WASHINGTON - Banking industry officials are scrambling to learn more about Treasury secretary-designate Paul O'Neill and are already weighing the asset of his big-business background against the liability of his inexperience with financial markets.
A day after President-elect George W. Bush said he would nominate Mr. O'Neill to head the Treasury, industry wags from coast to coast almost universally said they know nothing but what they read in the newspapers about the 65-year-old chairman of Aluminum Company of America.
"It's clear that he's someone with no experience in financial markets or financial regulation, so the two Treasury under secretary positions are going to be critical to the industry," said Karen Petrou, president of the ISD/Shaw consulting firm here.
She and other government watchers quickly added, however, that Mr. O'Neill could overcome his lack of the traditio1nal Treasury secretary pedigree, which usually includes serving in the financial services industry or being a Washington fixture - or both.
"I don't see that as a problem. He has stellar corporate credentials, and he is very well thought of," said Joe Belew, president of the Consumer Bankers Association. The banking "community may not know him very well, but I have a sneaking suspicion he will remedy that very quickly."
Industry insiders who are close to Mr. O'Neill, and who hold impressive resumes themselves, have nothing but praise for the presumptive Treasury secretary.
"The fact that he has been the CEO of a global company means he really understands what's going on in the marketplace," said Mellon Financial Corp.'s chairman and chief executive officer, Martin G. McGuinn. "That's going to be helpful to bankers and to everyone because he's not only got experience, he's knowledgeable and has been a very successful leader."
Mr. McGuinn is a friend and neighbor of Mr. O'Neill's - their companies are both based in Pittsburgh - and a fellow wine connoisseur. Aside from disclosing that Mr. O'Neill is partial to California cabernets, Mr. McGuinn said that the secretary-designate's "down-to-earth, open, personal style" means bankers will find him "very easy to work with."
Asked if he would advise Mr. O'Neill to select an under secretary or assistant secretary for financial institutions from the banking industry, Mr. McGuinn said, "If it's the right person, that could be very helpful to him, because he is not coming from that sector. That would be a good complement."
Mr. O'Neill has spent some time in government. When L. William Seidman, chairman of the Federal Deposit Insurance Corp. from 1985 to 1991, was assistant to the President for economic affairs during the Ford administration, he turned to Mr. O'Neill, then the Office of Management and Budget deputy director, on an almost daily basis.
"He was probably our best resource on financial analysis," Mr. Seidman recalled on Thursday. "He was very well schooled in all the financial problems of government and the private sector. We worked closely on the many economic problems of that time."
Serving under Mr. O'Neill at the budget office as an associate director was Donald G. Ogilvie, now the executive vice president of the American Bankers Association.
Mr. Ogilvie expressed confidence Thursday that Mr. O'Neill will be a quick study on issues specific to the financial services industry.
"I certainly will meet with him," Mr. Ogilvie said. "His real strength is he always sees the big picture of issues, but he also knows all the details, which is quite unusual in any position."
Of course, Mr. O'Neill comes to Washington with the well-publicized endorsement and friendship of the ultimate power broker, Federal Reserve Board Chairman Alan Greenspan, who, along with the Bush campaign's chief economic policy adviser, Lawrence Lindsey, is said to have hand-picked the secretary-designate.
This would not be the first time Mr. Greenspan had recruited his informal adviser, "old friend," and former Ford administration colleague. As a director of Alcoa's predecessor, Mr. Greenspan helped select Mr. O'Neill as CEO in 1987.
"In Paul O'Neill, the President-elect has attracted an exceptional and talented person," Mr. Greenspan said in a press statement Thursday. "I look forward to again working closely with an old friend and colleague."
Mr. O'Neill's close ties with Mr. Greenspan naturally give him extra points with banking lobbyists. "When [Robert] Rubin was Treasury secretary, it was very well known and very much of a comfort that the Fed and Treasury were working very well and very closely together," Mr. Belew said.
But Ms. Petrou cautioned that "playing tennis with someone is only part of the equation." What really matters, she said "is agreement on the real issues."
Indeed, Mr. O'Neill's public support in 1992 of increasing gasoline taxes drew sharp fire this week from conservatives. And some banking policy experts privately questioned if his emphasis on deficit reduction and tax reform over tax cuts will clash with Mr. Lindsey's advocacy of large tax cuts. Mr. Lindsey is expected to be named to a top economic advisory position within the White House.
Ms. Petrou said she hopes Mr. O'Neill will talk up the economy. Her clients, she said, have expressed concern that warnings this week from President-elect Bush and Vice President-elect Cheney of a looming recession would be "self-fulfilling prophesy."
The industry is calling for "a more upbeat presentation to boost consumer confidence," Ms. Petrou said, and the President- and Vice President-elect might want to look at the "very long history of jaw-boning the economy."
Before taking over Alcoa, Mr. O'Neill, a St. Louis native, headed International Paper Co. in New York for two years. His government service began in 1961 as a computer systems analyst for the Veterans Administration. He served with the Vice President-elect and with Secretary of State-designate Colin Powell in the Ford administration as deputy OMB director.
As Steve Bartlett, the president of the Financial Services Roundtable and a former Texas congressman, said: "Paul O'Neill met a payroll as the successful CEO for some major companies. Bankers like that. He's the kind of CEO bankers would lend money to, because they get paid back."