WASHINGTON -- The Clinton Administration is keeping the Treasury Department in capable hands by naming White House economic adviser Robert Rubin to replace outgoing Secretary Lloyd Bentsen, analysts said yesterday.
"This is viewed as a solid appointment. It's not a problem and it doesn't lead to expectations of any major policy moves," said Dana Johnson, head of market analysis for First National Bank of Chicago.
Kathleen Stephansen, senior economist at Donaldson, Lufkin & Jenrette Securities Corp., called Rubin's selection "a cautious choice" that should have little or no impact on financial markets.
Rubin, who became a millionaire working as an investment banker at Goldman, Sachs & Co. before he joined the administration, is a known quantity to market participants and highly regarded because of his Wall Street experience.
Bentsen announced his resignation yesterday at a Rose Garden press conference, saying that after a long career in public service he wanted to go "back to Texas, back to my roots." He later told reporters that he is considering a variety of opportunities in the private sector, including the possibility of going back into business with his sons in Houston. His resignation is effective Dec. 22.
Deputy Treasury secretary Frank Newman will serve as acting secretary pending Rubin's confirmation by the Senate, which is expected soon after the new Congress convenes in January.
Bentsen has served as a senior statesman within the Clinton cabinet, where he frequently provided advice on dealing with Congress based on his experience in the Senate. But many of the big issues that he worked on, such as international trade and deficit reduction, are now successfully resolved, or at least on the back burner.
At the same time, the U.S. economy is putting in one of the strongest performances seen in years. "The numbers haven't looked better in 30 years," Bentsen said.
Bentsen drew disfavor in the bond market for his policy of talking down the dollar in foreign exchange markets -- a policy he began in January 1993, when he made a speech at the National Press Club calling for a stronger yen. U.S. authorities subsequently reversed course and called for a stronger dollar, but not before the greenback fell sharply. Rubin is expected to follow a more cautious approach on the dollar, given the topic's sensitivity on financial markets.
Rubin lacks Bentsen's legislative experience, which will be needed as the administration gears up for responding to Republican budget proposals.
But Bentsen told reporters that he does not have any doubts about Rubin's ability to deal with members of Congress or anyone else. "He's dealt with giant egos on Wall Street. He'll be able to deal with them here," he said.
Bentsen also said he believes Rubin will continue the cordial relationship that the Treasury has forged with Federal Reserve officials. After becoming secretary, Bentsen resumed the practice of having weekly breakfasts with Fed chairman Alan Greenspan, after Secretary Nicholas Brady stopped them during the Bush Administration over irritation with the Fed's slow pace in cutting rates.
