CHICAGO (AP) — Nearing completion of his Cabinet, Barack Obama plans to choose California Rep. Hilda Solis as his labor secretary, a labor official said Thursday as the president-elect named three veteran regulators to help clean up financial debacles.
Obama blamed much of the nation's economic troubles on government regulators who “dropped the ball,” and he called for a return to ethics and tough enforcement.
Obama planned to announce Solis' selection on Friday, along with that of Republican Rep. Ray LaHood of Illinois for transportation secretary. The incoming chief executive is trying to get most of his major appointments out of the way before heading to Hawaii for a holiday vacation, and has held a news conference each day this week to unveil top positions.
On Thursday, he had yet to announce senior intelligence positions or his choice to head the Office of U.S. Trade Representative. And, numerous sub-Cabinet posts remain unfilled.
Solis, a Democratic congresswoman who is the daughter of Mexican and Nicaraguan immigrants, has focused on immigration and environment issues while in the House. The official who disclosed Obama's decision spoke on condition of anonymity because an announcement has not been made yet.
Standing before reporters on Thursday, Obama named Securities and Exchange Commission veteran Mary Schapiro as chairwoman of that agency, former Treasury official Gary Gensler to head the Commodity Futures Trading Commission, and law professor Daniel Tarullo to fill an empty Federal Reserve seat. All three will need to be confirmed by the Senate next year.
In making the announcements, Obama pointed to Wall Street money manager Bernard Madoff, under investigation in an alleged $50 billion fraud, and said the scandal underscored the need for tougher regulators. The scandal “has reminded us yet again of how badly reform is needed,” he said.
The president-elect said his new team will help put in place new rules that will help “crack down on the culture of greed and scheming.”
“There needs to be a shift in ethics on Wall Street,” he said.
As Obama spoke in Chicago, the White House said it is considering “orderly” bankruptcy as a way of dealing with the desperately ailing U.S. auto industry.
President George W. Bush, asked about an auto rescue plan during an appearance before a private group, said he hadn't decided what he would do but also spoke of the idea of bankruptcies organized by the federal government as a possible way to go.
Obama did not immediately comment on the idea.
But he wouldn't weigh in on whether he would support a decision by Treasury Secretary Henry Paulson to tap the second $350 billion installment of the $700 billion financial bailout program. Major auto companies are pleading for emergency aid, which could come from that pot.
“I think it's important that the Treasury, the Fed and all of us do whatever's required to make sure that our financial system is stable and secure,” Obama said.
But he added: “We cannot afford a collapse of our financial system. Main Street can't afford it.” He said he would evaluate any Paulson signals about what is necessary.
More broadly, Obama blamed regulators for the financial debacle, saying that they, along with congressional committees, “have been asleep at the switch.”
Americans, as they watch their investments tank, are frustrated that “there's not a lot of adult supervision out there,” Obama added.
Schapiro, who would be Obama's top Wall Street regulator and investor protector, said that investor trust “is the lifeblood of financial markets.” She called for tough enforcement action by incoming regulators.
If confirmed by the Senate:
• Schapiro, who served as an SEC commissioner in Republican and Democratic administrations and is currently the head of the Financial Industry Regulatory Authority, would take over an agency that faces growing criticism for its failure to protect investors and detect trouble brewing on Wall Street.
The SEC stands at what could be one of the most difficult times in its history, buffeted by criticism for failing to detect signs that major Wall Street banks were in trouble before the financial crisis erupted and for lax oversight and enforcement in other areas.
As the scandal involving Madoff continues to stun the financial world, revelations have surfaced that staff at the SEC repeatedly failed over the course of a decade to fully investigate credible allegations against him. SEC Chairman Christopher Cox on Tuesday ordered the agency's inspector general to investigate what went wrong.
• Gensler, a former Treasury official in the Clinton administration, would lead the Commodity Futures Trading Commission, which is an independent agency created by Congress to regulate trading in the commodity futures and option markets.
• Tarullo, a Georgetown law professor who also worked for President Bill Clinton, would fill an open seat on the Federal Reserve board in Washington.
His selection would allow Obama to begin to put his imprint on the Federal Reserve. All the present board members, including chairman Ben Bernanke, were hand picked by Bush. Tarullo would fill one of two vacant seats on the seven-member board. A third seat also will become available.
As a member of the Fed board, Tarullo would have an important voice in deciding policy to help jolt the economy back to life.
Pictured above is California Rep. Hilda Solis.