Former SEC chief: Paulson to stay in new administration

PETER'S NEW YORK--October 24, 2008--Former Securities and Exchange Commission chairman and consummate financial insider Arthur Levitt predicted today that a new presidential administration would retain Henry Paulson as treasury secretary to ease the nation through the current financial crisis. He also said U.S. markets would likely remain open even in the midst of market closures worldwide. And an analyst predicted a further dip in oil prices that could be felt at the pump.

"Paulson will stay for a while," Levitt said in an interview aired on early morning programming on the Bloomberg cable news network. "He will stick around for a while, clearly until a new administration takes hold."

The Administration of President George W. Bush will end in January, when a new president will take office. The primary contenders in the upcoming presidential elections are Republican Senator John McCain and Democratic Senator Barak Obama, with a handful of third party candidates also vying for the spot. The ability of either of the two front runners to smooth the transition from one administration to the next in the present chaos of the financial markets has been a matter of speculation. In the meantime, stocks constituting the Dow average have lost some 40 percent of their value since late last year, with the steepest declines occurring earlier this month.

"I'd make no precipitous changes now," Levitt stated, arguing that the current slate of Treasury officials has the information and plans to carry the nation through the current economic crisis.

Levitt predicted that financial markets worldwide would call a halt to trading in chaotic markets, but that U.S. markets would remain open. "We're going to see markets all over the world close," he said. "It is very unlikely that U.S. markets will close."

"The right message is to keep going and to stay with it," he added.

Levitt left open a role for Congress in resolving the nation's economic problems. "I think we are going to have Congress in continual emergency session," he said.

Earlier in the day, futures markets were limit down, meaning that trading was halted due to a precipitous decline in pre-market trading. At the U.S. opening, markets fell, with the Dow Jones Industrial Average down about 350 by midmorning. Bloomberg commentators had implied the possibility of a more serious correction, but their predictions did not materialize.

Levitt was SEC chairman from 1993 to 2001. Before his tenure at the SEC, he served as Chairman of the New York City Economic Development Corporation, and from 1978 to 1989 was chairman of the New York Stock Exchange, according to a biography on the SEC website. He is currently an adviser to the Carlyle Group. These connections brand him as a consummate insider in financial circles.

In other economic news, oil continued to decline and could persist in its downward path, one expert said. Oil fell today to between $61 and $63 a barrel on world markets, from highs of $147 only months ago. But industry analyst Adam Sleminski, in an interview on Bloomberg, said the price could fall to "somewhere near $50," which he said was the cost of drawing a barrel of oil out of the ground. Although the Organization of Petroleum Exporting Countries has signaled its intention to curtail production, Sleminski implied that serious reductions in output would not occur until prices approached the cost of production.

In the meantime consumers are enjoying gasoline prices that they have not seen for a while, recently dipping below the $3 a gallon at the pump, a level first exceeded during the price spikes in the aftermath of Hurricane Katrina in 2006, but which became commonplace for much of 2008. During the latest period of high gas prices, the Bush administration continued to fill the nation's strategic petroleum reserve, only halting purchases after the passage of congressional legislation requiring it.

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