O'Neill quits White House

PAUL O’Neill, the accident-prone US Treasury Secretary, and top economic adviser Lawrence Lindsey have lost their jobs in a White House reshuffle amid growing concerns over lack of confidence in the stewardship of US economic policy.

O’Neill’s resignation, announced in a curt letter at the Treasury, ended a two-year period in office often puctuated by gaffes. In the recent US congressional elections there had been criticism of the former industrialist’s ability to be the chief spokesman for the world’s biggest economy.

An administration official said O’Neill quit "at the request of the White House," making him the first Bush Cabinet official to leave.

Less than an hour later, Lindsey, who is director of the National Economic Council, also tendered his resignation.

On Wall Street, the Dow Jones Index at first tumbled on the news. But it recovered later as investors hoped that a shake-up in the administration boded well for the economy.

However, a surprisingly weak report on the job market in November showing the US jobless rate shot up to 6 per cent as employers chopped payrolls kept a lid on enthusiasm. The number of workers on US payrolls outside the farm sector fell by 40,000 last month, versus an expected gain of 38,000.

In his letter to Bush, O’Neill simply offered thanks and gave no hint that he was quitting at the White House’s request, as officials later confirmed was the case.

Treasury spokeswoman Michele Davis told reporters that the resignation would become effective "in the next few weeks", adding that O’Neill had informed senior Treasury staff of his decision yesterday morning.

Said Bill Strazzullo, a market strategist with State Street Global Markets: "The resignations are a good thing for the economy. I don’t think the market had much faith in O’Neill because of his inability to articulate a strategy for the dollar and his general ineptness."

O’Neill, who was 67 on Wednesday, had always smarted at comparison between himself and market-savvy former Treasury Secretary Robert Rubin, with whom he was frequently and unfavorably compared. But in the wake of his and Lindsey’s resignation, Wall Street traders sounded more relieved than shocked.

O’Neill was sworn in as the 72nd US treasury secretary on 20 January, 2001. While his often direct style of speaking raised eyebrows in Washington, he was also often seen as refreshingly candid. But this style sometimes riled financial markets and upset foreign governments.