diplomacy in Asia to improve economic value of the affected countries and Summers being complimented by Blackstone Group co-founder Pete Peterson, who said “if there’s a more brilliant economist in the United States, I wouldn’t know who that is.” The Bush Administration also praised the new Treasury Secretary, with deputy press secretary Tony Fratto calling Geithner “exceptionally talented” and Paulson lauding him for his “understanding of markets, his judgment and leadership, and his ability to meet the challenges that lie ahead”.

Fed Chairman Ben Bernanke, who has become a familiar face to news viewers throughout the recent economic downturn, will remain in his position under the new administration. We can expect him to work cooperatively with Geithner to develop strategies for dealing with the market slump. It is the Fed’s responsibility to control the money supply and set interest rates on federal loans, factors which will be important in resolving the current situation. Bernanke has three years experience in this position, so he is well poised to continue to handle the current recession. While Obama has warned that economic conditions are likely to worsen over the next year or two before recovering, only time will tell if his “dream team” of economic hard-hitters will pull a miracle or perpetuate the downturn.

NOTE: Since this post was originally published, scrutiny has arisen over the failure of Treasury Secretary Tim Geithner to pay his annual tax returns while he was chairman of the New York Federal Reserve during the early part of this decade. However, Obama has voiced his full support for Geithner, and it now appears likely that he will remain in his current position.