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president-elect-barack-obama-talks-about-choosing-orszag-as-his-choice-for-director-of-the-office-of-management-and-budget-during-a-news-conference-in-chicago CHICAGO (Reuters) – President-elect Barack Obama takes another step toward tackling the ailing U.S. economy on Wednesday as part of an aggressive effort to demonstrate that his administration will face the global financial crisis head-on.

In his third news conference this week, Obama will make an “economic announcement” at 10:45 a.m. EST, his transition office said, following a similar event on Tuesday, when he presented his picks to head the White House budget office.

The Wall Street Journal reported Obama would name Former Federal Reserve Chairman Paul Volcker to chair a new economic advisory panel designed to stabilize financial markets and steer the country out of a recession.

Quoting Democratic officials, the newspaper reported on its Web site that University of Chicago economist and Obama policy adviser Austan Goolsbee would serve as the panel’s staff director.

It said the board would not supplant the Treasury Department, but give Obama an official forum for getting expert advice outside bureaucratic channels.

Obama, who succeeds President George W. Bush on January 20, seems already to be taking the reins as financial market players increasingly tune out the current president and focus instead on the country’s next leader.

In addition to naming his top economic advisers, Obama has come closer to forming his national security team, with reports saying that Republican Robert Gates will stay on as defense secretary and retired Marine Gen. James Jones will take over as national security adviser.

Those appointments, along with New York Sen. Hillary Clinton as secretary of state, are likely to be made early next week, after the November 27 Thanksgiving holiday.

For now Obama has put his focus squarely on the economy, pledging a costly stimulus package that he urged the next Congress to pass quickly.

On Tuesday, he vowed to cut billions of dollars in wasteful government spending.

But questions remain about both goals. Obama declined to put a figure on the stimulus package — other Democrats have estimated it could cost hundreds of billions of dollars — and he did not identify specific government programs to be cut.

Analysts said Obama’s daily economic pronouncements showed the next president stepping into a leadership chasm.

“Confidence in Bush as an effective president has eroded so substantially that he is no longer taken seriously,” said Paul Beck, a professor of political science at Ohio State University.

“There is, of course, much more confidence in Obama or he would not have been elected as president. And, he is the president-in-waiting, so the only alternative the country has to Bush as a leader, especially in a period when the markets have failed and government must play an enlarged role in them.”

Obama has not shied away from telling struggling industries like banks and automakers to take responsibility for their ailing position in the economy.

In an interview with ABC television network, Obama said bank executives should forego their bonuses this year.

Source: Reuters

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Treasury Secretary Henry M. Paulson Jr. spoke at a news conference at the Treasury Department on Tuesday in Washington.

Treasury Secretary Henry M. Paulson Jr. spoke at a news conference at the Treasury Department on Tuesday in Washington.

The United States government unveiled $800 billion worth of new loans and debt purchases on Tuesday, hoping another massive infusion of cash would smooth troubled credit markets and make borrowing easier for homebuyers, small businesses and students.

The Federal Reserve said it would buy up to $600 billion in mortgage-backed assets from government-sponsored mortgage giants Fannie Mae and Freddie Mac. It would buy up to $100 billion in debt directly from the companies and up to $500 billion in mortgage-backed securities.

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Federal Reserve said in a statement.

Separately, the Fed and Treasury Department announced a $200 billion program to ease commercial lending on debt like student loans, car loans or business loans. The Fed would lend up to $200 billion to holders of asset-backed securities supported by car loans, credit card loans, student loans, and business loans guaranteed by the Small Business Administration.

The program would be seeded with $20 billion in “credit protection” from the Treasury Department, which is drawing the money from the original $700 billion bailout.

“It gives institutions liquidity and it’s clearly direct lending that will help consumers,” Treasury Secretary Henry M. Paulson Jr. said Tuesday at a news conference.The announcements came one day after President-elect Barack Obama unveiled his economic team and tried to assure Americans that he was seeking to fill any leadership vacuum, and said his economic advisers would begin working “today.” The advisers include Timothy F. Geithner, his choice for Treasury secretary. 

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