With the U.S. in its worst financial crisis in decades, one of the new president's most important early decisions will be the selection of a Treasury secretary.
Here is a look at the job and some of the challenges the new Treasury secretary will face while managing the largest financial bailout in history.
Q: Besides having his signature on all the nation's currency, just what does a Treasury secretary do?
The Treasury secretary serves as the president's top economic adviser, responsible for overseeing the revenue functions of government. That includes collecting taxes through the agency that American's love to hate – the Internal Revenue Service – and borrowing massive amounts of money to service the government's $10.5 trillion debt.
The Treasury secretary, who currently earns $191,300 a year, is also the administration's chief liaison with Wall Street and the international financial community.
Q: What kind of people get picked for the job?
The current occupant, Henry Paulson, is a good example of the type of person presidents like to choose. Paulson headed the investment bank Goldman Sachs at the time of his nomination, and the 32 years he spent rising to the top gave him plenty of expertise in how Wall Street works.
So far, there have been 74 Treasury secretaries – all men – starting with Alexander Hamilton in 1789. They were usually chosen for their ties to Wall Street.
Q: How does the job of Treasury secretary differ from that of chairman of the Federal Reserve, a post now held by Ben Bernanke?
Bernanke and other Fed officials manage interest rates, raising and lowering them to keep inflation under control and the economy moving forward. Bernanke has only one vote in monetary policy decisions, but his position as chairman gives him tremendous persuasive powers on the Federal Reserve Board.
The Treasury secretary helps formulate the administration's policies on the budget, taxes and financial regulation. Paulson, for instance, played an instrumental role in developing and then winning passage for the $168 billion economic stimulus bill Congress passed in February.
Q: What role is the Treasury secretary playing in the current financial crisis?
Paulson has been the administration's point person in developing the government's response throughout the crisis, which began in August 2007 with soaring defaults on subprime mortgages.
Paulson helped develop the administration's response to rising mortgage foreclosures, an effort that critics have complained has been too limited in getting help to people in danger of losing their homes.
He also was a key player in the decision to take over mortgage giants Fannie Mae and Freddie Mac in September and not to extend assistance to Lehman Brothers, which became the largest bankruptcy in U.S. history.
Q: How has Paulson been able to play such a major role in the current crisis?
The basic answer is that he enjoys the full backing of the president. Paulson refused to join the administration in 2006 until he received assurances from the president that he would have more influence in developing the administration's economic policies than Bush's first two Treasury secretaries – Paul O'Neill and John Snow.
The Treasury secretary's powers grew dramatically with the passage of the $700 billion rescue package Oct. 3.
Paulson and the people he selects to run the bailout program will be making decisions on which banks will get an infusion of $250 billion in direct purchases by the government of bank stock. He also is overseeing plans to buy bad assets off the books of financial institutions.
Q: Since Paulson has been so closely involved in the rescue effort, won't it be disruptive when he leaves?
Some think it could be and have urged Paulson to consider staying in some advisory role for a period of time as the next administrations gets settled. However, Paulson has rejected those suggestions, saying he plans to leave government on Jan. 20 when the next president takes office.
Q: Does that make the next administration's transition planning even more important at Treasury?
Yes. Recognizing this, Paulson has already set up office space and phones at Treasury that the next administration can begin using immediately after the election. He has also picked a transition team led by his chief of staff, Jim Wilkinson, to oversee the change in administrations.