WASHINGTON Top White House economic adviser Allan Hubbard resigned on Wednesday and will be replaced by his deputy, Keith Hennessey, the latest in a string of departures as President George W. Bush's term winds down.
His departure comes at a difficult time for the Bush administration, which faces a crisis in the mortgage industry that has led to an increase in housing foreclosures as well as jittery global stock and currency markets.
Hubbard, 60, will leave as director of the National Economic Council (NEC) by the end of the year and his announcement comes a day after he said the risks of the U.S. economy slipping into a recession were growing.
"Al Hubbard has led the economic policymaking process in my administration for some of the most challenging economic issues confronting our nation," Bush said in a statement.
Hubbard, who was a major fundraiser for Bush's campaigns and went to Harvard Business School with him, spent almost three years at the NEC and said in his resignation letter that he was leaving to spend more time with his three children.
Other top White House officials who have left this year include political adviser Karl Rove, homeland security and counterterrorism adviser Fran Townsend and budget director Rob Portman.
Hennessey, 39, has served as deputy director for the NEC for five years and previously worked for Republican Sen. Trent Lott and at the Senate Budget Committee.
The NEC is charged with coordinating the administration's economic policy and explaining it to Congress and Wall Street. Hubbard and Hennessey have been deeply involved in negotiations to expand children's health insurance and change entitlement programs like the Social Security retirement plan.
White House spokesman Tony Fratto said Wall Street should be happy with Hennessey's experience being at the center of economic policy development, helping formulate plans like Bush's proposal earlier this year to expand health care coverage by offering tax breaks, which has since stalled.
"They should also be pleased that they have someone in that job who is committed to an open policy process, that welcomes ideas and welcomes input from the outside," he said.
Democratic Rep. Carolyn Maloney of New York slammed the Bush administration's economic policies, arguing that a typical family's income was lower now than when Bush took office.
"As we work to cope with the financial crisis and the collapse of the housing market, the nation needs an economic leadership team that will put in place policies to avoid an economic downturn or lessen one's impact on American families, and regrettably we do not seem to have one that can do the job," she said.
The collapse of the U.S. market for subprime mortgages has touched off a global financial credit crunch and unnerved investors who fear that a recession is looming.
"Obviously the chances of a recession are higher now than they were a year ago, but we still think it's less than 50-50," Hubbard said on CNBC television on Tuesday.
"We obviously have problems in the housing sector and we have problems in the financial sector, but ... real America is doing just fine," he said.
The United States last suffered a recession between March and November 2001, according to the National Bureau of Economic Research, a 10-year gap from the previous episode.