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Paul O'Neill, Chairman Of Alcoa, Is To Be Treasury Secretary

Mike Godfrey,, Washington

21 December 2000

In a surprise move, George Bush nominated Paul O'Neill, chairman of Alcoa, as Treasury Secretary on Wednesday, instead of one of several financial sector candidates whose names had been mooted for the job.

The 65-year old is a prototypical Republican with extensive experience of public life, a budget specialist who has served Presidents Richard Nixon, Gerald Ford, Ronald Reagan and Mr. Bush's father. He was deputy director of the White House budget office in the Ford administration.

But this is an unconventional man, who has occasionally taken positions on global warming, energy taxes, education, Social Security and health care that seemed neither partisan nor Republican. In 1990, stepping out of line with fellow executives, Mr. O'Neill tried publicly to persuade Mr. Bush's father to put a $10 per barrel tax on the price of oil as a way of reducing energy use, protecting the environment, and helping close the budget deficit. The president-elect however wants to cut taxes and concentrate on finding new supplies of oil, not reducing its use.

Paul O'Neill has turned Alcoa, a down-and-out mining and aluminium company when he took control 13 years ago, into the best performing stock in the Dow Jones industrial average last year. He is no typical patrician executive: he works in an open-plan cubicle and and holds meetings in Alcoa's kitchen.

On Wednesday Mr O'Neill said that until three weeks ago he had not entertained thoughts of a return to public life, but described how he had maintained his links with Alan Greenspan since leaving the White House. "We've had lots of dealings with each other over the years that I've been at Alcoa and he's been at the Fed. I've made it my business, at his request, to come by on a fairly regular basis and tell him what I thought he was doing wrong and what I thought he was doing right." It was Mr Greenspan, then a director of Alcoa, who lured Mr O'Neill away from his job as president of International Paper in 1987 to take on the company.

"In Paul O'Neill, the president-elect has attracted an exceptional and talented person," said Alan Greenspan, the Federal Reserve chairman, who met Mr. O'Neill when both worked in the Ford administration.

Mr O'Neill said that he saw himself being an intermediary between Mr Greenspan and the fiscal policies emerging from the White House, under its likely chief economist Lawrence Lindsey. "From my point of view, it will be important for me to have ideas and suggestions for the president for the formulation of his policy, so that the balance of fiscal policy and monetary policy doesn't get out of kilter," he said.

Mr Bush said he had picked Mr O'Neill for his "vast experience" in managing an international company, at a time when the US economy was "showing warning signs of a possible slowdown". The two men met for the first time five years ago at an education conference in New Jersey, where Mr. Bush was attending as Texas' new governor and Mr. O'Neill attended with Tom Ridge, the Pennsylvania governor who named the executive to lead an education task force in his state. On education, Mr. O'Neill's drive to institute unified testing standards for Pennsylvania meshed well with Mr. Bush's own education initiatives in Texas.

After being introduced today by Mr. Bush, Mr. O'Neill acknowledged his reputation for outspokenness and agreed that he would have to keep himself in check: "The days of being a free-ranging, self-admitted maverick are over," he said. "That was yesterday."

Mr. O'Neill won't be needing his salary at the Treasury: in 1999, the year he stepped down as chief executive of Alcoa, he was paid $2.95 million in salary and bonus. As reported this spring, he owned 1.6 million shares of Alcoa, worth $50 million at today's Alcoa closing price of $31.44 per share, and had options to buy another 4.6 million shares at varying prices well below the current level.


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