Volcker to lead Obama panel of economic advisors

US President-elect Barack Obama on Wednesday named former Federal Reserve Chairman Paul Volcker to head a new panel that will advise him on stabilising financial markets in a bid to avert a painful recession.


President-elect Barack Obama Wednesday appointed former Federal Reserve chairman Paul Volcker to lead a new panel of advisers to steer the US economy back to health.

"It has become increasingly clear in recent months that we are facing an economic crisis of historic proportions," Obama told reporters, announcing the creation of the "President's Economic Recovery Advisory Board."

"At this defining moment for our nation, the old ways of thinking and acting just won't do," he said. "We are called to seek fresh thinking and bold new ideas from the leading minds across America."

Volcker, 81, will be assisted on the new panel by top Obama adviser Austan Goolsbee, who will serve as its staff director and chief economist. Further appointments would be announced in the coming weeks, Obama said.

The board will be composed of "distinguished individuals from diverse backgrounds outside of government" including business, labor and academia, Obama said at his third news conference in as many days.

Washington's "echo chamber" tended to exclude fresh voices and new ways of thinking, and the board would circumvent that danger, he said.

The appointments were the latest additions to Obama's economic team following his naming of Timothy Geithner as Treasury secretary, Larry Summers as chief White House economic adviser and Peter Orszag as budget overseer.

The new board is modeled on the Foreign Intelligence Advisory Board set up by president Dwight Eisenhower in 1956 when, at the height of the Cold War, the White House wanted views drawn from outside the established bureaucracy.

The intelligence advisers were chosen to be "candid and unsparing in their assessment," Obama said, and the economic board "will perform a similar function for my administration as we formulate our economic policy."

The towering Volcker was an economic adviser during Obama's campaign, and earned his reputation as Fed chief in the 1980s by waging an unpopular battle against inflation.

During his tenure, the central banker employed tight monetary policies to slay double-digit inflation -- a strategy that proved successful but at the cost of a severe recession and intense public criticism.

"Paul has served under both Republicans and Democrats and is held in the highest esteem for his sound and independent judgment," Obama said.

"He has a long and distinguished record of service to our nation, and I am pleased that he has answered the call to serve once again."

Obama said Goolsbee, a centrist academic, was "one of the economic thinkers who has most shaped my own thinking on economic matters, and I look forward to continuing our close collaboration in the White House."

The adviser waded into controversy after reportedly telling Canadian diplomats to ignore Obama's campaign rhetoric against the North American Free Trade Agreement.

Heading in to the Thanksgiving shopping weekend, which retailers fear could prove a bust as customers tighten their belts, Obama said fears for the financial future were understandable.

"I think it is important for the American people, though, to have confidence that we've gone through recessions before, we've gone through difficult times before, that my administration intends to get this economy back on track," he said.

Obama touted his plan to create 2.5 million jobs over the next two years through an infrastructure spending spree, and said "our future is bright if we make good decisions."

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