The first domino was Harvey Pitt.
Now the question is how long will it take other members of President Bush’s inept economic team to fall away.
William Webster is the next to go, sources said. After that, said sources familiar with Bush’s thinking, the administration will likely replace chief economic adviser, Larry Lindsey, and Treasury Secretary Paul O’Neill.
The White House also intends to exercise great influence choosing new heads of the Office of Management and Budget and the Congressional Budget Office, where the current directors are on the way out.
The Treasury secretary is clearly the most important job, and Bush and Vice President Dick Cheney have been meeting with potential candidates for more than a year.
Contenders like Don Marron, the former chairman and CEO of UBS PaineWebber, and Jack Hennessy, former chairman of the private equity group at Credit Suisse First Boston, are believed to be out of the running because they are tainted by Wall Street scandal.
Dick Grasso, head of the New York Stock Exchange, impressed the Bush team by how quickly he got the financial markets up and running again after the 9/11 disaster.
“But he’s not a policy wonk,” said one source. “When they asked him his opinion on Social Security privatization, he didn’t have an opinion.”
Charles Schwab went to the top of a short list after he “impressed the pants off Bush” at an economic summit in Texas in June.
“When [Schwab] first went to Waco, he went with a ‘who cares?’ attitude,” said a source close to Schwab. “But he loved hobnobbing with the big boys. And the big boys seem to like him. He’s Wall Street, but not New York Wall Street. He’s not tainted.”
In recent months, Schwab has stepped away from the day-to-day oversight of Charles Schwab Corp.
The clear front-runner for Larry Lindsey’s job is Josh Bolton, currently the deputy chief of staff at the White House. Bolton has worked at Goldman Sachs, and is widely admired within the West Wing, said a source who knows Bolton.
Another candidate is John Makin, who works at the right-leaning American Enterprise Institute. That is where Lindsey worked, however – which could work against Makin.
People familiar with the White House’s thinking say it is likely to turn to an academic to fill Webster’s position. One likely candidate is Yale accounting professor Rick Antle, who recently organized a forum on restoring the reputation of the accounting profession.
Front-runners for the OMB position include William Hoagland, currently staff director of the U.S. Senate budget committee, and John Kasich, who headed the House budget committee during the Gingrich revolution and has since become a managing director at Lehman Brothers.
Either of those two could also be approached for the Congressional Budget Office.
Post-Harvey
Key candidates for the SEC chairmanship have emerged, now that Harvey Pitt is out. Here’s the lineup:
James Doty, D.C. lawyer: Bloomberg
Pros: White House favorite, major GOP insider
Cons: Involved in George W.’s controversial Harken stock sale
Stanley Sporkin, former federal judge: Bloomberg
Pros: Former SEC enforcer, squeaky clean, popular in industry
Cons: May not want the job
Joseph Grundfest, Stanford law professor, former SEC commissioner
Pros: ex-SEC enforcer, knows political ropes
Cons: Outspoken on wrong-doers
Gary Lynch, CSFB general counsel and former SEC enforcement director
Pros: Can walk right into job and know what to do
Cons: Already happily settled at CS First Boston
Denise Crawford, Texas Securities commissioner
Pros: Texan, already a regulator
Cons: Inexperienced, unknown