Even though he's been in office for just over a year, Securities and Exchange Commission chairman Harvey Pitt's tenure has been, to be kind, a mixed review.
In several public appearances on mainstream TV news shows and in several SEC-organized public roundtables, it seemed that he was working overtime to overcome any pre-appointment prejudices that he was still in the pockets of his former clients — namely the Big Four and the AICPA.
He has pointed out on several occasions that his agency has brought a record number of cases and also fought to upgrade the pay levels for his staff.
But at other times, he has veered into situations that only diplomatically could be labeled "questionable."
As an example he unwisely met with several executives whose companies were under investigation by his agency and with the heads of said companies’ auditors.
And he certainly didn’t endear himself to the administration that appointed him when, without its knowledge, he unsuccessfully lobbied Congress to propose that his SEC chairman’s post be raised on an equal level with cabinet positions.
Despite those missteps, he successfully parried a volley of lawmakers who criticized his handling, or rather as they saw it, mis-handling of the corporate scandals, and demanded that he step down. At the time he got a full round of support ammo from the White House, who stood by their appointee.
And when the SEC began soliciting submissions for potential candidates for the Public Company Accounting Oversight Board, any ensuing appointees, if agreed upon by all, would probably have staved off Pitt’s harshest critics for at last a year. But that didn’t happen.
After former Federal Reserve chairman Paul Volcker turned down the chairman’s post at the PCAOB, the regulator still had a tough reform-minded candidate in John Biggs, chair of TIAA-CREF.
Biggs’ candidacy quickly garnered high-profile support from the likes of Senate Banking Committee chairman Paul Sarbanes, Volcker, Arthur Levitt, (Pitt’s predecessor at the SEC), and former comptroller general Charles Bowsher. Internally, Biggs had the support of Democratic SEC commissioners Harvey Goldschmid and Roel Campos.
But a funny thing happened.
Just when Biggs seemed ready to order his new nameplate, Pitt waffled on his support of the regulator, reportedly as a result of pressure from GOP lawmakers and the AICPA, both of which protested that Biggs was too strict on accounting reform.
Well, that’s all the fuel top Democrats like House Minority Leader Richard Gephardt of Missouri and Senate Majority Leader Tom Daschle of South Dakota needed. The duo uncorked their fountain pens and drafted a letter to President Bush requesting Pitt’s ouster.
The White House press corps dismissed the Daschle-Gephardt diatribe against Pitt as a "tired story," but the incident served only to widen the credibility gap between Pitt and the Promised Land of corporate reform.
If Pitt wants to remain SEC chairman and keep folks like Messrs. Gephardt and Daschle off his back, then he needs to name Biggs or someone of his pedigree to the PCOAB. Otherwise, Daschle and Gephardt wont be the only lawmakers writing letters to 1600 Pennsylvania Avenue.
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