The odds on Tim Geithner becoming the next US Treasury Secretary have shortened after a key Barack Obama economic adviser said he would be a "superb" candidate.

However, the veteran Fed chief Paul Volcker could yet also be appointed as an interim financial chief in the Obama administration according to the president-elect's economic transition adviser Robert Shapiro.

He told the Evening Standard: "There is no one who knows this financial crisis better than Tim Geithner. He understands the economic situation very well. He is not a trained economist but maybe that's an advantage."

Geithner, 47, the current head of the New York Federal Reserve who served under Bill Clinton's Treasury Secretaries Robert Rubin and Larry Summers, emerged as a potential Treasury Secretary after polls of businessmen and media commentators identified him as the man best able to turn round America's economic and financial crisis.

Shapiro, himself a former Clinton appointee in the White House as Commerce chief and now close to Obama, did not rule out the new President approaching Volcker, 81, who ran the US central bank during the Presidencies of Jimmy Carter and Ronald Reagan.

"Paul Volcker would be great figure for an initial year," Shapiro said.

Shapiro, in London for talks at Downing Street, was highly critical of the current US administration in a meeting at the House of Commons, saying President George Bush and Treasury Secretary Hank Paulson had failed to contain the "reckless and entirely predictable" actions of Wall Street investment banks. He also chastised current Fed chairman Ben Bernanke for "vastly underestimating" the risks being taken by Wall Street and for relying on the "existing outdated paradigm".

Offering a window on the policies of the Obama administration, Shapiro said the White House could not let the severely troubled big three carmakers go bust, adding: "That would see us skip the slippery slope and head straight for the edge of the cliff."

Key policies to get the US back on its feet would be for financially-strapped corporate America to go through wholesale debt-for-equity swaps in a bid to entice new investment and to stop widespread foreclosures on US homeowners by getting the Fannie Mae and Freddie Mac lending organisations to offer long-term stable mortgages for Americans, he said.