Hank Paulson, chairman and chief executive of Goldman Sachs, was on Tuesday nominated as US Treasury secretary, a move that could revive the power of the department and boost confidence in the Bush administration’s handling of the economy.

George W. Bush, US president, who has been seeking a replacement for John Snow for months, hailed Mr Paulson’s Wall Street credentials and cited his record as “a strong and consistent voice for corporate accountability”.

Mr Bush said: “As Treasury Secretary, Hank will be my principal advisor on the broad range of domestic and international economic issues that affect the well-being of all Americans.”

Mr Paulson had previously turned down an offer for the position. Many on Wall St had suggested no such senior banker would not want the job because driving forward far reaching economic policy, such as tax or entitlement reform, would prove difficult during the latter stages of a second term presidency.

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However, insiders said on Tuesday that Mr Paulson was unlikely to have accepted the job without some assurances that he could affect change.

Mr Paulson leaves Goldman Sachs at a crest in the Wall Street bank’s power. He plans to remove himself from Goldman?s day-to-day operations to focus on succession planning and his confirmation hearings.

Goldman declined comment on who might succeed him, calling it a matter for the board, but insiders said the role will be filled by Lloyd Blankfein, who is now president.

Mr Paulson has been chairman and chief executive of Goldman since 1998. He earned $38.8m last year and is the largest individual Goldman shareholder. He has worked in government before, as a member of the Nixon administration.

Mr Paulson’s appointment could address criticism that Mr Bush?s economy policy team lacks heavyweights. He has the chance to position himself as the leading voice on the US economy, at a time of rising volatility in the international financial markets, and while Ben Bernanke, chairman of the Federal Reserve, has yet to acquire the decisive authority of his predecessor.

Josh Bolten, Mr Bush’s chief of staff and a former Goldman employee, was an influential figure in courting Mr Paulson. Dana Perino, White House spokeswoman, said Mr Bush met Mr Paulson earlier this month.

Mr Bush praised Mr Snow’s leadership, a sentiment others echoed.

Although the outgoing secretary has been criticised for not doing enough to promote the economy, Kevin Hassett, director of economic policy at the American Enterprise Institute, said that during Mr Snow’s tenure the economy had grown on average, by 3.98 per cent per year.

“That is nearly identical to the 3.99 per cent average growth during Secretary Rubin?s tenure, and well above the average economic growth associated with any other secretary of the last 25 years,” Mr Hassett said.

Mr Paulson has remained at the helm of Goldman for longer than many had expected, but his appointment still came as a shock to the bank’s executives who for weeks had expressed confidence that he would continue to rebuff entreaties from Washington.

Many top managers did not learn of Mr. Paulson’s decision until Monday afternoon, one insider said. Mr Paulson had previously turned the Treasury post down, others said.