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The Honolulu Advertiser
Posted on: Wednesday, November 6, 2002

SEC chairman resigns

By Marcy Gordon
Associated Press

WASHINGTON — Securities and Exchange Commission Chairman Harvey Pitt resigned last night under pressure over a series of political missteps that had embarrassed the Bush White House.

In a letter to President Bush, Pitt said "the turmoil surrounding my chairmanship" had made it difficult to do his job.

"Rather than be a burden to you or the agency, I feel it is in everyone's best interest if I step aside now, to allow the agency to continue the important efforts we have started."

The White House quickly accepted his resignation.

Three administration officials, speaking on condition of anonymity, said the White House welcomed the resignation of a regulator who had created a host of political problems for Bush in the runup to last night's elections.

The latest came when Pitt failed to share with fellow commissioners information about William Webster, the newly named chairman of an accounting industry oversight board, before the agency voted last week to put the former CIA and FBI director in charge of the panel.

The revelation led SEC commissioners, including Pitt, to request an internal investigation Thursday of Webster's selection — and renewed the almost daily drumbeat of calls from Democrats and other critics for Pitt's resignation.

A senior White House official said Bush aides had heard over the weekend that Pitt was inclined to resign. Neither the president nor his aides requested the resignation, but Pitt called the White House personnel office yesterday afternoon and said he intended to resign.

There were no objections, so Pitt submitted his resignation late yesterday afternoon. In it, he said he thought the controversy was hurting his ability to lead the SEC.

The official said Bush would not have a replacement immediately. They had not begun to search for candidates as of last night, and expected Senate confirmation to be difficult in the intense political climate, the official said.

Pitt, who first worked at the SEC in the late 1960s and built his career as an attorney in appearance-conscious Washington, has been criticized for meeting with the heads of companies under SEC investigation, and for his close ties to the accounting industry at a time when the SEC is investigating major accounting fraud at big corporations. Pitt represented the Big Five accounting firms while in private practice.

In this latest instance, Pitt withheld information about Webster's lead role on the auditing committee for U.S. Technologies, a company facing investor lawsuits alleging fraud. Webster told The New York Times that Pitt had assured him SEC staff had looked into the issue and it would not pose a problem.

Last month, Democrats asked Bush to remove Pitt, whom they accused of bowing to the accounting industry by opposing the appointment of John H. Biggs to head the oversight board. Supporters of the pension fund administrator believed he would advocate tough regulation of the accounting industry.

It was not immediately clear whether Bush had sought Pitt's resignation, but the White House made no secret that the president was angered by his failure to warn the White House and chief of staff Andrew Card about Webster's role with the auditing committee.

Officials did not reveal who will replace Pitt.