Choice for SEC chief praised

Mr Bush's pick to head the SEC has vast business skills

By David Schepp BBC News Online North America business reporter

Given his broad range of experience and his distinguished career on Wall Street, the choice of William Donaldson to lead the embattled Securities and Exchange Commission (SEC) is viewed by many analysts to be a stroke of genius.

The president has probably picked a guy who will be generally well received

Michael Shaub,
St. Mary's University

At age 71, Mr Donaldson can claim to have founded his own successful investment-banking firm, served a stellar term as the leader of nation's premier stock exchange and established a prestigious business programme at an Ivy League school.

His was the second nomination in as many days to a high post in the Bush administration designed to send a message to the American public in general and Wall Street in particular that the president takes economic issues seriously.

On Monday, Mr Bush announced John Snow would take the top spot at the Treasury Department, following last week's ousting of Paul O'Neill.

"[The president] loves to pick leaders and CEOs for these roles, as he did yesterday when he picked Snow," says Michael Shaub, accounting professor at St. Mary's University in San Antonio, Texas.

'Strong leader'

Mr Shaub believes congressional Democrats will embrace the choice of Mr Donaldson as will SEC board member Harvey Goldschmid, who battled with outgoing SEC chief Harvey Pitt over his choice for chairman to head the accounting oversight board.

He is someone... with a blameless, clean record

John Coffee,
New York University

"The president has probably picked a guy who will be generally well received," Mr Shaub told BBC News Online.

Like the new Treasury nominee, Mr Donaldson has an extensive resume in business.

Mr Donaldson helped found investment-bank Donaldson, Lufkin and Jenrette, served as chairman of the New York Stock Exchange and insurance-giant Aetna, and founded Yale University's Graduate School of Management.

Squeaky clean

In making the announcement on Tuesday, the president said Mr Donaldson would be "a strong leader with a clear mission to vigorously enforce our nation's laws against corporate corruption".

Mr Donaldson comes from a special category the Bush administration trusts, says John Coffee, law professor at New York University, referring to the White House predilection for choosing captains of industry and finance.

"He is someone - both as a founder of a broker/dealer firm and as a very effective leader of it and the New York Stock Exchange - with a blameless, clean record," Mr Coffee told BBC News Online.

"The White House seems to want people who have been chief executive officers, even if they don't have quite the same regulatory experience or inside knowledge of the institution they're going to run."

Daunting challenges

Despite his stellar record of achievement, Mr Donaldson faces formidable challenges in reshaping an agency reeling from numerous accounting scandals and internal dissension.

He's going to be stepping into an agenda... that has already been established by Congress

Paul Maco,
Vinson & Elkins

It was amid such rancour that Mr Pitt resigned on 5 November, following a dispute over his choice to lead the agency's accounting-industry oversight board.

The challenges facing Mr Donaldson are daunting.

They include implementing the sweeping Sarbanes-Oxley Act, which calls for substantial change in the way in which corporations do business.

One thing in his favour is that he does not have to set agenda, says Paul Maco, a partner at law-firm Vinson & Elkins and a former SEC attorney.

"He's going to be stepping into an agenda... that has already been established by Congress through Sarbanes-Oxley," Mr Maco says.

The Sarbanes-Oxley Act, signed into law by President Bush last summer, calls for a number of fundamental reforms that include the establishment of a group to oversee the accounting industry.

Skill and talent

Nevertheless, analysts are somewhat concerned the administration seems to repeatedly dip from the same gene pool.

"Long-term it's a concern if Mr Bush is picking yes men," says Mr Shaub.

Nevertheless, chief executives become leaders in the business world precisely because of their leadership skills and their ability to run institutions.

In other words, on paper Mr Donaldson appears the right man for the job.

"There's no question with New York Stock Exchange experience he's got the substance and the qualifications to do this," says Mr Shaub.