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President George W. Bush on Monday named John Snow, chairman of railroad giant CSX Corp., as his new Treasury secretary and promised bold new measures to reinvigorate the US economy -- and the stock market -- before the 2004 re-election campaign.
"John Snow will be a key adviser on the economy and a key advocate of my administration's agenda for growth, new jobs and wider and more international trade," the president said at a brief ceremony.
Ousted Treasury chief Paul O'Neill was notably absent, although White House economic adviser Lawrence Lindsey, also pushed out on Friday, had a front-row seat for the occasion, which came amid poor economic news, including a surge in unemployment and the United Airlines bankruptcy.
Snow's nomination -- and the imminent appointment of former Goldman, Sachs Chairman Stephen Friedman to replace Lindsey at the National Economic Council -- clears the way for Bush to push a stimulus package expected to total as much as US$300 billion and include tax cuts for companies and individuals.
Although traders said other factors were at play, stock markets sank after the Snow announcement, with the blue chip Dow Jones industrial average shedding nearly 2 percent to close down 172 points. The US dollar has been roiled by uncertainty since Friday over the future of administration currency policy following the departure of O'Neill.
Bush said Snow, head of the biggest rail operator in the eastern United States, "knows firsthand how the economy works" and will play a central role in the effort to increase the momentum of a slow-moving economic recovery.
For his part, Snow, who must still be confirmed by the Republican-controlled Senate, promised to "advance a pro-growth, pro-jobs agenda."
While crediting Bush with guiding the economy through "one of the shortest and shallowest" recessions, Snow said: "I strongly share your view that we cannot be satisfied until everyone -- every single person who is unemployed and seeking a job -- has an opportunity to work."
SWIFT ACTION URGED
Bush urged the Senate to act swiftly on the nomination.
Senate Democratic Leader Tom Daschle of South Dakota said it was too early in the vetting process to predict if any opposition would emerge to Snow's nomination, but noted White House spokesman Ari Fleischer said Snow was already in the process of stepping down from several corporate boards and organizations, including the Augusta National Golf Club, controversial for its policy of not allowing female members.
Friedman's appointment is not expected until Tuesday at the earliest as the White House scrambled to complete extensive background checks, sources said.
The administration was taking great care in vetting both Snow and Friedman, now a senior principal at Marsh & McLennan Capital Inc. , hoping to avoid surprise disclosures.
Embarrassing scandals ripped through the Securities and Exchange Commission earlier this year, forcing out Chairman Harvey Pitt amid controversy over his choice to head a new accounting oversight board. Bush is close to naming Pitt's replacement, lobbyists said.
Fleischer played down the disclosure of Snow's link with Augusta, saying this was not Lindsey looked ill-at-ease at Monday's ceremony at the Old Executive Office Building next to the White House but was able to muster some humor. When asked what he planned to do next, he jokingly told reporters O'Neill, who wrote a terse resignation statement after Bush asked him to leave, was at work next door at Treasury on Monday as the president fawned over his replacement. Fleischer dodged questions about O'Neill's absence, saying 'WELL-BALANCED'
Despite uncertainties about the future, financial markets seemed hopeful about Bush's new economic team.
"He's a markets outsider," Steven Pearson, chief currency strategist at Halifax Bank of Scotland Treasury Services, said of Snow. "But if you see his appointment in combination with Friedman, who is clearly a markets insider, then the look of the team is fairly well-balanced."
Snow, 63, is chairman and chief executive of Virginia-based CSX . His Washington experience dates back to Ford administration stints as assistant secretary and general counsel at the Transportation Department.
The economist and lawyer was heavily involved in the US$10 billion deal that saw CSX and rival Norfolk Southern Corp. carve up Conrail, once the dominant force in the Northeast.
Since Snow became chairman of CSX in January 1991, his company's shares have lagged significantly behind his top competitors in the US rail business. In nearly a dozen years with Snow at the helm, CSX shares have posted a rise of just about 7 percent compared with a 60 percent increase for the Standard & Poor's railroads index <.GSPRAIL>.
The Ohio native taught economics at the University of Virginia and was chairman of the influential Business Roundtable, representing large corporations in Washington.
"He seems to approach things by looking at the facts, not based on preconceived notions. I've learned a lot listening to him," said Maxine Singer, who heads the Carnegie Institution and serves on the board of Johnson & Johnson with Snow.
Snow, who earned US$1.2 million in salary last year plus a US$1 million bonus, according to the most recent CSX proxy, has been a vocal proponent of corporate responsibility in the wake of scandals at Enron Corp. and other big US firms and has argued for reforms in setting executive compensation.
He also got options worth around US$8 million at the time they were granted, but which are now underwater after a stock price drop. Another US$7.1 million came in the form of restricted shares, which the recipient must hold for a set period.
"John has a deep, long-standing commitment to ethical corporate governance," Bush said.
TIES TO BUSINESS
The White House was seeking both strong ties to business and a deft touch with investors in its new Treasury secretary.
While O'Neill had a successful record as chairman and chief executive of aluminum giant Alcoa Inc. from 1987 to 1999, his relationship with Wall Street was often awkward.
The White House has also made clear it expects the incoming Treasury chief to be a tax-cutting advocate who, unlike O'Neill, would enthusiastically market the administration's economic stimulus package to Congress and the US public.
Snow appeared to fit the bill.
"I'll be proposing specific steps to increase the momentum of our economic recovery. And the Treasury secretary will be at the center of this effort," Bush said, adding Though the White House declined comment on Friedman, the prospect of his appointment won praise from Republicans and some Democrats, including Sen. Jon Corzine of New Jersey, himself a former chief of Goldman Sachs.
Wall Street would be relieved if Friedman, with his Wall Street ties, brings the same degree of magic that Robert Rubin, his long-time associate from Goldman Sachs, did to Treasury.
(China Daily December 10, 2002)
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