Mr. Obama to the rescue

What will Barack's Wall Street look like?

Most people would not want to be in Barack Obama's shoes at the moment. He is arguably facing one of the most challenging beginning-of-term scenarios an American president has ever had to deal with. On top of a phenomenal foreign policy crisis and an increasingly indebted economy, he is now in the battle ring with a fnancial meltdown. The economy is top priority at the moment, but what does Obama plan to do with it?

The US government seems to be subprime and the budget balance is reaching record low levels, exports are stalling and the housing market continues its decline. With his promises of investing in education and healthcare, Obama seems to be setting himself up for quite a challenge. The era of the famous "light touch" regulation seems to be ending - time will only tell what this will mean for Wall Street.

Hank Paulson will leave his post as Treasury Secretary to either Lawrence Summers or Timothy Greithner. Paul Volcker, the former Fed chairman, has also been mentioned. Summers already did the job for Clinton, while Greithner has gained experience as Chairman of the New York Fed. As Summers writes in his column for the FT: "we need to reform tax incentives that encourage financial risk taking, regulate leverage and prevent government policies that give rise to a toxic combination of privatised gains and socialised losses". Volcker and Greithner seem to be following the same general guidelines. The time of record bonuses might truely be over.