(2 of 4)
That may be because Bush doesn't believe the market's gyrations have much to do with the basic vitality of the economy. For plenty of Americans, especially the 60% who own stocks, they're one and the same. But Bush's view is "more old-fashioned," as an adviser puts it. To him, corporations and businessmen who produce things are the backbone of the economy, while the markets and investors are a vaguely sinister sideshow. Bush's first reaction to revelations of corporate misconduct was to assume the best. Yes, corporate America tripped up here and there, but the subsequent hysteria was stirred up by the overheated media. He didn't want to overreact lest he hamstring honest executives. "He didn't want to do something that would hurt the real economy just to fix a perception problem," says a senior adviser.
Bush came to his benevolent view of corporate America by way of Midland, Texas, where the young Harvard Business School graduate landed in 1975 hoping to strike it rich in the oil business. There, Bush recalls, businesses were filled with "good men" who would strike a deal on a handshake or the strength of a family name. When the oil boom went bust, as it did for Bush in the mid-1980s, small-business men didn't cash out their stock options and run; they took pay cuts and tried to help their employees. To Bush, Enron and WorldCom were aberrations, the fault of a few bad actors in an otherwise sound system. "We were, like, What in the world?" says Commerce Secretary Donald Evans of his conversations with Bush. "We were just kind of bewildered. It is unbelievable to us."
What does make perfect sense to anyone from those Midland days is to blame Wall Street. Bush remains distrustful and not a little dismissive of the investment bankers who swooped into Texas with saddlebags full of cash when oil prices gushed but galloped out of town when prices sank. Back in April, when the Dow hovered around 10,000, a White House economic adviser told the President at a social gathering that "there's no reason this market shouldn't be around 7500." According to an eyewitness, Bush made a face, turned and walked away, as if the subject bored or annoyed him. Last week Bush was back on memory lane. "When I used to watch the stocks...in Midland, Texas," he said, "[I was] somewhat skeptical about what was taking place on the floors of these exchanges. They'll buy you or sell you, depending upon if it's in their interest."
Bush's distrust of financiers and faith in CEOs determined his economic team. The month before he took office, he told TIME that he viewed economists as he did "accountants--you hire them." Bush "hired" Lawrence Lindsey, a former Federal Reserve governor, for the backstage role of national economic adviser. And he chose Glenn Hubbard, an economics professor, as chairman of his Council of Economic Advisers. But for the out-front post of Treasury Secretary, Bush chose the CEO of aluminum giant Alcoa, Paul O'Neill, whose skepticism about investment bankers mirrored his own.