Nov 22, 2008

World - US;Obama moves to pick Timothy Geithner for Treasury

Jeff Mason and Caren Bohan

CHICAGO (Reuters) – President-elect Barack Obama on Friday moved toward nominating Timothy Geithner as Treasury secretary and charging the respected head of the New York Federal Reserve with helping pull the United States out of an economic nosedive.

New York Sen. Hillary Clinton appeared headed to be nominated as Obama's secretary of state, bringing his one-time main Democratic rival into the fold in a pivotal role in his new administration.

Geithner, 47, had been seen as one of two main candidates for the Treasury job along with former Clinton administration Treasury chief Lawrence Summers.

U.S. stocks soared on the Geithner news, first reported by NBC News, pushing major indices up more than 6 percent. The Dow Jones industrial average closed above 8,000.

Obama may consider Summers as a possible successor to Federal Reserve Chairman Ben Bernanke, whose term ends in January 2010, a Democratic source said.

Clinton, wife of former President Bill Clinton, appeared set to take the top U.S. diplomatic post after wrestling with whether she wanted to give up her Senate seat.

"We're still in discussions, which are very much on track. Any reports beyond that are premature," Clinton senior adviser Philippe Reines told Reuters.

The New York Times said it was a done deal. "She's ready," The Times quoted one of two Clinton associates who confirmed the deal as saying.


A senior Democrat told Reuters in Washington that Obama wanted Geithner for the Treasury job, but had yet to make an offer. He did confirm that Summers was no longer under consideration. "Summers is off the list," he said.

Obama, who beat Republican John McCain in the November 4 election, takes over from George W. Bush on January 20. He has been largely hunkered down in Chicago since the election working on his administration team.

NBC News said Obama was expected to announce Geithner and other members of his economic team on Monday to try to calm U.S. financial markets that have sunk like a stone all week before Friday's surge.

"A fantastic choice to help lead the financial markets out of the wilderness," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi in New York. He called Geithner a "crisis manager par excellence" who would hit the ground running.

If confirmed by the Senate, Geithner would be at the helm of efforts to stem the worst financial crisis since the Great Depression.

NBC also said New Mexico Gov. Bill Richardson could get Obama's nod to become commerce secretary.

Richardson's elevation to the Cabinet would give the Obama administration its first high-profile Hispanic member as its main liaison to the business community. Richardson was a United Nations ambassador and energy secretary under former President Bill Clinton.


Set to become the first black U.S. president, Obama will inherit a deeply unpopular war in Iraq and another war in Afghanistan, where violence has soared, and will seek to rebuild relationships with allies, particularly in Europe.

Retired Marine Gen. James Jones has emerged as a leading contender for White House national security adviser, according to Democratic sources. Jones is a former top operational commander of NATO.

Obama is also leaning toward keeping Defense Secretary Robert Gates. Gates, who replaced the combative Donald Rumsfeld in 2006, is praised by both Republicans and Democrats in Congress for overseeing a military strategy shift in Iraq that helped bring the country back from the brink of civil war.

Analysts said the foreign policy team Obama was assembling seemed to signal a centrist bent for a president-elect who launched his campaign emphasizing liberal, anti-war message.

Obama and Clinton differed on some issues during the campaign, with the former first lady taking a tougher line on issues such as the Iraq war and Iran.

The two had contrasting styles on the campaign trail, with the calm Obama earning the nickname "No Drama Obama" as the leader of a disciplined team adept at staying on message.

Clinton's campaign, by contrast, was marked by infighting among aides, more turbulence and numerous leaks to the media.

But as the wife of a former president, she has name recognition and clout that Obama views as an asset.

"Obama believes Clinton would bring immediate respect and stature to the role at a time when the country is in need of strong relationships around the world," said on Obama aide, who spoke on condition of anonymity. "Throughout the campaign he always had a great deal of respect for her intellect, work ethic and thinks the advantages of Clinton serving far outweigh the downsides."

(Editing by Kristin Roberts and Frances Kerry)

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