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CLINTON PICKS N.C. MAN AS CHIEF OF STAFF

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Filling a huge hole in his second-term staff, President Clinton selected North Carolina businessman Erskine Bowles to replace Leon Panetta as his chief of staff, administration officials said Friday. Labor Secretary Robert Reich said he, too, is resigning.

Several administration officials said Clinton would announce his decision at an afternoon news conference. Panetta was announcing his resignation at the same time.His departure heads an exodus from the administration and Cabinet. Reich is the latest to disclose plans to leave - the sixth member of Clinton's 14-member Cabinet with plans to move on. The number could soon grow.

Bowles, 51, a merchant banker in North Carolina, was reluctant to take the top staff job because of pending business deals. He served as Small Business Administration director and deputy chief of staff at the White House before leaving nearly a year ago to spend more time with his family and start a new business.

Bowles remained a golfing partner and special projects coordinator for the president. Most recently, he headed the team preparing Clinton for his debate with Bob Dole.

Before accepting Panetta's job, Bowles insisted on wide latitude in selecting the rest of the White House senior staff. He edged out White House counsel Jack Quinn and deputy national security adviser Sandy Berger, who Clinton decided were too valuable to move.

Panetta, the president's second chief of staff, is credited with bringing more discipline to the White House. The former congressman, who replaced Arkansan Mack McLarty, plans to return to California and run for governor.

Losing Panetta means another severed link to Capitol Hill. Two other legislative veterans, George Stephanopoulos and Rahm Emanuel, also plan to leave. Bowles is known as a strong administrator, a soft-spoken bookish man who is well-liked at the White House - but he will lack Panetta's pull on Capitol Hill as the president wrestles with a Republican Congress.

His selection could impact deputy chief of staff Harold Ickes, whose management style is said to be a bad fit with Bowles. Ickes may now leave the White House and is a candidate to replace Reich at Labor, officials said. However, Ickes likely would draw opposition from Republicans if nominated.