Financial crisis complicates Obama transition

Lawmakers seem likely to settle on relatively modest measures for now — such as a $60 billion package for extended unemployment benefits, food stamps and subsidies to states — rather than risk a Bush veto. Then, with expanded Democratic majorities in both chambers, Congress can tackle a more-ambitious plan early next year.

On Thursday, Obama named Rep. Rahm Emanuel, a hard-charging fellow Democratic lawmaker from Chicago, to be his White House chief of staff. Now he is under pressure to name a treasury secretary as quickly as possible.

Former Treasury Secretary Lawrence Summers, who served at the end of the Clinton administration, and Timothy Geithner, president of the Federal Reserve Bank of New York, are viewed as top contenders.

Geithner has played a key role in the government's response to the financial crisis and worked closely with Treasury Secretary Henry Paulson. Summers, whose tenure as president of Harvard was rocky after inflammatory remarks about women in the sciences, has been a close adviser to Obama.

Other names being mentioned include another former Clinton treasury secretary, Robert Rubin, New Jersey Gov. Jon Corzine, former Fed Chairman Paul Volcker and Jaime Dimon, chief executive of JP Morgan Chase. During one of the presidential debates, Obama and GOP rival John McCain suggested billionaire investor Warren Buffett would make a fine, if unlikely, secretary.

Obama has promised to keep in close contact with Paulson, who has made it clear he will leave his post in January and leave to his successor key decisions on how to spend the rest of the $700 billion financial rescue package passed last month by Congress.

Paulson pledged Thursday to work closely with Obama, saying, "A methodical and orderly transition is in the best interests of the financial markets and Treasury is committed to making sure that the incoming team can hit the ground running in January."

The Bush administration is already pouring $250 billion into banks in return for partial ownership. It also may use some of the money to buy bad mortgages and other toxic debt held by financial institutions.

Obama administration faults Senate bank bill The Obama administration on Friday pushed back against a proposal in the U.S. Senate to create a single bank super-regulator and strip the Federal Reserve of its supervisory powers. Warren Buffett: Financial panic is over Pay czar concerned firms could lose talent U.S. banks to prepay $45 billion to FDIC Geithner encouraged by policies in Asia

Presidents have to be careful about what they pick as their top legislative goals. Despite wide Democratic majorities, President Carter stumbled with energy proposals and President Clinton with health care overhaul. In 2004, Bush squandered political capital from his re-election victory to push a partial privatization of Social Security that he couldn't sell even to most fellow Republicans.

White House press secretary Dana Perino said Thursday that the administration has been briefing Obama aides. "What we have pledged to do and we are doing is to work and consult with the Obama team on issues as we move forward, one of those being the financial summit that's coming up next week," she said.

Obama declined an invitation to attend himself. Why? The Obama camp says it's one thing for the president-elect to work with his party in Congress on a stimulus package, another to participate directly in something that is the prerogative of the president. But he's expected to send a representative.

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