Washington’s revolving door continued spinning Wednesday with the appointment of a new Treasury secretary and the unexpected resignation of the Securities and Exchange Commission’s longtime chairman.

On his way in as President-elect George W. Bush’s Secretary of the Treasury is Paul O’Neill, chairman of the Pittsburgh-based Aluminum Company of America. On his way out is Arthur Levitt, the longest-serving chairman in the SEC’s 66-year history.

Mr. O’Neill, 65, will advise the President-elect on economic policy issues and help craft the $1.3 trillion tax cut he promised during the campaign. Before taking over Alcoa in 1987 Mr. O’Neill had served as president of International Paper Co. for two years. He had been deputy budget director during the Ford administration.

“Paul O’Neill brings an extraordinary understanding of the economy and the business community to my cabinet,” the President-elect said. “With his experience in running successful companies and his knowledge and experience in the federal government, Paul O’Neill has the background and experience to make a terrific Treasury secretary.”

Meanwhile, the departure of Mr. Levitt gives President-elect Bush an unexpected opportunity to put one of his appointees at the head of another agency with a key role in shaping economic policy. Mr. Levitt’s decision to step down next year comes midway through his second five-year term. President Clinton first appointed him in July 1993.

Mr. Levitt, who said he is unsure about what he will do next, met with Vice President-elect Richard Cheney before announcing his resignation. He did not recommend a successor or discuss any potential candidates with the Vice President-elect, whom Mr. Levitt described as “a good friend.”

Mr. Levitt, 69, “will be remembered for his sense of dedication and hard work, as well as his commitment to American investors,” said Sen. Phil Gramm, R-Tex. “It has been my honor to work with him.”

Mr. Levitt’s relations with the bankers and their regulators has been decidedly cooler, however. In the past year alone he angered bankers by supporting tough new accounting standards for mergers, restrictions on their ability to add to loan-loss reserves, and a move to block accounting firms from providing advice to the companies they audit.

The merger-accounting proposal he backed would have forced the acquiring party in every merger to subtract the goodwill resulting from the purchase from their earnings over 20 years. The alternative favored by most bankers would allow merging companies to pool their balance sheets without reducing earnings.

Mr. Levitt took a parting shot at pooling Wednesday. He said the practice foists “numbers that are not accurate” on investors, and he promised to continue speaking out on the accounting issue even after he returns to the private sector.

There is no private group “that truly represents investors,” he said. “Investors have few friends here in Washington. I’d like to find ways to change that.”

In the past he also butted heads with banking regulators and industry executives during the debate over passage of the Gramm-Leach-Bliley Act of 1999. He lobbied constantly to narrow the list of securities activities that could be conducted inside banks or their direct subsidiaries, to preserve as much of the SEC’s oversight authority as possible.

He forced an 11th-hour compromise on securities powers that, among other things, said banks could continue offering trust services without registering as broker-dealers, provided they charge set fees and do not publicly solicit brokerage business.

Mr. Levitt also strongly supported Federal Reserve Board Chairman Alan Greenspan’s effort to make sure the law housed as many new powers as possible in holding company units and not direct bank subsidiaries.

On Wednesday he said Gramm-Leach-Bliley “has worked well up to now.”

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