WASHINGTON – Stephen Friedman, tapped on Thursday to become the top White House economic adviser, has roiled conservatives who question his tax-cutting zeal but he brings a resume that seems tailor-made to please Wall Street.
Friedman, 64, spent three decades at the venerable investment firm Goldman, Sachs, and co-chaired the company during the early 1990s with former U.S. Treasury Secretary Robert Rubin.
Most recently, he has been a principal at Marsh & McLennan Capital, Inc. but he kept his ties to Goldman, remaining a limie global economic aspects of the job of chairman of the White House National Economic Council in which he will become the point person to coordinate the Bush administration's economic policies.
"He's a terrific guy, very smart," said Roger Kubarych, a former Federal Reserve economist and now economic adviser to Hypo-Vereins Bank, who knows Friedman and described him as a highly talented manager.
"He doesn't need to dominate a conversation, yet people want his views and they may change their mind about what they think because what he says makes sense," said Kubarych, one of many on Wall Street who praised Friedman's selection.
However, some Washington conservatives were wary of Friedman because of his position as vice chairman of the Concord Coalition, a group founded a decade ago to promote deficit reduction.
Some tried to quash his appointment, charging that he would be the wrong person to market an aggressive stimulus package that the White House has been writing.
President George W. Bush stood by his choice but White House staff telephoned Republican skeptics, succeeding in winning over some — but not all of them.
"He's a deficit-phobic," said Stephen Moore, president of the Club for Growth lobby group.
Rapport With Rubin
Those who know Friedman describe him as a committed Republican. But his political views are almost assuredly more centrist than those of the man he will replace, Lawrence Lindsey, a passionate believer in "supply-side" policies that emphasize tax breaks to businesses and investors as a way of spurring growth.
In a major reshuffling of staff within the Bush administration, Lindsey resigned on Monday along with Treasury Secretary Paul O'Neill. The White House is nominating CSX Chairman John Snow to fill O'Neill's job.
Lindsey and O'Neill were both criticized for having a "tin ear" when it came to Wall Street. Neither has a financial markets background.
Both were frequently held up in comparison to Rubin, President Clinton's treasury secretary who was promoted to that job after serving as head of the National Economic Council.
Rubin became something of an icon on Wall Street, which has long wished to see one of its own take on a key administration role.
Although Friedman and Rubin have quite different personalities, associates of Friedman say he possesses many of the qualities investors admired in Rubin — a calm, smooth demeanor and keen understanding of the financial markets.
"He has got a terrific understanding of the economy, both from a micro and macro point-of-view," said Daniel Yergin, who served with Friedman on the Brookings Institution Board of Trustees. "He also has a terrific understanding of financial markets and how they interact with the overall economy."
Yergin, president of Cambridge Energy Research Associates, and author of "The Prize," one of the most comprehensive histories of oil, added: "His manner is low-key and down-to-earth, but he's a man capable of intense concentration and focus."
Friedman and Rubin had a strong rapport when they ran Goldman, known as a top-notch and extremely competitive firm. They remain friends and associate in many of the same circles, including the Concord Coalition, a bipartisan group of which Rubin is also a member.
Friedman's ties with the former treasury secretary left many on Wall Street all the more pleased that he would be hired by the White House.
But the Rubin friendship was yet another sore spot with some conservatives. An ardent Democrat, Rubin has been a vocal critic of Bush's signature $1.35 trillion tax cut and has faulted the plan for bloating the budget deficit.
A Wrestling Champ
Kubarych said that Friedman's background as a deficit hawk may actually help him sell a new stimulus to lawmakers and Wall Street investors. "He may be a more credible salesman," Kubarych said.
Salemanship is an important part of Friedman's background. At Goldman, he rose through ranks on the investment banking side, while Rubin's hailed from trading side.
He is a lawyer by training and an alumnus of Cornell University and Columbia Law School.
In keeping with the fierce culture in which he worked for decades, wrestling has been one of Friedman's hobbies and he won championships as a youth.
Friedman is married and has three grown children.