Securities and Exchange Commission Chairman Harvey Pitt resigned more than a month ago, and a successor is still not in sight. However, the White House didn't dawdle when it came to replacing Treasury Secretary Paul O'Neill, who "resigned" on Friday. John Snow, CEO of freight rail operator CSX(NYSE: CSX), has been nominated to fill the post.
Over the weekend, Democrats decried the ouster of O'Neill and White House Economic Advisor Lawrence Lindsey as superficial fixes for a struggling economy. On ABC's This Week, former Vice President Al Gore said O'Neill and Lindsey are "fall guys for failed policies." While much of it is political posturing, the truth is that it will take more than changing the nameplates on a couple of doors to put the economy on firmer ground.
November unemployment figures came in at 6%, matching April's number, which was an eight-year high. The stock market is poised to post its third straight losing year, and virtually nothing has been done to convince investors that another Enron or WorldCom can't happen again.
On the latter point, Snow has been vocal on the need for corporate America to clean up its act. In July, he appeared on CNNfn to urge fellow executives "to return to the ethical moorings of capitalism... The shareholders own the companies. Management are just the hired hands." According to Bloomberg, Snow was part of a Conference Board panel that recommended new financial statement reporting standards and the reduction in executive salaries. (However, according to The Washington Post, Snow recently signed a contract with CSX that provided for the usual lavish compensation: millions in salary, bonus, and stock options, as well as home security, medical care, accounting services, use of company aircraft, and country club memberships for life.)
So don't expect a runup in the stock market once a new treasury secretary is in place. At best, this is a sign that the current administration is finally turning its attention to the economy, which -- according to several polls -- is more important to the public than fighting terrorism or Iraq.
President Bush doesn't have to look far for an example of what happens to a chief executive who doesn't focus enough on the American pocketbook.