Though there were indications of a rescue on Friday November 21st, on the evening of the 23rd, the U.S. Government announced the bailout of financial giant Citigroup. The following Monday morning Barack Obama announced his economic team, appointing Timothy Geithner (the man who contributed to the Wall Street surge on the 21st) as Secretary of the Treasury, and Lawrence Summers as Director of the National Economic Council.

Combined, these announcements gave the Dow Jones its biggest two day increase since 1987, making for a couple of amazing days on Wall Street.

There was a sense of hope for the ailing economy as people started to believe that the worst of the economic crisis might have passed. The U.S. government agreed to invest $20 billion in Citigroup, with an additional guarantee of $306 billion in risky assets. With the bailout of Citigroup, enthusiasm grew not only because the company itself had become safe, but because it answered questions about how the government might take action towards future bank stabilizations.

The combined efforts of the various government financial entities marked the most recent attempt to support a banking system plagued by waning confidence and bad debt. Investors remained cautious, indicated in the last hour Monday when the Dow Jones gave up some of its gains. There is still much apprehensiveness with the market having frequent swift reversals since the start of the credit crisis.

President-Elect Barack Obama, in a press conference after naming his economic team, had this to say:

I’ve sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold, new ideas, and most of all, who share my fundamental belief that we cannot have a thriving Wall Street without a thriving Main Street.

The selection of an experienced economic team, combined with Obama’s promise to create 2.5 million jobs over the course of two years, invigorated Wall Street with new hope for the future despite past failures.

Representing Obama’s top economic team member, Timothy Geithner will oversee the dispersal of the controversial $700 billion financial rescue package Congress passed in October. There has been much speculation amongst politicians and taxpayers over whether the package is being best put to use under the existing Bush administration.

Geithner is the current president of the Federal Reserve Bank of New York, and has been working closely with Secretary of the Treasury Hank Paulson in an effort to stabilize the financial system. Geithner played a central role in negotiating the recent Citigroup bailout, in addition to having a hand in several past bailouts. In a statement issued Monday afternoon, Secretary of the Treasury Paulson said of Geithner:

I have the highest regard for Tim—his judgment and creativity have been critical to designing and implementing the necessary actions we’ve taken to protect and strengthen our financial system. I have great confidence in his understanding of markets, his judgment and leadership, and his ability to meet the challenges that lie ahead.

President Bush commented on Paulson’s acknowledgement of Geithner, indicating that Paulson was working closely with the Obama transition team to ensure a flawless transfer of responsibilities. With Bush’s approval ratings at all time lows, news of his administration passing the reigns instilled further hope and confidence for the future on Wall Street.

Though Geithner has been rendered as the heavyweight of Obama’s economic team, future Director of the National Economic Council Lawrence Summers is of definite worth of mention. Summers served as the Secretary of the Treasury under the Clinton administration for two years, where he received widespread acclaim for using United States budget surpluses to reduce the federal debt for the first time since the 1920s.

Prior to his appointment to Secretary of the Treasury, Summers served as the Deputy Secretary under Robert Rubin, a man who is the current Director and Senior Counselor of Citigroup, and also an adviser to President-elect Barack Obama. Together with Alan Greenspan, Summers and Rubin worked to combat the 1990s financial crises in foreign markets around the world. In 1999, Time Magazine named the three “The Committee to Save the World”.

Despite his experience and claim to fame, Summers is not bereft of controversy, making his selection a stretch for an Obama administration that has sought to avoid contentious candidates. In 2005, as the President of Harvard University, Summers made some illicit comments about gender differences. Women’s groups have circulated complaints about Summers, serving as a distraction for a preoccupied Obama economic team.

Though his personal character might raise questions, Summers is regarded as a brilliant economist, and was a preemptive supporter of economic stimulus to ward off recession. The selection of Summers indicates the Obama economic team will place an emphasis on aggressive government intervention in the market. President-elect Obama commended Summers as “a thought leader”, and Wall Street responded with approval.

The Citigroup bailout combined with the announcement of Geithner and Summers holding central positions on the Obama economic team marked a significant turnaround for the market last week. Whether the trend will continue has yet to be determined, but with no losses in the Dow Jones over the course of the week, there does seem to be some hope for the future, at least for the moment.

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