Goldman CEO nominated as Treasury chief

updated 7:48 p.m. ET May 30, 2006

WASHINGTON - 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.

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