Obama confers with economic experts

November 7, 2008 9:22:25 PM PST
On Friday, the president-elect met with his team of economic advisors.The group is a 17-member, monetary all-star team including billionaire Warren Buffet, former Fed chairman Paul Volcker and former treasury secretary Robert Rubin.

Joining Barack Obama Friday was a who's-who of American economic expertise with a heavy does of hometown hotshots.

Standing right next to the president-elect, was a man described as a political pit-bull. Rahm Emanuel cut his chops in the late '80s as the finance chairman of Richard M. Daley's first campaign for mayor. He was a senior advisor in the Clinton administration who went on to make millions in the private sector before running for Congress.

But it's a 13-month period beginning in the year 2000 now raising questions.

"The fact is, Emanuel was on the board of Freddie Mac at the time when they were misreporting their earnings," said Joe Weber, Business Week.

A government investigation doesn't name Emanuel. Instead, it blamed the entire board, saying it "failed in its duty to follow up on matters brought to its attention."

An Obama spokesperson said Emanuel only served on the board for a short period of time.

Also at Friday's event was Chicagoan Penny Pritzker. She was the Obama campaign's national fundraising chairwoman. The noted Chicago philanthropist founded Classic Residences by Hyatt and is mentioned as a possible Commerce Secretary in the Obama administration.

But Pritzker also ran Superior Bank. It went under in 2001, an early victim of the problems that now plague the financial industry. Superior Bank made a lot of subprime loans. When it failed, it took a good chunk of the life savings of nearly 1,400 people with it.

"They were given explicitly the Pritzker guarantee. Their life saving was safe and the Pritzkers reneged and let it fail and made a boatload of money in the failure," said Tim Anderson, Pritzker critic.

Anderson is a former bank consultant who began a crusade against the Pritzkers after his mom lost money in a failed bank.

"She can't be a part of the plan since she designed the program that sunk the savings and loans and created the problems we have today," Anderson said.

Home sales dropped again in October. The unemployment rate is at a 14-year high. The auto industry is broken. GM says it may run out of cash sometime next year.

After meeting with his economic advisors, the president-elect said his intent after taking office is to launch an economic stimulus package, extend unemployment benefits and build a plan for infrastructure improvements.

"I'm not against government interv3ention. I am against government intervention that is wasteful," said Prof. Paola Sapienza, Kellogg School of Management.

Sapienza watched the Obama press conference with interest Friday. She agrees with his key points but cautions that simply throwing money at a crippled auto industry would be like pouring water in a bucket filled with holes.

"This is not gonna solve the problem for this industry. It hasn't solved it in many years," Sapienza said. "Money would be better spent on unemployment rather than giving it to management."

A hard-line approach to the auto industry that Sapeinza would recommend has huge political pitfalls, of course. Obama called the auto industry the backbone of American manufacturing, and urged the Bush administration to speed up the "re-tooling" assistance its already promised Detroit.

David Schaps didn't get a chance to watch the Obama press conference. He was busy at work at his restaurant and bread shop. But his magic word is shared by the president-elect and the professor - patience.

"It's gonna take time to get out of this mess. It took a lot of time to get into it," said Schaps.

"We're not starting from nowhere," said Lawrence Summers, a Treasury secretary under President Clinton and one of the members of Obama's transition economic advisory board.

"Throughout his campaign the president-elect has been talking about what we need to do. We need to put the middle class at the center of the policy approach in a way that it hasn't been these last years," Summers told NBC's "Today."

Leaders of business, government and academia to meet with Obama and Vice President-elect Joe Biden include executives from Xerox Corp., Time Warner Inc., Google Inc. and the Hyatt hotel company. Investor Warren Buffett was participating by telephone.

Obama also was holding his first news conference as president-elect after the meeting.

It was to be Obama's first public appearance since Tuesday's election, where exit polls showed that the economy was far and away the top issue for voters. More evidence of a recession came Friday when the government reported that the unemployment rate had jumped from 6.1 percent in September to 6.5 percent in October.

Obama has been meeting privately with his transition team, receiving congratulatory phone calls from U.S. allies and intelligence briefings, and making decisions about who will help run his government.

The selections are telling for Obama, who campaigned as a nontraditional, almost "post-partisan" newcomer. People close to him say the selections show he is aware of his strengths and weaknesses, and knows what he needs to be successful as he shifts from campaigning to governing.

Transition spokeswoman Stephanie Cutter said Obama would not announce any personnel appointments Friday.

Friday morning, Obama and his wife, Michelle, attended a parent-teacher conference at the University of Chicago Lab School where their daughters, Malia and Sasha, are students. The couple planned to visit the White House on Monday at President Bush's invitation.

Obama planned to stay home through the weekend, with a blackout on news announcements so he and his staff can rest after the grueling campaign and the rush of Tuesday night's victory. He is planning a family getaway to Hawaii in December before they move to the White House, and to honor his grandmother, Madelyn Dunham, who died Sunday at her home there.

Obama, who bested Sen. Hillary Rodham Clinton for the Democratic presidential nomination, has made it clear he will rely heavily on veterans of her husband's eight-year administration, the only Democratic presidency in the past 28 years.

Podesta was President Clinton's chief of staff, and several other former Clinton aides are on Obama's short lists for key jobs, Democratic officials say. Some helped write a large briefing book on how to govern, assembled under Podesta's supervision.

Obama also is certain to bring to the White House a cadre of longtime aides like senior adviser David Axelrod and press secretary Robert Gibbs. Both have worked closely with Obama since he ran for the Senate in 2004.

The Associated Press contributed to this report.