With the economy being the number one issue for a majority of U.S. voters, President-Elect Barack Obama's pick of Treasury Secretary is viewed as one of the most important choices in the Democrat's cabinet. Each candidate on the shortlist has a long resume to equip them for the job.
The three frontrunners include a former Treasury Secretary, a former chief of the Federal Reserve, and the current President of the New York Fed - the most important bank of the 12 regional Fed branches.
It's unknown when Obama will make the choice, though it was recently announced that he will be meeting with his economic advisers on Friday, followed by his first media briefing since being elected President on Tuesday night.
Perhaps the most likely candidate for the job is Lawrence Summers, who served as Bill Clinton's Treasury Secretary in the final year and a half of his presidency. It's been widely reported in recent days that Summers wants another shot at the job, and his credentials certainly qualify him as a top choice.
As the son of two economics professors and the nephew of two Nobel laureates in economics, Summers was something of a prodigy, attending MIT at age 16 and becoming, in 1983, the youngest tenured professor in Harvard University's history at 28.
Before becoming Clinton's Treasury Secretary, Summers was an economic adviser to President Ronald Reagan, a chief economist at the World Bank, and he held many positions at the Treasury before taking the lead role.
In the late 1990s, when economic crises broke out in Latin America, South-East Asia, and Russia, Summers was so instrumental in warding off the turmoil, that he -- alongside then-Secretary Robert Rubin and then-chairman of the Fed Alan Greenspan -- was featured in a Time Magazine cover story called "The Committee to Save the World."
Since leaving the Treasury, Summers spent five years as Harvard's President, concluding in 2006 amidst some controversy unrelated to economics. More recently, he's been writing a widely-read monthly column for the Financial Times.
Another top choice is Summers' close colleague during the 1990s, Timothy Geithner, who now heads the New York Federal Reserve. His current position has allowed him to lead the central bank's efforts to prevent the credit crisis from spreading beyond the financial sector, and before his job at the Fed, Geithner held high-ranking positions at the Treasury, including Undersecretary for International Affairs.
Geithner would likely fit comfortably inside the cabinet. At 47, he is the same age as Barack Obama, and he too has a reputation as a consensus-seeker. Writing at the New Republic, Noam Scheiber describes Geithner as "svelte and baby-faced, with teen-idol locks and a boyish face to match;" yet he also reports that at the Treasury, Geithner would often cast the deciding vote between a restless Summers and a too-cautious Robert Rubin.
Geithner is also known to be nonpartisan. In Merrill Lynch's guide to the FOMC, Geithner sits neutral - alongside Chairman Ben Bernanke - on the spectrum between Hawks and Doves.
As chief of the New York Fed - which, sitting in the middle of Wall Street, has become the Fed's eyes and ears to the financial district - Geithner has earned praise for his calls for regulatory reform. Like Bernanke, he has called for increased transparency at the central bank, and in July he wrote that the financial system must be made "more resilient to future shocks."
Months before Lehman Brothers fell and the latest phase of the crisis set in, Geithner was calling for global initiatives to solve the crisis, and his own past attests to an interest well beyond the scope of just the United States. Geithner attended high school in Thailand; specialized in government, international relations, and Asian Studies at the BA and MA levels; has studied Chinese and Japanese; and has lived in East Africa, India, China, and Japan.
Both Summers and Geithner give Obama the chance to choose a Secretary that has not come directly from a Wall Street investment firm.
"There is pressure from Democrats in Congress not to follow the Bush administration in allowing Wall Street executives to dominate the Treasury," wrote Krishna Guha in the Financial Times on Thursday. "Still, Mr Obama may appoint some officials with a financial sector background, given the need to grapple with the financial crisis."
The Bush administration has been criticized for the "Goldmanization" of the U.S. economy, as many top officials came directly from the former investment bank including Treasury Secretary Henry Paulson, who was once co-CEO of Goldman Sachs, and the interim head of the TARP program, Neel Kashkari, a former vice-president.
Even with pressure from Congress though, it's unclear whether the President-Elect will avoid hiring cabinet members off Wall Street. One of Obama's top economic advisers during the campaign was Jon Corzine, current governor of New Jersey and former co-chair of Goldman. Corzine has also been whispered to be a possible candidate for Secretary of the Treasury, though his four-year term in New Jersey extends into 2010.
Corzine began as a bond-trader for Goldman in 1975, was named a partner in 1980, and in 1994 became co-chairman with none other than Henry Paulson. It's widely reported that the two men didn't get along, and according to New York Times correspondent Floyd Norris, Paulson forced out Corzine "in what amounted to a coup" in 1998, taking over the post of CEO.
In recent days, Corzine has been downplaying speculation that he would be Obama's Secretary, though many have noticed that his careful language did not rule out the possibility.
"I'm not going to say never to anything," Corzine said. "I want to be very clear. I like what I'm doing. I have not had any conversations with anybody about this job," he said on MSNBC Wednesday morning.
Corzine said "there are a lot of good people" besides him that could take the job, suggesting that former Fed chairman Paul Volcker could be suitable.
Volcker, the six-foot-four, cigar-smoking chairman of the Fed from 1979 to 1987, served as an essential adviser to Obama during the lengthy campaign. At a time when Republican candidate John McCain was saying the "fundamentals of the economy are strong," Volcker was writing op-eds characterizing the economy as in "full-scale recession."
During his tenure at the Fed, Volcker trotted a new direction for monetary policy, reigning in double-digit inflation back to reasonable levels. Far from being a populist, Volcker raised interest rates, promoted fiscal discipline, and prided the Fed's independence from the executive branch.
On Wednesday, Nobel Laureate Joseph Stiglitz said Volcker would be "the kind of person" that should be running the Treasury, in contrast to some of the other candidates on the shortlist.
"Many of the people whose names have been floated around have actually been implicated in some of the deregulation initiatives that got us into this mess - or who supported, in one way or another, these deregulation initiatives," Stiglitz told Reuters. He added: "I think Paul Volcker has been speaking out very clearly on what needs to be done."
Others are less likely to support Volcker, however. At 81, he wouldn't quite fit the "young and diverse" administration Obama is reportedly establishing. Moreover, the young Democrat could continue to benefit from Volcker's expertise without giving him such a prominent position.
Obama, who showed extraordinary patience during his 21-month campaign, is expected to establish his cabinet quickly, possibly within the next day. As of Thursday afternoon, the only member to be selected so far is his chief of staff, Rahm Emanuel, the fourth-ranking Democrat in the House of Representatives.
By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2008