New regulator socks it to Wall Street

President Bush yesterday continued to assemble the team he hopes will get the US economy back on track with the nomination of William Donaldson as chairman of the securities and exchange commission.

Mr Donaldson, a former investment banker, will replace Harvey Pitt who last month resigned from the financial regulator amid heavy criticism.

But as the president named Mr Donaldson, political rivals were already attacking his choice of treasury secretary John Snow, who has still to be approved by the senate.There were also reports that the administration's choice of chief economic adviser, former Goldman Sachs chairman Stephen Friedman, was facing opposition.

Some conservative Republicans are said to doubt Mr Friedman's commitment to tax cuts and a final decision on his appointment has been delayed.

Mr Donaldson, a founder of the banking firm Donaldson, Lufkin & Jenrette, has a long Wall Street career. He said it was time for corporate America, buffeted by scandals this year, to "pull up" its socks. Mr Donaldson is a former US undersecretary of state, and was chairman of the New York Stock exchange between 1990 and 1995. He was also a dean in the Yale school of management for five years.

Credit Suisse First Boston bought DLJ for $13.4bn (£8.5bn) two years ago and is one of the firms under scrutiny by the SEC. But Mr Donaldson has not had an operational role for many years.

His nomination was broadly welcomed by Wall Street. The securities industry association described him as a "superb choice".

The White House is determined to limit the damage of an ailing economy as presidential elections loom in two years. President Bush's father is perceived to have lost his bid for re-election because of the failure of his domestic policies.

Mr Snow will be a key figure in pressing a planned $300bn package of tax cuts and extra spending. But his background at the rail freight company CSX has come under scrutiny. Mr Snow's compensation totalled more than $50m over the past 12 years and would have been higher had a fall in the firm's share price not made many of his options worthless. He was also awarded a loan of $25m to buy shares in the firm, which was later cancelled.