Bush picks investment banker Donaldson to head troubled SEC

WASHINGTON -- President Bush selected former investment banker William H. Donaldson to head the Securities and Exchange Commission and to restore confidence in markets shaken by a wave of corporate financial scandals.

His mission, as outlined by Bush on Tuesday: "to vigorously enforce our nation's laws against corporate corruption."

Standing beside Bush at the White House announcement, Donaldson took up the challenge. "As my mother used to say many years ago, it's time for all of us to pull up our socks."

Donaldson will replace Harvey Pitt, who resigned last month under pressure over his handling of the financial debacle at Enron and other large corporations. The president said his administration also plans to boost the SEC's budget to give it the resources to root out corporate malfeasance.

"Confidence in the U.S. corporate and financial industries has been seriously eroded during the past few years," Donaldson said after Bush had introduced him.

'Firmly committed'

He pledged to deal swiftly with instances of corporate wrongdoing. "Let me just simply say that I am firmly committed to doing everything that I can do to restore the confidence of investors in the U.S. corporate and financial industry," he said.

Donaldson, who helped found the investment banking firm Donaldson, Lufkin & Jenrette in 1959, would bring a long record of experience on Wall Street. He also served as chairman of the New York Stock Exchange from 1990 to 1995.

His nomination must be confirmed by the Senate.

Bush tapped Donaldson one day after he nominated railroad executive John Snow to replace Treasury Secretary Paul O'Neill and lead a retooled economic team.

White House economic adviser Larry Lindsey, also fired in the economic team purge, is expected to be replaced by investor Stephen Friedman. But a final decision by Bush is pending the resolution of personal and professional issues that recently cropped up for Friedman, said White House officials. They said the delay will not hurt Friedman's prospects.

Funding increase

The president said his proposed increase in funding for the SEC for the 2004 budget year would almost double the agency's current resources. For the last fiscal year, which ended Sept. 30, the SEC was given $438 million. Bush's increase would bring that total to between $800 million and $850 million, said Amy Call, a spokeswoman for the White House's Office of Management and Budget.

Pitt resigned on Election Day after a series of gaffes exposed Bush to criticism over corporate wrongdoing scandals.

In addition to the staff changes, Bush is promising a new tax-cutting economic package, which aides say could cost up to $300 billion over 10 years, as part of an effort to control political damage from the ailing economy.

Democrats have criticized both Bush's economic team and policies.

According to a biography on the Yale business school website, Donaldson also was a founder of Yale University's Graduate School of Management and served as its first dean and held a tenured chair as the William S. Beinecke Professor of Management from 1975 to 1980.

Donaldson served in the Marines from 1953 to 1955 in Japan and Korea as a rifle platoon commander. A Yale graduate who received his MBA from Harvard, Donaldson is a chartered financial analyst and director of a number of public and private and philanthropic corporations.