Washington – President Bush nominated Goldman Sachs chairman Henry Paulson to be secretary of the Treasury on Tuesday, turning to a highly respected Wall Street insider to lead his economic team and become the chief promoter of his administration’s fiscal policies.
The nomination marked the first time that this president has chosen a chieftain from the world of finance to head the Treasury after two industrial- sector executives who struggled with Bush’s inner circle.
Although Bush has shown mistrust of financiers in the past, he hailed Paulson as head of “one of the most respected firms on Wall Street” who has “an intimate knowledge of financial markets and an ability to explain economic issues in clear terms.”
The move culminated a months-long recruitment effort during which Paulson rebuffed several White House overtures to consider the post, according to administration officials and people familiar with Paulson’s decisionmaking.
White House Chief of Staff Joshua Bolten renewed those efforts in recent weeks and persuaded his former Goldman Sachs colleague to meet with Bush at the White House earlier this month. It was then, after a long meeting May 20, that Bush persuaded Paulson to take the job.
In the meeting, Paulson sought assurances that the post, which at times has been seen as subordinated by the White House, would have the proper stature.
“He was curious about what was myth and what was reality when it came to the inner workings of the job,” said a top Bush adviser with close knowledge of the selection process. “I think he was reassured by understanding how the job operates.”
If confirmed by the Senate, Paulson, 60, will replace outgoing Treasury Secretary John Snow, who in December told the White House he wanted to step down after three years in the job, a pledge he carried through on last week. Although a loyal booster of Bush’s policies, Snow suffered from the widespread perception in markets and on Capitol Hill that he was an advocate rather than a policymaker.
The White House sought Paulson despite the fact that he and his wife had contributed nearly $1 million to an environmental organization that has been harshly critical of the president.
In brief remarks, Paulson said 32 years on Wall Street have given him a keen sense of the power that markets have in fostering economic growth and efficiency.
“Our economy’s strength is rooted in the entrepreneurial spirit and the competitive zeal of the American people, and in our free and open market,” Paulson said as Bush looked on. “It is truly a marvel, but we cannot take it for granted.”
As chief since 1998 of one of Wall Street’s wealthiest investment-banking firms, Paulson brings high-caliber financial credentials that contrast with those of Bush’s previous Treasury chiefs: Paul O’Neill, who ran Alcoa, and Snow, of the CSX railroad.
The White House was eager to find a candidate with credibility among investors. Markets have turned highly volatile in recent weeks, with the biggest dips coming in commodities and stocks in Asia, Latin America and Eastern Europe. U.S. stocks, which have also dropped sharply from recent highs, sank anew Tuesday, with the Dow Jones industrial average shedding 184.18 points, mainly because of a rise in oil prices and a report showing a decline in consumer confidence.
