By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – Among all the hullabaloo last night, Securities and Exchange Commission Chairman Harvey Pitt resigned. Strange timing, but not a minute too soon. I'm Maxine Shapiro with KERA Marketplace Middays.
Not only was the timing of the resignation by Mr. Pitt weird, but I surely thought William Webster would go first. Mr. Webster was recently appointed head of the brand spanking new accounting-oversight board. This is the five-member board that would oversee and regulate the accounting industry so the likes of Enron, WorldCom and other scandals would be avoided and investor confidence would be restored. It was revealed last week that Mr. Webster was head of an audit committee that is now being investigated for accounting fraud. And in a very naughty move, Harvey Pitt didn't let anyone know that he knew this - including the White House or the other four SEC commissioners.
Harvey Pitt's position has been tenuous since he became chairman fifteen months ago. Before then, he was a lawyer for the big accounting firms and other stock-market players. His past made it difficult to believe Pitt would be a tough reformer on investor issues - the role of an SEC chairman. In fact, in October of last year, to the relief of his ex-cronies, Pitt said he would make the SEC "a kinder and gentler" place for accountants. He was reported to have met privately with a CEO who was being investigated and then this summer, all but demanded to be elevated to a cabinet position with the obvious raise that goes along with it. Concealing the investigation and Webster's role with his ex-company was the ultimate straw that broke the confidence of everyone's back.
So who'll take Pitt's place? I have my fears. Two points here: one, can the SEC afford to bring in a top-notch aggressive reformer? As talked about here many times before, President Bush has reneged on a law he signed giving the SEC a much needed budget increase. Second, the powerful accounting lobby now has friends everywhere they turn. Their heavy hand managed to get Webster appointed over a tougher more qualified candidate.
Investors cannot get lackadaisical in the call for corporate reform and a stronger SEC. Please. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.