Obama faces crucial choice at Treasury

Two key players who were not affiliated with either Obama or his Republican rival John McCain also could be among those considered.

Timothy Geithner and Sheila Bair have both attracted attention for their efforts to stem the tide of financial crises, and could be among those considered by either candidate for the treasury secretary job.

As chairman of the Federal Reserve Bank of New York, Timothy Geithner has become an increasingly recognizable and respected figure as the economic crisis has unfolded. He helped broker the emergency sale of failing brokerage to JPMorgan Chase in March. And he stood next to Paulson last month when Paulson announced plans to invest $250 billion of taxpayer funds into the banking industry. Geithner also gained international experience navigating the financial crises of the 1990s under Robert Rubin at Treasury.

Light describes Geithner as "a very effective public servant" who could seamlessly step into the role. But the prospect of having to replace Geithner at one of the most important regional Federal Reserve banks in the midst of a financial crisis could make this an unattractive proposal.

Standing shoulder-to-shoulder with Paulson at that same October meeting was another potential pick for either McCain or Obama. Sheila Bair, as chairwoman of the Federal Deposit Insurance Corp., engineered the seizure of IndyMac and has used her agency's temporary ownership to test a mortgage refinancing program that could be applied on a larger scale. The success of that program gives Bair real-world experience at the helm in a sector key to the future of the economy's well-being.

James Galbraith, economics professor and author of "The Predator State," says renegotiation of mortgages is the top priority for the next president because economic recovery is dependent on keeping people in their homes by whatever means necessary.

"The problem will not be solved until you deal with the other side of the equation," says Galbraith. "That's the real economy -- the collapse of the housing sector, which is behind the collapse of the financial sector."

As a Republican, Bair could be a strong selection for Obama, who has touted the importance of having a bipartisan Cabinet.

Regardless of who the next treasury secretary is, most agree that a new appointment must be made.

According to Paul Light, Paulson has "expended a lot of personal capital" engineering bailout strategies and plans, undermining his ability to be effective for much longer.

Kuttner calls the idea of Paulson staying on "terrible."

While the experts agree challenges ahead for the next treasury secretary will be enormous, they also point to the complexity of the job, and say the entire team of economics advisers will be just as important.

"I think we'll need to look at the package of appointments," says Light. "The deputy secretary, under secretary, chair of (the) Council of Economic Advisers -- the best approach is to announce your economic team as a whole, to really emphasize the experience of the people who'll try to fix this mess."

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