U.S. president-elect Barack Obama’s new economic team is earning praise from the financial services industry.

The incoming economic team will be headed by the current Governor of the New York Federal Reserve Bank, Timothy Geithner, as Treasury Secretary.

Larry Summers, the former Treasury Secretary under Bill Clinton, will be director of the National Economic Council.

Economic research firm Global Insight Inc. says that Geithner, “is widely respected and has long been seen as a rising star. Geithner has been a key player in the efforts to date to rescue the financial sector, something that may count against him among Democrats who feel the government has been too generous towards banks.”

“A career bureaucrat, Geithner served as a Treasury attaché in Japan in the 1990s, and later worked with the International Monetary Fund. He is known as an advocate of strong government intervention during the crisis, and will presumably carry this activist slant to the Treasury,” it adds.

Geithner has an unenviable list of challenges facing him, Global Insight notes, including the future of the Troubled Asset Relief Program, how to confront the tide of foreclosures, what to do with the mortgage giants Freddie Mac and Fannie Mae, how to deliver on Obama’s tax pledges, and how far to push the financial sector regulatory overhaul.

Global Insight says that Summers is a widely respected economist who has maintained a high public profile throughout the Bush years. Additionally, Peter Orszag will be director of Office of Management and Budget. Orszag was previously an economic advisor to president Clinton, and served on the Council of Economic Advisers. “Orszag is regarded as a protégé of former treasury secretary Robert Rubin, something that will spur suspicion among more left-leaning Democrats,” Global Insight adds.

“President elect Obama today tapped some of the most experienced financial officials in the world to help lead his economic team,” said Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association.

“As these months of financial turmoil have unfolded, his choice for Treasury Secretary, Tim Geithner, was in the room and part of the debate when many critical decisions were made. The New York Fed has been consulted on nearly every step, and has even taken the lead in many vital policy areas. The financial community had hoped for a smooth transition between administrations, and given Tim’s familiarity with the current team and their thinking, his appointment all but guarantees that to be the case. Tim brings experience from both the Federal Reserve and the Treasury, in both domestic and global finance, having been involved in major policy decisions affecting the world from Mexico to Japan,” Ryan added.

“Larry Summers is one of the most respected minds in the field of economics. He helped lead the world through a number of economic crises and his steady hand and sharp mind will benefit us all when he takes the helm of the National Economic Council,” he said. “Their jobs will be difficult, but we look forward to working with them on the challenges ahead.”

Global Insight notes that Obama is also expanding his plans for economic stimulus. “During the campaign Obama pledged a US$175-billion economic stimulus plan to drag the economy out of its current crisis. This was bold, but now the president-elect believes this is insufficient,” it says. “The plan under preparation will span two years and aims to create some 2.5 million jobs (compared to 1 million in the original plan). It is also hinted that Obama may delay the promised tax hike on the wealthy to 2011.”

“A figure has not been given for the cost of the expanded plan, but the US$300–500 billion range is being widely speculated. There will be a strong focus on building “green infrastructure”, as Obama stresses that the economic crisis has not dimmed his ambitions to tackle climate change and foreign oil dependence,” it adds.

“Obama’s picks show that he will staff his inner White House core with long-time allies, but that he is happy to fill other key roles with experienced Washington insiders and one-time foes… It is reassuring to see that he values experience, and is reaching beyond his Chicago associates, but there are concerns among some supporters that his mantra of change and political renewal is being undermined,” Global Insight says. “Obama may well turn out to be more of a pragmatic centrist than many of his fervent supporters expected.”