Treasury Secretary John Snow resigned Tuesday and President Bush nominated Goldman Sachs chief executive officer Henry M. Paulson Jr. as his replacement — another chapter in the shake-up to revive Bush’s troubled presidency.
“He has a lifetime of business experience. He has intimate knowledge of financial markets and an ability to explain economic issues in clear terms,” Bush said of Paulson in a Rose Garden announcement.
White House officials believed that a Wall Street executive with Paulson’s talents could better make the case for the administration’s economic program.
Paulson, who also is chairman of Goldman Sachs, called the U.S. economy “truly a marvel, but we cannot take it for granted. We must take steps to maintain our competitive edge in the world.”
Snow, the former head of railroad giant CSX Corp. who has a Ph.D. in economics, has been Treasury secretary since February 2003. His departure has been rumored for more than a year.
Just last week, Bush was asked if Snow had given him any indication he intended to leave his job. “No, he has not talked to me about resignation. I think he’s doing a fine job,” the president said during a Thursday evening news conference.
But White House press secretary Tony Snow said that Bush already had offered Paulson the job five days before that, during a meeting between the two. Paulson’s acceptance the next day, on May 21, was subject to a background check, Bush’s spokesman said.
Bush praised the outgoing Treasury secretary on Tuesday for showing “strong leadership.”
In a statement, Federal Reserve Chairman Ben Bernanke praised Snow for his “years of dedicated and able service” and said that he looked forward to working with Paulson, described by Bernanke as “highly respected throughout the financial world.”
Paulson has been both chairman and CEO of Goldman Sachs since May 1999. It is considered one of the premier financial firms on Wall Street and has sent a number of its top executives to high positions in Washington.
Speculation that Paulson would take over from Snow increased after Joshua Bolten, a former Goldman Sachs executive who had worked with Paulson and was leading the effort to find a replacement, became the new White House chief of staff.
Paulson is a major Republican donor and fundraiser.
He collected at least $100,000 for Bush’s 2004 campaign, earning the nickname “pioneer” reserved for Bush’s six-figure fundraisers. Paulson has donated at least $68,000 to GOP campaigns and party committees so far in the 2005-06 election cycle, including $25,000 to the National Republican Senatorial Committee and $15,000 to its House counterpart, figures compiled by the Political Money Line campaign finance tracking service show.
Robert Rubin, one of Paulson’s predecessors, served as Treasury secretary in the Clinton administration, and Jon Corzine, another Goldman Sachs chairman, served as a U.S. senator from New Jersey and is now governor of that state.
The Senate Finance Committee is expected to act swiftly on the nomination. A spokeswoman for the panel said it was possible a hearing could be conducted within the next few weeks, depending on how quickly the necessary paperwork for the nomination is supplied to the panel.
Securities and Exchange Commission Chairman Christopher Cox predicted Paulson will be swiftly confirmed. He told reporters after a speech at the American Enterprise Institute that Paulson was “exceptionally able” and would do an excellent job.
Sen. Chuck Schumer, D-N.Y., a member of the Senate Finance Committee, gave Paulson his backing after talking to him Tuesday.
“His experience, intelligence and deep understanding of national and global economic issues make him the best pick America could have hoped for,” Schumer said.
The naming of the new treasury secretary is part of a series of changes within the White House staff. Andrew Card’s replacement by Bolten as chief of staff was followed by a string of other personnel moves as Bush sought to reinvigorate his presidency, mired in the lowest approval ratings since he took office in 2001. Among other changes, Bush forced out CIA chief Porter Goss, trimmed the portfolio of political adviser Karl Rove and replaced press secretary Scott McClellan with television commentator Tony Snow.
Welcoming Paulson to the Cabinet, Bush praised the economy under his own watch. “The American economy is powerful, productive and prosperous, and I look forward to working with Hank Paulson to keep it that way.”
“He’s earned a reputation for candor and integrity and when he’s confirmed by the Senate he will be a superb addition to my Cabinet,” Bush said.
Snow, who has called Paulson “a very able executive, a friend of mine,” thanked Bush for his time in the Cabinet and said he looked forward to private life.
Treasury officials said Snow planned to stay on the job to ensure a smooth transition and will attend the June 9-10 meeting in Russia of finance ministers from the Group of Eight major industrial countries. That meeting will help prepare the agenda for this year’s G-8 summit which is being held in July in St. Petersburg.
Paulson is a millionaire many times over. Last year, the Goldman Sachs group said it paid Paulson $30 million in total compensation in 2004 — almost a 40 percent gain from the year before.
Paulson is leaving Goldman Sachs at a time when its stock is trading at historic highs and with his chosen successor, Lloyd C. Blankfein, ready to take over.
Paulson was known on Wall Street for his dedicated support of environmental causes. Earlier this year, he made a gift of $100 million in Goldman stock to a family foundation dedicated to conservation and environmental education. Even after that gift, Paulson has a net worth estimated at more than $500 million.
Paulson, who was known to favor bird-watching in New York’s Central Park to playing golf, is chairman of the Nature Conservancy and the chairman emeritus of the Peregrine Fund.
Last year Goldman Sachs donated 680,000 acres in Chile to the Wildlife Conservation Society.
Snow has been Treasury secretary since February 2003. He took over for Paul O’Neill, who was forced to resign because of policy disagreements with the White House.
Snow has been a loyal proponent of the administration’s economic policies, traveling the country as a salesman for Social Security reform and an overhaul of the tax code. But his standing suffered as both proposals stalled.
Financial disclosure forms have put Snow’s estimated worth at between $43 million and $128 million. Two years ago he acknowledged an error of more than $10 million in his investment portfolio that caused him to lose nearly half a million dollars.