Ex-Fed chief named Obama adviser

Barack Obama says his cabinet will combine experience with fresh thinking

US President-elect Barack Obama has named former Federal Reserve chairman Paul Volcker to chair a new panel advising him on the economy.

Mr Volcker, 81, who advised Mr Obama on the economy during the election campaign, led the Fed under presidents Jimmy Carter and Ronald Regan.

The President's Economic Recovery Advisory Board is part of efforts to tackle problems in the ailing economy.

Mr Obama has pledged to focus on the US economic slowdown as his top priority.

He as also said he will cut billions of dollars in "wasteful spending".

This is designed to partially offset costly stimulus packages aimed at reviving the US economy.

Analysis: Economic appointments

'Historic proportions'

The panel's staff director will be the University of Chicago economist, Austan Goolsbee, another Obama economic advisor.

It will bring in outside expertise so that the president-elect can build a consensus as he seeks to stabilise the financial markets.

Mr Obama said he hoped the new board would provide fresh thinking and detailed reports about what was happening across the country.

"It has become increasingly clear in recent months that we are facing an economic crisis of historic proportions," Mr Obama said.

"At this defining moment for our nation, the old ways of thinking and acting just won't do."

New York Federal Reserve President Tim Geithner has already been named as the President-elect's treasury secretary.

Deepening problem

The Federal Reserve this week said it would inject another $800bn (£526.8bn) into the US economy in a further effort to stabilise the financial system.

US Treasury Secretary Henry Paulson said the stimulus package aimed to make more lending available to consumers.

About $600bn will be used to buy up mortgage-backed securities while $200bn is being targeted at unfreezing the consumer credit market.

Financial institutions are reluctant to lend, deepening the economic slowdown.

The latest rescue plan is in addition to the $700bn bank bail-out that was passed by Congress in October.