He will replace Harvey Pitt, who resigned in early November, following a scandal over the appointment of the head of the new accountancy oversight board.

His appointment was announced by president Bush today, who said: '"Bill Donaldson will be a strong leader, with a clear mission to vigorously enforce our nation's laws against corporate corruption and to uphold the highest standards of integrity in the securities markets.'

He has an impressive CV to bring to the job, having co-founded the investment banking firm Donaldson Lufkin & Jenrette in 1959 and served as its chairman and chief executive.

From 1990 to 1995 he was chairman and CEO of the New York Stock Exchange and was also formerly the chairman of the insurance giant Aetna.

He was a founder of Yale University's Graduate School of Management and served as its first dean.

Donaldson also took on a political career in the mid-1970s, serving, in 1975, as counsel to US vice president Nelson Rockefeller and was under-secretary of state to US secretary Henry Kissinger from 1973 until 1975.