The Bush administration turned to a Wall Street veteran yesterday to help restore confidence in the integrity of corporate America.
In the second crucial White House appointment this week, President George W. Bush nominated Mr William Donaldson, co-founder of an investment bank and former head of the New York Stock Exchange, to be the next chairman of the Securities and Exchange Commission (SEC).
Mr Donaldson, who has also served in the State Department, will take over at the US's chief financial regulator at a pivotal time. After a year of financial scandal and groundbreaking governance legislation from Congress, the independent agency will play a central role in efforts to restore integrity to corporate America.
Mr Harvey Pitt, the outgoing chairman, resigned last month on the night of the mid-term elections, after 15 turbulent and heavily criticised months.
Mr Donaldson will still need to be approved by the Senate when it reconvenes in January. The Senate banking committee, under Senator Richard Shelby, its new chairman, is unlikely to stand in the way, analysts said.
The White House has been moving swiftly to change its economic team after firing Treasury Secretary Mr Paul O'Neill and chief economic adviser Mr Larry Lindsey last Friday. On Monday it nominated a businessman, Mr John Snow, for the post of Treasury Secretary. It hopes that Mr Snow, the chief executive of the CSX railway company, will be a solid advocate of a fresh tax-cutting programme.
The administration will be looking to Mr Donaldson to repair the credibility of the SEC after the damage wrought by a series of mis-steps by Mr Pitt.
"Bill is one of the most respected business leaders in our nation," said Mr Bush yesterday. "He understands the capital markets and he understands financial institutions."
Mr Bush responded to criticism that the White House was not committed to boosting the SEC's budget, announcing that he was looking to double the agency's budget for 2004 from its current $438 million (€438 milliom). There is still a gap between congressional requests for 2003 of $776 million and the White House plan for $568 million.
Mr Donaldson, who co-founded Donaldson, Lufkin & Jenrette, the investment bank bought by Credit Suisse First Boston in 2000, said: "I am firmly committed to doing everything I can do to restore the confidence of investors."
He said there had clearly been numerous recent instances of corporate malfeasance. "It is time for all of us to pull up our socks."
Mr Pitt remains chairman. The SEC could not say whether he would stay on until Mr Donaldson has been confirmed.
One of the new chairman's most important tasks will be finding a head for the new US accountancy regulatory board. The board was set up by legislation to oversee the accountancy profession after a run of audit failures and a collapse of confidence in the integrity of financial statements. Mr Pitt's resignation came amid botched appointments to the board, which will be the subject of a congressional investigative report due next week.
Mr Donaldson will also have to oversee implementation of the mass of legislation overhauling US corporate governance. Companies outside the US have raised a host of concerns about the laws. - (Financial Times Service)
