WASHINGTON – President Bush (search) intends to nominate California Rep. Christopher Cox (search) to head the Securities and Exchange Commission, Republican officials said Wednesday following the resignation of William Donaldson (search).
These officials, who spoke on condition of anonymity, said an announcement was possible as early as Thursday.
Cox, 52, was first elected to the House from the GOP stronghold of Orange County in 1988. He served as chairman of the House Policy Committee from 1994-2005 and is chairman of the House Committee on Homeland Security.
Cox has been a longtime advocate of repealing the estate tax, the capital gains tax on savings and investment, and taxes on dividends. He also has supported banning taxes on Internet commerce.
Bush picked Donaldson 21/2 years ago as SEC chairman to restore confidence in a stock market that had been shaken by corporate scandals.
A Republican and Bush family friend, Donaldson was an activist who often clashed with traditional GOP business allies. They chafed over what they perceived as an excessive regulatory zeal during Donaldson's tenure.
Donaldson, who turns 74 on Thursday, told the president that "the time has come for me to step down and return to the private sector and my family." He said Wednesday he would leave the agency on June 30.
In a letter to Bush, Donaldson cited the tireless work of SEC employees and said the past 21/2 years "may well be remembered as the most consequential and productive period in the commission's history."
In turn, Bush wished him well. "Bill Donaldson took on a tough job at a tough time and he delivered for the American people," Bush said in a statement. "He vigorously and fairly enforced our nation's securities laws and helped rebuild the public trust in corporate America that has been important to our economic recovery."
Before he was elected to the House, Cox was a senior associate counsel to President Reagan for two years. He also worked in private practice as a lawyer, specializing in corporate finance. He earned a bachelor's degree from the University of Southern California in 1973, a master's in business administration from Harvard Business School in 1977, and a law degree from Harvard Law School, also in 1977.
The son of a race car driver, Cox is married to Rebecca Gernhardt, whom he met while both worked in the Reagan White House. They have three children.
At a news conference, Donaldson refused to speculate about his successor. Among those who had been considered in the running to replace him were:
—James Doty, a lawyer in the Washington offices of the Texas-based firm of Baker Botts. Doty was general counsel at the SEC from 1990 to 1992.
—Peter Wallison, an SEC expert at the conservative American Enterprise Institute in Washington.
—The commission's Republican members, Paul S. Atkins and Cynthia A. Glassman. Both opposed Donaldson on some important votes.
Donaldson rejected the suggestion that he was leaving because of clashes with Republicans over commission decisions. He had sided with the two Democrats on the five-member panel on rules in such areas as stock market trading, hedge funds and mutual funds.
Donaldson said he hoped "there will be no legalistic rollback of any of these key items." He predicted the next chairman "will leave politics at the door."
Bush turned to Donaldson in 2003 to replace the embattled Harvey Pitt, who quit after a series of political missteps.
Donaldson helped put in place the Sarbanes-Oxley Act of 2002. The law tightened oversight of U.S. corporations and came in response to financial scandals at Enron Corp., WorldCom Inc and other large companies.
Donaldson also won approval at the SEC for a number of rules designed to clean up the $7 trillion mutual fund industry.
Various industry groups have increased their criticism of Donaldson in recent months, arguing the SEC was becoming too zealous and unfairly burdening honest companies.
Thomas Donohue, president of the U.S. Chamber of Commerce, spoke in an interview of bringing "the pendulum back ... to have the right balance."
Members of Congress praised Donaldson.
Donaldson helped "restore investor confidence in the markets," said GOP Rep. Michael Oxley of Ohio, chairman of the House Financial Services Committee. Donald's tenure was marked by "a commitment to ensuring investor protection and the integrity" of the markets, said Republican Sen. Richard Shelby of Alabama, chairman of the Senate Banking, Housing and Urban Affairs Committee.
Paul Brown, a professor of accounting at New York University's business school, said Donaldson's "array of activities have been impressive and good for investors, but they have not been the traditional conservative Republican-based positions."
Donaldson last month won SEC approval for a plan to overhaul stock trading. He joined with the Democrats on the commission as the two Republican commissioners objected to the new rules.
Under the proposal, known as the "trade-through" rule, stock brokers will be required to accept the best quoted price for any transaction, no matter which market it came from.
The rule is not due to take effect until 2006. Most observers said the SEC probably would take a second look at the issue should Bush appoint a more pro-business chairman of the SEC.
Donaldson's departure and pending vacancies in the two Democratic positions gives the White House the ability to alter the balance of power on the commission. By law, no party can control more than three seats on the five-member panel.
The term of one Democratic commissioner, Roel A. Campos, expires this year. Democrat Harvey Goldschmid has made it known that he intends to return to teaching at Columbia University this fall.
Senate Democrats have suggested that the president nominate the SEC's market director, Annette Nazareth, to fill Goldschmid's slot.
Before joining the SEC, Donaldson had a distinguished 45-year career at the heights of corporate America. He was as head of the New York Stock Exchange, Aetna Inc. and investment banking firm Donaldson, Lufkin and Jenrette, which he co-founded.