Welcome Mr. President 
      
The extraordinarily aggressive efforts of leading governments and central banks to provide liquidity to financial markets, infuse banks with capital and provide selective funding guarantees for financial institutions have begun to bear fruit. LIBOR and other indicators of short-term stress are easing, and key markets are beginning to loosen.

Unfortunately, US mortgage rates have not yet budged despite lower Fed rates. This Tuesday, the United States will elect its 44th president. The winner will face a daunting task. The US recession is deepening, major parts of the financial industry remain in intensive care, and the fiscal deficit is rising fast. The new Administration must proceed rationally and pursue policies that complement the recent actions by the US Treasury and Fed.

It must also suppress the urge--and particularly the impulse within the US Congress--to try to accomplish too much.  Efforts to support the economy now must also safeguard and enhance long-run potential growth. Any new fiscal stimulus must be well-directed and not just costly and wasteful.

Certainly, regulation of the financial industry needs revamping, but burdensome regulations that stifle credit markets or have other unintended side effects must be avoided. Policymakers in the US and globally have already taken courageous actions to address the systemic crisis and the near-global recession.

We expect the new US president will become an integral force in policymaking even before his official inauguration in January.  Wise and sound decisions are now required to facilitate the transition toward economic recovery.  

source: BofA.com