Barack Obama can't afford a honeymoon. When it comes to the economy, the president-elect doesn't have the luxury of waiting for George Bush to leave the White House before getting to work and by the end of last week was putting together his economic team.

With Congress planning a four-day session before the end of the year to craft a stimulus package and lay the groundwork for sweeping financial reforms, Obama and his advisers will be running a sort of shadow White House alongside the one still in office at 1600 Pennsylvania Ave.

"Barack Obama effectively became the economic spokesperson and chief economic policymaker" on the night of his election, says Stan Collender, managing director of public relations firm Qorvis Communications LLC. The Bush White House "no longer has any credibility on economic issues and maybe hasn't had any for quite some time."

The credibility gap leaves a wide opening for Obama and lawmakers to get started now. "Congress is ready to get on with financial reform, and they must involve Obama's people," says Paul Quinn, government relations counsel at Buchanan Ingersoll & Rooney PC.

Administrations enjoy an initial period of deference from Congress. Obama's is starting off as a giant collaboration, with Congress as partner. His party controls both chambers of Congress, and his relative inexperience in Washington will make him dependent on party stalwarts for advice and staff.

Unlike Bill Clinton and George W. Bush, both governors before taking the presidency, Obama has only a small coterie of congressional aides and political backers from his home state that he can bring to the White House. The lack of a huge army of political patrons from Illinois will by default prevent him from loading key posts with unqualified cronies, which Quinn says is "a syndrome most administrations fall into."

Quinn, who landed his first Washington job during the Eisenhower administration, thinks the reliance on Washington insiders is a plus. "The people he will appoint will be more committed to doing what needs to be done," Quinn says. Perhaps that's overly optimistic, but crises do have a way of making people focus on the task at hand.

Despite Obama's mantra for "change," he'll put in place the most experienced team of Beltway insiders since George H. W. Bush. That may sound like a negative, but it's not. Unlike so many new regimes that proclaim disdain for Washington's ways, Team Obama's first steps are less likely to be stumbles.

Leading the priority list on Capitol Hill is passing a $60 billion stimulus package, which lawmakers will try to do in their lame duck session, though it's not clear whether they will have the support of the Bush administration.

In addition to the support given the financial industry, Obama may find himself pressured to help out some ailing nonfinancial businesses, such as automakers, retailers and real estate developers, should year-end numbers turn out badly, says Kevyn Orr, a partner in Jones Day's Washington office. "We don't know what the priority will be in the New Year," he says. "He might want to consider helping domestic automakers and saving thousands of jobs in the Midwest, including Michigan, Ohio and Indiana. If holiday sales are bad enough, retailers might ask for help, and helping retailers means helping their real estate and employees."

When the time comes for the new White House to make appointments to key banking and other federal agencies, the president-elect is expected to heavily mine the staffs of Sens. Christopher Dodd, Ted Kennedy and John Kerry,
his most aggressive promoters during the campaign, Quinn observes.

He predicts Obama will promote professional staffers within the agencies, too. Coupled with Democratic pickups on Capitol Hill, Obama's victory will energize efforts to implement a spate of legislation and federal agency initiatives aimed at corporate America generally and the financial industry specifically.

"You will see a Sarbanes-Oxley-like bill for the financial services industry coming out of Congress," Collender says. "Any committee with jurisdiction in the financial services area will hold a hearing. Regulatory reform is coming."

A reorganization of regulators, including a combination of the Securities and Exchange Commission and the Commodities Futures Trading Commission, may be high on the agenda. Treasury Secretary Henry Paulson called for that and other consolidation of federal financial regulatory offices in March.

Although industries that are comfortable with their regulators and congressional committee chairs (who are in turn jealous of their turf) will oppose consolidation, many observers say the current economic turmoil gives momentum to pass a regulatory streamlining measure that is long overdue. "There will be a new look at reorganizing regulators," says Ralph MacDonald, partner in the Atlanta office of Jones Day.

Regardless of whether regulatory consolidation is enacted, the financial agencies are already coordinating their oversight activities better than before, observes Amy Greer, partner in the Philadelphia office of Reed Smith LLP and former regional trial counsel in the SEC's Philadelphia Regional Office.

In January, the 110th Congress will begin work on an "investors' bill of rights," which will make major changes to executive compensation, parachute contracts and bonus packages while giving institutional investors a greater say on CEO pay packages.

Expect rules limiting compensation of CEOs to move quickly from legislation to law -- above and beyond the limits placed on financial services companies receiving equity infusions from the Treasury Department.

A bill approved earlier this year in the House that would give shareholders a nonbinding vote on CEO pay packages will certainly be reintroduced, but this time look for passage by the Senate as well and approval by the president. GOP lawmakers are fighting this measure tooth and nail. They say it could be used by special interest investors as leverage to push a company, but with a strengthened Democratic party in Congress, expect this measure to be approved.

House Financial Services Committee Chairman Barney Frank, D.-Mass., is also likely to take compensation limitations attached to the Treasury bailout program and use them as a model for new pay prohibitions that Congress will consider in January for all corporations. Changes may include rules governing bonuses, golden parachutes and corporate tax treatment for CEO salaries.

One restraint under the Troubled Asset Relief Program, or TARP, prohibits participating banks from deducting from their taxable income more than $500,000 a year for base salary paid to each of their five most senior executives. That may be extended to all companies.

Bonuses may be on the table as well. The rescue package includes a bonus clawback provision: If benchmarks executives reached entitling them to bonuses were based on "materially inaccurate financial statements" or other inaccurate metrics, CEOs must return that payment to the business.

House Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif., is calling for even more stringent prohibitions on bonuses.

MacDonald is worried by criticism from some on Capitol Hill that TARP's restrictions on dividend payments by banks and limits on their executive compensation don't go far enough. "I hope they won't change existing TARP programs, which are beginning to work. Changing the contract terms could destabilize the financial system again."

A major regulation aimed at bailed-out financial services companies is a measure that prohibits participating banks from providing golden parachute compensation packages to new top-five employees as long as the institution is holding on to government capital. This may be approved for all corporations.

"I would have written tougher executive compensation limits for participating banks, but we will build on this next year," Frank says.

Also, as part of the investor bill of rights, expect to see the new administration have the SEC revisit proposals that would give shareholders a greater say in nominating director candidates for corporate boards; rules that could have profound implications for some hedge funds. Congress may also require the SEC to set up rules to have hedge fund managers register and open their books for inspection by agency staffers. The commission adopted fund registration rules that a federal court later struck down, arguing that the agency didn't have the authority to require registration. Congress may change that. Waxman's committee will hold a hearing on regulation of hedge funds Nov. 13.

Making hedge funds and private equity managers pay more taxes will also be on the table. Look for House Ways and Means Committee Chairman Charles Rangel, D-N.Y., and Senate Finance Committee Chairman Max Baucus, D-Mont., to revisit a mid-2007 effort in Congress to increase taxes that such managers pay on carried interest -- the share of investment profits retained by operators of the investment funds. Carried interest is now taxed at the 15% capital gains rate, but managers' profits could soon be taxed at the 35% ordinary income rate.

A plethora of short-sale regulations are likely as well. Fund managers are required to provide details about their short-selling positions weekly to the SEC well into 2009. The agency says the data is confidential and being used in its rumor-mongering investigations. Some observers expect the agency to require hedge funds with $100 million or more in assets to disclose short positions four times a year, much like they now must disclose equity positions through SEC 13F filings.

Also, look for the SEC's Corporate Finance Division to expand disclosure rules for activist funds. Some fund managers and corporations enter into cash-settled equity swap agreements with derivatives dealers at banks to hike their economic exposure to a target company while avoiding SEC disclosure rules. A Democratic administration is likely to push through new rules that would require earlier reporting by activist investors. SEC Corporate Finance Director John White is expected to be replaced by someone favored by the next commission chairman.

Greer predicts the Obama administration will move quickly to rejuvenate the Department of Justice's enforcement division, rocked by charges of politicization at the U.S. attorneys' offices around the country.

"The scandal was demoralizing, and changes at the top will help with reviving the line people," she says.

Obama is expected to name his Cabinet and agency chiefs in record time. On the antitrust front, Harvard Law School professor Einer Elhauge has been mentioned to head either the Justice Department's Antitrust Division or the Federal Trade Commission. For the DOJ, he would face competition from two partners at Wilmer Cutler Pickering Hale and Dorr LLP, Doug Melamed, who was acting assistant attorney general after Joel Klein left the Clinton administration, and William Kolasky, a former supporter of Sen. John McCain, who switched to the Obama camp more than a year ago. At the Federal Trade Commission, it's no secret that Commissioner Jon Leibowitz is vying for the post, but the list of hopefuls is long.

Names for replacing Christopher Cox at the Securities and Exchange Commission include Arthur Levitt, SEC chairman from 1993 to 2001, and former commissioners Harvey Goldschmid, Roel Campos and Annette Nazareth. It would be easier for Obama to elevate an existing commissioner to the chair position. Elisse Walter, who is on the commission, could fit the bill.

At the Federal Communications Commission, a key arbiter of media and telecom deals, the search to replace Republican Kevin Martin is being led by Henry Rivera, a Democrat at powerhouse law firm Wiley Rein LLP. Names bandied about include Obama's Harvard Law School classmate, Julius Genachowski, a managing director of venture capital firm Rock Creek Ventures and a special adviser to buyout firm General Atlantic. Other candidates include Lawrence Strickling, former chief of the FCC's common carrier bureau, and Don Gips, an executive vice president at Level 3 Communications Inc. and former chief of the FCC's International Bureau. Current FCC Commissioners Jonathan Adelstein and Michael Copps could also be candidates. Former Senate Majority Leader Tom Daschle also may be considered. Stifel, Nicolaus & Co. regulatory analyst and Clinton administration FCC Chief of Staff Blair Levin is also a possibility.

On Capitol Hill, Christopher Dodd, D-Conn., is expected to remain chairman of the Senate Banking Committee. Ditto for Barney Frank, D-Mass., who leads the House Financial Services Committee.

Quick formation of an economic team and the prompt layout of an agenda will have a stabilizing effect, says Philip Keevil, senior partner at Compass Advisers LLP in London and a former head of European M&A at Citigroup Inc.

"This should calm the credit markets and also will likely encourage those with liquidity to make acquisitions, as opposed to keeping their powder dry as they have been for the last few months," he says. Further out, however, he worries over Obama's calls for higher taxes and more regulation.

Lest anyone worry too much over a leftward tilt to the new administration, however, they might consider that the member of Congress who, according to the Center for Responsive Politics, received the most campaign money from hedge funds, private equity shops and major financial institutions in 2008 was Obama's new chief of staff, Rep. Rahm Emanuel, D-Ill.