WASHINGTON – President Bush on Tuesday named longtime Wall Street executive William Donaldson as his choice for the new chairman of the U.S. Securities and Exchange Commission.
The noon announcement at the White House ended weeks of speculation over a replacement for SEC Chairman Harvey Pitt. Pitt resigned on Nov. 5 amid controversy, after just 15 months on the job.
"Restoring the confidence of investors in the integrity of the markets is the responsibility of all of us," Donaldson said after being introduced by Bush. "Corporate managers, boards of directors, the operators and regulators of our financial markets, as well as those who advise, including bankers and lawyers and accountants, must be constantly mindful of the trust that shareholders have placed in them. Each of us must take that trust very seriously."
Donaldson is known for a colorful candor reminiscent of former Treasury Secretary Paul O'Neill, whose off-message riffs contributed to his slide from grace in the Bush White House.
"Bill Donaldson will be a strong leader with a clear mission to vigorously enforce our nation's laws against corporate corruption and to uphold the highest standards of integrity in the securities markets," Bush said, with Donaldson at his side.
Donaldson, 71, now heads Donaldson Enterprises, his own firm based in New York.
He co-founded the investment banking firm Donaldson Lufkin & Jenrette in 1959 and served as its chairman and chief executive. He was also chairman and CEO of the New York Stock Exchange from 1990 to 1995 and was formerly chairman of the insurance giant Aetna Inc..
A powerful Wall Street insider, Donaldson is seen by academic observers as a respected leader with close ties to the industry he would be regulating, much as Pitt was when he was named to the post last year.
Shortly before he took over as chairman of the New York Stock Exchange on Jan. 1, 1991, he 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.
In picking Donaldson, President Bush has substantially reshaped his economic team, following the naming on Monday of railroad executive John Snow as Treasury secretary. Investment banker Stephen Friedman was also expected to be named soon as White House economic adviser, replacing Lawrence Lindsey.
Donaldson was a founder of Yale University's Graduate School of Management and served as its first dean. He served during 1975 as counsel to U.S. Vice President Nelson Rockefeller. Before that, he was U.S. undersecretary of state under Secretary Henry Kissinger from 1973 until 1975.
Pitt, a former corporate lawyer and SEC staff lawyer, resigned amid controversy over his handling of appointments to a new national accounting oversight board. His tenure as chairman was marked by deft handling of the Sept. 11 attacks on Washington and New York that shut down Wall Street. Under Pitt's guidance, the markets reopened in just days.
But as a flood of scandals engulfed the business world starting with the collapse last fall of Enron Corp., Pitt stumbled repeatedly over his handling of relationships with former high-powered Wall Street clients and with Congress. An SEC spokesman said Pitt had no comment.
Reuters and The Associated Press contributed to this report.