Geithner to stay on as Treasury chief

With the U.S. unemployment rate above nine percent and the economy still scarred by crisis, “we still have a lot of work to do”, he added.

Geithner had indicated he might leave after a debt-ceiling increase was approved, partly because his family was returning to New York, where his son is planning to attend his final year of high school this autumn.

But administration officials had signaled that both Obama and White House chief of staff William Daley had urged him not to leave now.

The high-stakes drama over the debt ceiling increase, which brought the world’s biggest economy to the brink of default, has given way to a new set of concerns after ratings agency Standard & Poor’s downgraded U.S. debt late on Friday.

“The president asked Secretary Geithner to stay on at Treasury and welcomes his decision,” White House spokesman Jay Carney said in a statement.

Debt crises on both sides of the Atlantic have escalated in recent days. European officials were struggling to prevent financial turmoil from spreading from the periphery to core economies such as Italy‘s, while officials in Washington will seek to minimize fallout from the debt downgrade.

After $2.5 trillion in value was erased from global stock markets last week, there was worry about how financial markets would respond to the latest developments when they open in Asia on Monday morning.

Renewed financial instability comes as major economies struggle to establish firm recoveries from the 2007-2009 crisis.

Geithner, the last of Obama’s original economic team to remain in office, is experienced at navigating economic storms. When he took office in January 2009, the economy was in deep recession after the U.S. housing market collapse and ensuing credit crunch. In his previous job as president of the New York Federal Reserve, he played a central role in the government’s response to those crises.

WASHINGTON (Reuters) – By Glenn Somerville(Reporting by Glenn Somerville, with additional reporting by Jeff Mason; Writing by Mark Felsenthal; Editing by Chizu Nomiyama))