Monday, 24 November 2008

UK sets new econ plan, Obama seeks swift action

CHICAGO (Reuters) - President-elect Barack Obama presented the economic team on Monday that will help him navigate the U.S. financial crisis but declined to specify how much his proposed 2-year stimulus package would cost.

Financial markets fell during the long-awaited announcement as traders were dismayed that Obama did not specify the size of a massive financial stimulus package he said he will roll out in January. Other Democrats have said it could cost hundreds of billions of dollars.

Obama also declined to specify whether he would pursue a tax increase for the wealthy or simply allow the 2001 tax cuts to expire after tax year 2010 as scheduled.

Obama said his team was already working on the details of a package designed to jolt the U.S. economy out of its worst financial crisis since the Great Depression.

"I want to see it enacted right away," he said. "It is going to be of a size and scope that is necessary to get this economy back on track."

Obama, who takes over for President George W. Bush on Jan. 20, announced his economic team at a news conference. The big players on his team were already known.

Timothy Geithner, 47, president of the New York Federal Reserve Bank, will become Treasury secretary, and Lawrence Summers, 53, a former Treasury secretary under President Bill Clinton, will be director of the National Economic Council.

Summers is also a possible successor to Federal Reserve Chairman Ben Bernanke, whose term ends in January 2010.

Obama also named University of California, Berkeley, economics professor Christina Romer to head his Council of Economic Advisors and Melody Barnes to head his Domestic Policy Council. Barnes, a former chief counsel on the Senate Judiciary Committee, was a policy advisor to Obama's presidential campaign.


Obama has backed a bailout for Detroit automakers but said he was disappointed that the chief executives for General Motors Inc., Ford Motor Co., and Chrysler LLC did not present a concrete plan when they testified before Congress next week.

"I think Congress did the right thing, which is to say, 'You guys need to come up with a plan and come back before you are going to get any taxpayer money,'" he said.

The scope of the economic crisis has widened in the 20 days since Obama's White House win. Except for one short news conference, Obama has kept a low public profile since his Nov. 4 victory over Republican John McCain, remaining in Chicago to pick his Cabinet but not formally announcing any of his choices.

By breaking that near-silence with the unveiling of his economic team, Obama signaled the priority he places on addressing the economic meltdown.

U.S. stocks rallied late on Friday after news leaks about Geithner's appointment. They rose again on Monday after the U.S. government agreed to inject $20 billion of new capital into Citigroup Inc., but fell during the press conference.

U.S. government bonds edged up from their lows from the day as stocks pared their gains. The dollar, broadly lower against most currencies, strengthened a bit against the euro.

In Washington, Bush said the government stood ready to help the banking system as it did with Sunday's Citigroup deal.

Bush, speaking after a meeting with Treasury Secretary Henry Paulson, said he had also spoken with Obama about the Citigroup rescue and promised to inform the incoming president and his economic team of any future major decisions.

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