Possible Obama, McCain Treasury picks mulled

Republican presidential candidate Senator John McCain speaks to the National Association of Latino Elected and Appointed Officials (NALEO) 25th Annual conference and political convention in Washington, DC, June 28, 2008.

WASHINGTON (Reuters) - Who would President Barack Obama or President John McCain choose as the next U.S. Treasury secretary?

With the election still more than four months away, Republican candidate McCain and Obama, his Democratic opponent, are focused on picking vice presidential running mates.

But that has not stopped Wall Street from mulling over possibilities for the top job at Treasury.

"You would have to think that Phil Gramm is on the list for McCain," said Greg Valliere, chief strategist at Stanford Washington Research Group. Gramm, a vice chairman for UBS Investment Bank and a former Texas senator, is a senior McCain campaign official.

Also high on McCain's list would be former Hewlett-Packard chief executive Carly Fiorina, Valliere said.

For Obama, some in the financial community are intrigued by the possibility of New York Federal Reserve President Timothy Geithner, a former official in Bill Clinton's administration.

"He's very popular on Wall Street. He understands the complexities of the markets and the credit crunch. He's got just a tremendous Rolodex," Valliere said.

Both Valliere and Marc Chandler, a currency strategist at Brown Brothers Harriman, said another potential candidate for Treasury secretary in an Obama administration would be Laura Tyson, a former top economic adviser to President Bill Clinton who is now teaching at the University of California, Berkeley. She has recently begun advising Obama.

Depending on who wins the November 4 election, McCain, an Arizona senator, or Obama, an Illinois senator, would not begin any formal selection process for the Treasury post or any other Cabinet job until after the vote.

President George W. Bush and his current Treasury secretary, Henry Paulson, do not leave office until January 20 next year.

Nevertheless, there is always strong interest among investors in speculation about the Treasury secretary, who manages a vast federal department involved in everything from printing coins to helping regulate banks.

IMPORTANT DIPLOMATIC ROLE

Markets look to the Treasury secretary as the main spokesman for U.S. dollar policy, a crisis manager in times of economic turbulence and as one of the top -- if not the top - adviser shaping a president's economic plans.

Recent Treasury secretaries have also taken on an important diplomatic role. A top responsibility in Paulson's portfolio is taking the lead on sensitive discussions with Chinese officials on issues like currency and trade.

A slumping U.S. economy, sagging dollar and sinking stock prices amid the housing crisis and surge in oil prices have only heightened the interest in who will become the next president's most senior Cabinet adviser on the economy.

In addition to Gramm and Fiorina, some in the market saw Harvard economist Martin Feldstein, a former adviser to President Ronald Reagan, as potential Treasury secretary material in a McCain administration.

Some said McCain might also opt to try to persuade Paulson to stay on.

Obama could consider asking former Treasury Secretary Lawrence Summers to reprise his role. Or, if he wanted to follow a recent pattern of tapping former executives from venerable Wall Street firm Goldman Sachs, there is New Jersey Gov. Jon Corzine, who recently appeared at a governors' forum with Obama.

"My sense is it is a little bit early to speculate," admitted Chandler.

But he has been watching as the economic advisory teams of the two candidates have begun to take shape, potentially signaling the type of economic approach they will follow.

Fiorina has a emerged as a top surrogate for McCain, telling Reuters this month McCain would consider the "strong medicine" of intervention to strengthen the dollar if circumstances demanded and voicing confidence in Federal Reserve Chairman Ben Bernanke.

McCain's main economic adviser is Douglas Holtz-Eakin, a former White House economist and former director of the Congressional Budget Office.

University of Chicago economist Austan Goolsbee is a longtime adviser to Obama who remains a highly influential voice on economic matters for the Illinois senator.

Obama also recently tapped Jason Furman, a former White House aide and close associate of former U.S. Treasury Secretary Robert Rubin, to become his campaign's economic policy director.

(Editing by Eric Beech)

(For more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/)