Jewish World Review Dec. 9, 2002 / 4 Teves, 5763
A lot rides on prez's Treasury pick
http://www.jewishworldreview.com | The White House's decision to part ways with Treasury Secretary Paul O'Neill is a positive - if long overdue - step.
As I wrote two months ago, O'Neill had a bad habit of misspeaking at the most inopportune times, and also a bad habit of being wrong. Both are qualities ill-suited to the person serving as the administration's highest-ranking economic official. O'Neill also made the critical mistake of clumsily disagreeing in public with the White House and with Republican lawmakers, and he was unable to develop a good working relationship with Wall Street, unlike his predecessor, Robert Rubin.
At times, however, O'Neill managed to get it right, and when he did, he displayed a refreshing amount of candor. As President Bush and the White House search for a replacement, they'd do well to remember this: Candor and an unwillingness to appear too cozy with Washington and with Wall Street power brokers are good things. After a three-year bear market, an avalanche of corporate scandals and an atypically slow and stubborn recovery, the American public will likely show very little tolerance for a nominee who appears to be too much of a Washington insider or too closely tied to the big money on Wall Street.
That's why I find at least one of the names being floated to replace O'Neill unsettling. Former Republican Sen. Phil Gramm dragged his feet on the Sarbanes-Oxley corporate reform legislation that, among other measures, required CEOs and CFOs to sign off personally on their company's financial statements. And Gramm's wife, Wendy, served on the audit committee of Enron.
Other names being suggested would be much better suited for the job. Charles Schwab has great credentials. He's a Wall Street legend who leads a firm with no investment-banking baggage. Schwab is a self-made success story and a well-known philanthropist. It's been suggested he might run into the same CEO-turned-politico problems that O'Neill did. I doubt it.
Donald Marron, the chairman of UBS America and former head of PaineWebber, would also be a good choice. Like Rubin, he has the proven track record and gravitas needed to advance the president's economic policies.
Marty Feldstein is also worth serious consideration. He headed the Council of Economic Advisers under President Reagan. He currently serves as the president of the National Bureau of Economic Research. Ironically, that's the group responsible for making the official call that we had entered a recession, while O'Neill initially denied that a recession was under way.
Others deserving of consideration are Joe Grano, the chairman and CEO of UBS PaineWebber, and Ken Chenault, the chairman and CEO of American Express. Both are bright, dedicated Wall Street leaders who could advance the president's economic agenda.
There's no doubt that President Bush and his team have a very difficult task ahead. They need to find someone who is respected by Wall Streeters but not beholden to them. Someone who can convey confidence to investors and grow to become as recognizable and respected as Rubin. Someone who can avoid public missteps. Someone who knows how to play the game in Washington but has enough detachment to do what needs to get done. And, let's not forget, a lot remains to be done.
November's employment report, released Friday, shows that the jobless rate is now at an eight-year high. The Dow and the Nasdaq, while sharply higher over the past two months, are still down 13 percent and 28 percent, respectively, for the year. Investor confidence remains weak, and more corporate governance reforms are needed to assure investors that the outbreak of fraud is under control.
The Securities and Exchange Commission is without a chairman following Harvey Pitt's departure-in-disgrace on Election Day. The White House would like to move forward with a new economic stimulus package. And - oh, yeah - we'll soon likely be at war with Iraq, which could have some effect on world equity, currency and energy markets.
To meet these challenges, the administration needs a Treasury secretary who can provide a clear, steady, strong voice on the economy. President Bush will likely make no more important appointment during his remaining years in office.
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