Media outlets were abuzz this morning at the prospect that President Barack Obama may be considering American Express Co.’s chief executive officer, Kenneth I. Chenault, for the position of Treasury secretary. Should he be seriously considered, nominated by the President, and confirmed by the Senate, Mr. Chenault would be the first African American to hold the post of Secretary of the Treasury. Mr. Chenault appears to have the pedigree for the job.
Just who is Ken Chenault? If anything his resume says consistent. Mr. Chenault’s tenure at American Express has been a long one. Mr. Chenault started with the company in 1981 and by 1993 was serving as President of the U.S.A. Division of the American Express Travel Related Services Company.
In February 1997, Mr. Chenault became President and Chief Operating Officer of the American Express Co., serving in that capacity until January 2001 when he was named chairman of the financial services company. April 2001 saw Mr. Chenault also taking the reins of the company as its chief executive officer.
Maybe some of Mr. Chenault’s steadiness has been rubbing off on American Express since during his tenure as its chief executive officer the company’s performance has been positive and consistent. At the end of April 2001, American Express’ stock price was $37.16, but by the end of May 2007, the company’s stock price was at $64.98. This was the eve of the Great Recession. The stock took a nose dive undoubtedly hit as hard as its card carrying customers. By the end of February 2009, the stock price was at an abysmal $12.06.
The company has clawed back from the abyss along with the rest of the economy. Mr. Chenault has managed to steer the firm’s stock price back to $57.42 at the close of business on December 18, 2012.
In addition to his steadiness, Mr. Chenault may have another advantage: technically he is not of Wall Street. Although American Express is headquartered in New York City, the firm is neither an investment nor commercial bank. According to Morningstar, American Express operates the most profitable closed-loop credit card network in the United States, providing charge and credit card payment products and travel related services to consumers around the world. It is not in the business of buying and selling mortgage-backed assets, the type of business that got investors and banks in deep trouble between 2007 and 2008.
Mr. Chenault, a Harvard University law graduate, would not be alone as a non-banker should he get nominated and eventually become Treasury secretary. Only one of the three most recent secretaries, Henry Paulson, was an investment banker.
Of course at this point whether Mr. Chenault is nominated is still more speculation, but if steadiness continues to serve him as a virtue, the thought of nomination and selection may soon enter the realm of certainty.