He has built one of the most successful investment-banking franchises on Wall Street and holds roughly $500 million worth of his company's stock. So where might Morgan Stanley Dean Witter exiting President and Chief Operating Officer John Mack go in the wake of his sudden resignation on Jan. 24? A possible answer: To the top of the Securities & Exchange Commission.
GOP sources say Mack, 55, is on the list of potential candidates to succeed Arthur Levitt Jr. as SEC chairman. Levitt, appointed in 1993 by President Bill Clinton and the longest-serving chairman in the SEC's history, has announced he'll leave on Feb. 9. Privately, Levitt has urged aides to President George W. Bush to fill the job quickly to avoid further upsetting already-troubled financial markets.
LEADERS OF THE PACK. But that doesn't mean Mack, who has served as No. 2 ever since the Morgan Stanley investment bank merged with broker Dean Witter in 1997, should start buy a ticket to Washington. He's only one of at least a half-dozen candidates for Levitt's job -- and the list, which ought to be shrinking by now, just keeps getting longer.
Early favorite James R. Doty, a former SEC general counsel and a Houstonite with strong Bush connections, is still on the list. So is PaineWebber CEO Donald B. Marron, though he's telling friends that he isn't interested in a second-tier job after Bush passed over him for Treasury Secretary.
Those two, while still the front-runners, have been joined by an ever-expanding cadre of candidates. High-tech companies are pushing Representative Chris Cox (R-Calif.), a former securities lawyer. Techdom hopes Cox would soften the SEC's harsh views on accounting for mergers, stock options, and revenue recognition. Stanford University Professor Joseph Grundfest, a former SEC commissioner, also is getting mentioned, as are onetime SEC General Counsel Harvey Pitt, Citigroup executive William H. Heyman, and John Robson, Deputy Treasury Secretary in the first Bush Administration.
SO MANY CHOICES. Then there's Frank Zarb, the retiring chairman of the National Association of Securities Dealers, who has been telling anyone who'll listen over the past years how ready he is to leave Washington. The latest rumor maintains that 68-year-old Princeton University Professor Burton Malkiel -- author of the 1973 investing classic, A Random Walk Down Wall Street -- also is in the running to head the SEC.
Why so many names? In part, because Wall Street and Washington love to gossip. But the bigger problem lies with the Bush transition, which has repeatedly said that appointing heads of independent agencies, like the SEC, is a top priority -- but hasn't delivered. "They say they'll have them all out this week -- but they said that last week, too," says an exasperated GOP official.
Sources also say Bush has given Senate Banking Committee Chairman Phil Gramm, a fellow Texas Republican, extraordinary control over the SEC job. Gramm is interviewing the candidates. So far, says a top SEC-watcher, "He hasn't met one he likes."
MIDDLE ROAD. Mack isn't politically active and has made only small contributions to both GOP and Democratic candidates, mostly New Yorkers. His main credential for the SEC job is extensive experience on Wall Street, where he is considered a heavyweight and true insider. His extensive knowledge could prove a real asset in regulating not only the retail side but also the institutional side of the securities industry. "Levitt was clearly on the side of the individual investor," says Amy Butte, securities industry analyst at Bear Stearns Companies Inc. "A Mack appointment would perhaps bring the pendulum back closer to the middle. The markets will respond positively."
But don't bet on a Mack rally anytime soon. With the Bush team's record of surprise appointments, the SEC job is very much up in the air. By Emily Thornton in New York and Mike McNamee and Paula Dwyer in Washington