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Obama Economic Team Rolls Up Its Sleeves

STEVE INSKEEP, host:

It's Morning Edition from NPR News. Renee Montagne is away. I'm Steve Inskeep, good morning. President-elect Obama says the country must act swiftly and boldly to deal with the economic crisis. And that may mean the President-elect himself faces pressure to move more swiftly than he wanted. He made his remark yesterday as he unveiled his economic team. And NPR's John Ydstie reports that Mr. Obama appears to be ready to play a major role in addressing the crisis even before taking office.

JOHN YDSTIE: Two weeks ago, during his first post-election news conference, President-elect Obama deferred to the Bush administration on the handling of the economic crisis, saying the United States has only one president at a time. Yesterday, his tone changed decidedly. Flanked by his new economic team, he said it was time to go to work.

(Soundbite of news conference)

President-elect BARACK OBAMA: That work starts today, because the truth is we do not have a minute to waste.

YDSTIE: Obama was forced to take a step into the transition power vacuum in Washington when faith in some of the nation's major banks deteriorated again last week, leading to the rescue of Citigroup over the weekend. President Bush called Mr. Obama to inform him of the rescue plan which taps another $20 billion of the $700 billion TARP program authorized by the Congress. Yesterday, Obama clearly suggested he would be involved in future TARP decisions.

(Soundbite of news conference)

President-elect OBAMA: We need to make sure that that authority is used forcefully in the coming weeks to stabilize the current situation. I will make further assessments about whether it's necessary to draw down additional TARP money as the administration and Treasury Secretary Paulson and Bernanke provide me more real-time information.

YDSTIE: Simon Johnson, former chief economist at the International Monetary Fund, is encouraged by the signs of more involvement from the president-elect.

Professor SIMON JOHNSON (Entrepreneurship, Sloan School of Management, MIT; Senior Fellow, Peterson Institute for International Economics): I think this means that Mr. Obama and his team realize that the situation, far from stabilizing, as Mr. Paulson said last week, is actually deteriorating.

YDSTIE: That means Mr. Obama and his team need to get busy, says Johnson, who is now a professor at MIT and a fellow at the Peterson Institute.

Professor JOHNSON: And I hope and I think that Mr. Bush's administration will cooperate with them fully, but there's no question that there's a lot of constitutional issues here and plenty of scope for people to be uncomfortable.

YDSTIE: Those constitutional issues are diminished somewhat by the fact that Mr. Obama's choice for Treasury secretary, Tim Geithner, already has a seat at the decision-making table. That's because Geithner's current job is president of the New York Federal Reserve Bank. And for the past 18 months, he's worked intimately with the current Treasury secretary, Henry Paulson, and Fed Chairman Ben Bernanke battling the economic crisis. Former FDIC Chairman William Seidman, who dealt with the fallout from the savings and loan crisis two decades ago, says it might seem unlikely the Bush administration would cede decision-making power to the incoming administration.

Mr. WILLIAM SEIDMAN (Former Chairman, FDIC; Chief Financial Commentator, CNBC Network): Although, I think they are convinced that the severity of the problem is so great that they want to make sure they're not in any way making it worse. So I would think they would try to work out something that looked like a joint venture, but the final word would be in the hands of the new administration.

YDSTIE: Speaking from experience, Seidman says that in crisis situations there's got to be one decision maker. Whether President Bush and Treasury Secretary Henry Paulson are ready to be that cooperative is a big question mark. But MIT's Simon Johnson says he believes Mr. Obama's Treasury secretary-in-waiting can make it work.

Professor JOHNSON: Mr. Geithner is a very experienced economic diplomat, and he's very capable of managing that relationship without - getting things done without ruffling too many feathers.

YDSTIE: The first act in this joint venture, the rescue of Citigroup, does seem to have gone smoothly. But with big egos involved and the inevitable differences on policy, working together for the next two months will be a challenge. However, with so much at stake, there is a great incentive for the Obama and Bush camps to find a way to cooperate. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.

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