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Thursday, November 07, 2002

Schwab At Treasury?

by: Sean Hanna, Editor in Chief

Now that the election is over, the Washington rumor mill has turned to debating which Bush administration might be headed for the door. The most interesting tidbit for fund watchers is about Treasury Secretary Paul O'Neill. Keep in mind that this is wild speculation that was perhaps fueled by the location of last week's Impact 2002 conference.

In today's New York Post, reporter Beth Piskora speculates that O'Neill is on the way out and she digs up a now aged rumor that Charles Schwab leads the short list of possible replacements. "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, writes Piskora. She also quotes an unnamed source saying Schwab "loved hobnobbing with the big boys" a the economic summit held in Waco earlier this year.

She also adds that "in recent months, Schwab has stepped away from the day-to-day oversight of Charles Schwab Corp."

While a Schwab spokesperson would not comment on the rumors other than to reiterate that O'Neill remains the Treasury Secretary, he did comment on the last part.

"That is absolutely not true [that Schwab stepped away in recent months]. Chuck has been very involved in running the company with Dave [Pottruck]," said Glen Mathison. "Obviously he plays a slightly different role now with Dave, but he has not been the front line person in the day-to-day operations in quite some time."

Separately, Christopher Dodds, Schwab's chief financial officer, told analysts that the firm expects that it may have to further cut its headcount in 2003. He did not reveal how many positions may be eliminated. The cuts would likely be through attrition and the firm has no plans in place for formal layoffs.

Both Pottruck and Schwab told attendees at last week's Impact 2002 advisor conference that the nearly 9,000 layoffs they have overseen was one of the most difficult tasks that they have faced. Asked by an advisor if they had any regrets about the way they have run the company, Pottruck jumped on the job cuts as one area where he does have regrets. He and Schwab noted that the firm built its staff to respond to what turned out to be temporary demand.

Headcount at the San Francisco firm has dropped to roughly 17,000. "My hope is that by the end of 2003, we'll be below that 17,000 number," Dodds told analysts.  

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