Bush Picks New SEC Overseer

President Bush chose William H. Donaldson to head the Securities and Exchange Commission, saying that the former investment banker believed that American corporations should follow the highest standards of integrity.

Mr. Bush, speaking in the White House Roosevelt Room, said Tuesday that Donaldson "will be a strong leader with a clear mission — to vigorously enforce our nation's laws against corporate corruption."

Bush said restoring confidence in the markets was essential to the country's economic well-being. Donaldson said, "It's time for all of us to pull up our socks."

Donaldson would replace Harvey Pitt, who resigned the SEC chairmanship on election day. Pitt had weathered the storm over corporate scandals this year, but resigned after it was disclosed he did not tell fellow SEC commissioners that his nominee to head a new accounting oversight board had been associated with a company under investigation for accounting lapses.

"He's got just about everything Wall Street could have asked for, but most of all he's got a history and a perception by Wall Street of integrity," Mike Holland of Holland and Company tells CBS News Correspondent Anthony Mason.

"Throughout his exceptional career Bill Donaldson has shown an ability to take on big assignments," touted President Bush.

But taking the reigns of the S.E.C could be one of his biggest. Predecessor Harvey Pitt stumbled amidst all the corporate scandals. Donaldson said his first job would be to restore confidence.

But some wonder whether Donaldson will be tough enough.

"I watched him when he was chairman of the New York Stock Exchange and I thought he was without any power, any push," says Robert Lenzner, national editor of Forbes Magazine.

To Lenzner, Donaldson is too much of an insider.

"He's supposed to police these people that he represented many years ago. Now I ask you is that any way to do business. I don't think that's gonna work out to well for rugged regulation of Wall Street," he tells Mason>.

Donaldson, who once worked for President Bush's grandfather, is an old family friend.

The Senate will have to sign off on his nomination, but to many on Wall Street, Donaldson's reputation appears to be bulletproof.

The president's selection of Donaldson continues his effort to assemble a new economic team to aggressively sell a new stimulus package next year.

That effort began Friday with the resignations of Treasury Secretary Paul O'Neill and White House economic advisor Larry Lindsey, who had been widely criticized for being poor spokesmen for the president's policies.

On Monday, the president nominated John Snow, a Ford administration official and current CEO of CSX Corp., to head Treasury.

Still to be named is a replacement for Lindsey, who, like O'Neill, was forced out.

Wall Street investment banker Stephen Friedman was said to be the leading candidate, but a final decision by Bush is awaiting the resolution of unspecified personal and professional issues that recently cropped up for Friedman.

Presidential spokesman Ari Fleischer said that he and other White House officials had always advised press to be careful in reporting that Friedman's selection was certain.

White House officials, speaking on condition of anonymity, said that certain personal and professional obstacles had arisen that Friedman would need to work through.

They said Mr. Bush might turn to other candidates but they denied that Friedman's appointment had been jeopardized by complaints from conservative Republicans who doubt Friedman's support for further tax cuts.

Reaction to the president's selection of Snow been generally favorable, although Democrats complained that it was not the personnel but the administration's policies that needed to be changed and some critics said Snow had not excelled in corporate skills when running CSX.

Snow's first job will be to convince Congress to adopt the administration's new economic stimulus package, which Mr. Bush indicated the administration would be sending to Congress next month.

Mr. Bush said the package would include "specific steps to increase the momentum of our economic recovery," citing in particular the need to provide further tax relief, bolster the confidence of investors shaken by the long bear market and help Americans save for retirement.

Congressional and business lobbyists who have been briefed by administration officials said Monday that Mr. Bush was considering a package of tax cuts and spending measures that would cost between $250 billion and $300 billion over the next decade.

These officials, who spoke on condition of anonymity, said the major tax cuts the administration was considering were accelerating the personal tax rate reductions scheduled to take effect in 2004 and 2006; boosting tax breaks to encourage businesses to invest more, and lowering the tax on stock dividends, long a Republican goal.

House Democrats on Monday convened a two-day forum to help devise their own economic stimulus package that they will put forward as an alternative to the Mr. Bush program. They said Mr. Bush's sacking of the top two members of his economic team showed the president's policies have failed to generate sustained growth.

Donaldson was chairman of the New York Stock Exchange from 1990-95 and a co-founder of Donaldson, Lufkin & Jenrette, a well-known investment banking firm.

His appointment to the SEC requires Senate confirmation.

Democrats and consumer advocates appeared to be keeping an open mind on the question of whether a Wall Street figure should be named to police investment firms and corporate America.

Senate Banking Committee Chairman Paul Sarbanes, D-Md., who will lose that position next month when the Republicans regain control of the Senate, said he looked forward to "a thorough confirmation process in which Mr. Donaldson's record will be carefully examined and his views on the challenges facing the SEC fully reviewed."

Barbara Roper, director of investor protection for Consumer Federation of America, said Donaldson's background isn't in itself a problem. She noted that Arthur Levitt, the SEC chairman during the Clinton years, had come to the agency from Wall Street and became an activist chairman in pushing for investor protection.

Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee, said Donaldson's Wall Street background was among the things that made him a "first-rate choice for SEC chairman."Both Democrats and Republicans predicted swift Senate approval of Snow's nomination.

Donaldson is known for a colorful candor reminiscent of O'Neill, whose off-message riffs contributed to his slide from grace in the Bush White House.

Shortly before he took over as chairman of the New York Stock Exchange, Donaldson described the great bull market of the 1980s as "a somewhat ribald party" that left the securities industry -- and the U.S. economy -- with a severe hangover.

And the former Wall Street executive whose job it was to rebuild Wall Street's reputation for fair dealing after the 1980s, once decried the "chauffeured limousines lined up outside fancy, new glass towers, while the homeless congregated in Grand Central Station and lavish Park Avenue parties that made headlines while the lines lengthened at the soup kitchens."

A native of Buffalo, Donaldson's first job on Wall Street was at the old brokerage G.H. Walker & Co., run by former President George H.W. Bush's uncle Herbert Walker. Donaldson was a classmate of the former president's brother, Jonathan, at Yale University and is friends with the Bush family. He also is a former undersecretary of state.