Editorial: SEC chief can’t instill confidence

Thursday, July 18, 2002 | 9:47 a.m.

Harvey Pitt, the embattled Securities and Exchange Commission chairman, has a problem with the facts -- and that's putting it mildly. Pitt recently told NBC's Today show that part of his difficulty in dealing with the current wave of business scandals could be traced to his predecessor, Arthur Levitt. "You know, this is, unfortunately, a mess that I inherited from the prior administration," Pitt said. "We're very actively cleaning it up, and I think that there's a very tough cop on the beat here, and that we are going to clean up this mess."

What Pitt didn't mention in his revisionist history is that he played a key role in creating what he refers to as the "mess." It was Pitt, as a lobbyist for accounting firms, who helped stymie Levitt's attempts in 2000 to end some of the very corporate abuses that today are shaking investor confidence. Regarding Pitt's claim to be a "tough cop," it was also Pitt who claimed early on in his tenure -- before the scandals were revealed -- that the SEC would be "kinder and gentler" under his stewardship. Pitt's efforts to recast his image as a tough regulator are pathetic.

The crisis of confidence among investors doesn't just end with Pitt, though. Part of the White House's problem in dealing with the business scandals is that President Bush and Vice President Dick Cheney, before they were elected, were involved in the very kind of questionable business dealings that now are the focus of legislative reforms. It is Pitt, however, who is the man in charge of day-to-day securities regulation, and he has done nothing to inspire faith that he's the right man for this difficult job. A growing number of Democrats have called for his resignation and, just last week, Sen. John McCain, an Arizona Republican, said Pitt must go, too.

Pitt, quite simply, is the wrong man at the wrong time. President Bush needs someone in charge of the SEC of the caliber of Arthur Levitt, an individual willing to take on the accounting industry and put in meaningful reforms that benefit investors. For the sake of all investors, big and small, Harvey Pitt should resign.