Wednesday, May 12, 1999 Published at 21:20 GMT 22:20 UK
Business: The Economy
Rubin to resign
Robert Rubin: A key figure behind the current US economic boom
US Treasury Secretary Robert Rubin is to resign, the White House has confirmed.
His current deputy, Larry Summers, will replace him, President Bill Clinton confirmed.
US stock markets reacted badly, with the Dow Jones index of leading US companies plummeting 200 points when the news first broke.
However they quickly recovered most of that lost ground.
"Because of the suddenness and the unanticipated move, the markets were taken totally aback by the resignation," said Ned Riley, chief investment officer at BankBoston.
But John Wiliams, Chief Global Markets Economist with Bankers Trust said: "At the end of the day, it will not impact US policy at all.
"Certainly, Greenspan's policy will not change. Mr Summers will try to keep those policies. We may see volatility in the near-term, but over the long-run this should not hurt market confidence."
Under Secretary of State Stuart Eizenstat will be promoted to the post of deputy Treasury Secretary.
Architect of the boom
The Treasury Secretary's departure was not unexpected. It has long been rumoured that he wanted to return to the private sector.
His wife has never moved to Washington, living in New York throughout his term in office.
Mr Rubin, who made millions in a 26-year career on Wall Street, took office as Treasury Secretary in January 1995 after a stint as head of the White House National Economic Council.
He has been widely credited with steering President Clinton's economic policies, including the budget cuts which helped set the nation on course for its first balanced budget in decades.
As the brains behind several multi-billion dollar IMF rescue deals, he also played a pivotal role in restoring a degree of market stability after Asia's crisis started in the summer of 1997.
"We've seen a golden age of development under his leadership. It will be difficult to replace him," said David Jones, chief economist at Aubrey G. Lanston and Co in New York.
Mr Rubin has long been viewed as a possible top candidate for the chairmanship of the Federal Reserve if Chairman Alan Greenspan should choose to retire.
The US Secretary will remain at the Treasury until July.
Larry Summers, 44, a former Harvard economics professor, has been in the Treasury's number-two spot since August 1995.
Mr Jones added: "Summers is respected for his intelligence and economic brilliance but not for his diplomacy or market understanding. He has sort of taken on the same market-oriented views. But he has to prove himself."
But Bank of England Deputy Governor Mervyn King said he was looking forward to working with Mr Summers.
He said: "I have known Larry Summers as a friend and colleague since graduate school days.
"He is one of, if not the, brightest economist of his generation."
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