Goldman Sachs Chair Paulson Replacing Snow at Treasury
Goldman Sachs chair Henry Paulson will be named to replace John Snow asTreasury Secretary later today, AP reports.
Treasury Secretary John Snow has resigned and will be replaced by Goldman Sachs Chairman Henry M. Paulson Jr., a senior administration official said Tuesday, in another chapter of a White House shake-up to revive President Bush’s troubled presidency. Bush was to announce the changes in a White House ceremony later Tuesday.
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. Paulson has been chairman of Goldman Sachs for about eight years. 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. 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.
Snow has called Paulson “a very able executive, a friend of mine.” Paulson is also 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.
In tapping Paulson for the Treasury job, the administration is seeking a more effective spokesman to tout Bush’s economic accomplishments of low unemployment and solid economic growth. 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 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.
Appointing a successful businessman with excellent speaking skills is the traditional route at Treasury and one that has often worked. Still, Bush tried that with both Snow and his predecessor Paul O’Neil with rather mediocre results.
Of course, it’s not entirely clear how much the Secretary of Treasury really matters. While he is undoubtedly a key economic advisor and at least pro forma head of several important bodies, his actual influence on the giant global economy stems almost entirely from his ability to sway international counterparts and inspire confidence among major investors. Certainly, the president and Fed chair have more actual power over the economy.
I am not sure what Bush is thinking. This guy Paulson is a radical environmentalist who has been at the forefront of trying to push money towards reducing carbon emissions. He makes Al Gore look like a moderate on the global warming issue. Having a radical environmental activist at the helm of Treasury seems like a pretty stupid move–even if the post is largely ceremonial.