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EDITIONS
Monday, 9 December, 2002, 23:40 GMT
Wall Street eyes new treasury chief
Treasury Secretary nominee John Snow (left) and President George W Bush
John Snow is expected to be a better Bush cheerleader


In nominating John Snow as his new treasury secretary, President George W Bush has once again turned to a captain of industry - this time with the hope of soothing rattled nerves on Wall Street.


John Snow is a better salesman, and will toe the administration's line... much more closely

Ram Bhagavatula
Royal Bank of Scotland
But if the share tumble witnessed on Monday is any indication of investor confidence in the US economy, it will take more than a cabinet reshuffling to get Wall Street back in gear.

In nominating the new treasury secretary, Mr Bush promised aggressive action on measures to jump-start the US economy.

Many analysts blame mixed messages about the state of the US economy from Bush administration officials for puzzling investors and consumers alike.

'Yes' man

The White House hopes to correct the perception.

"John Snow is a better salesman, and will toe the administration's line - at least in public anyway - much more closely," says Ram Bhagavatula, chief economist for the Royal Bank of Scotland, of Mr Bush's new choice to lead the Treasury.

That is a start.

Under previous Treasury Secretary Paul O'Neill, the Bush administration often found itself at odds with some of his brash statements.

Treasury Secretary nominee John Snow (left) and President George W Bush
Bush hopes Snow will be better at communicating

Mr O'Neill's independent-mindedness was more suited to the boardroom than the White House, and eventually led last Wednesday to Mr Bush's request that the former Alcoa chief resign his cabinet position.

Given the bevy of influential names bandied about on Friday in the aftermath of Mr O'Neill's resignation, the choice of Mr Snow, the 63-year-old chairman of railroad giant CSX Corp, was seen by some on Wall Street as a bit of a disappointment.

"Once they heard the name, expectations downshifted," Mr Bhagavatula told BBC News Online.

Cheerleading the economy

Nevertheless, Mr Snow is seen by some on Wall Street as a better fit at Treasury than Mr O'Neill.

"One of the things O'Neill did poorly was he scoffed at Wall Street's importance in terms of facilitating capital markets," said John McGowan, a floor trader at the American Stock Exchange.

"One of his main gaffes was saying, 'any idiot could be a trader,'" Mr McGowan told BBC News, adding he expects Mr Snow to be more sensitive to Wall Street's issues.

CSX Corp chief executive, chairman and president John Snow.
Snow earns $21m as CSX chief executive officer

Mr Snow enjoys a breadth of knowledge about business due to his chairmanship of the influential Business Roundtable, an association of chief executives, and has pushed for corporate-governance reform.

Mr Snow has used his powerful position at the Business Roundtable to blast corporate scandals - such as those at Enron and WorldCom - that have roiled stock markets over the last year, an issue which Mr O'Neill awkwardly side-stepped.

Recipe for success

But if Mr Snow hopes to garner Wall Street's respect and confidence analysts say there are several things he should do immediately to assuage jittery markets, which have suffered a stinging bout of losses since the beginning of December.

Firstly, Mr Snow needs to showcase the strong economic data that has emerged from Washington in recent weeks, says Keith Stock, senior consultant at Cap Gemini Ernst & Young.

For example, last week, the government reported that productivity among American workers rose much faster in the third quarter than previously thought.

Also, the brightened economic outlook caused by such reports will undoubtedly influence the dollar's relationship to other currencies, making US investments attractive once again to foreign investors.

US President George W Bush
Bush wants Snow to help rebuild investor confidence

In addition, while some have voiced alarm over rising budget deficits, Mr Stock says Americans need assurance the shortfalls are not cause for concern given their relatively small size in relation to the overall economy.

Fresh leadership

Aside from jaw-boning the general health of the economy, Mr Snow could do much to help the administration push for additional stimulus to bolster the anaemic recovery, pushing lawmakers to deliver.

"It would be useful if he begins to get on the bandwagon with regard to Congress and the president on some additional tax stimulus," says Cap Gemini's Stock.

Additional incentives could act as an insurance policy to accelerate the economic recovery, he says.

In short, Wall Street is looking to Mr Snow to lead on international financial issues, from loans to Latin American nations to exchange rates and tax policy.

It is the sort of leadership that Paul O'Neill failed to deliver.

 WATCH/LISTEN
 ON THIS STORY
President George W Bush
"Many Americans have very little money left over after taxes."
John Snow
"I look forward to joining the team to advance a pro-growth, pro-jobs agenda."

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See also:

09 Dec 02 | Business
06 Dec 02 | Business
29 Jul 02 | Business
09 Dec 02 | Business
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