Securities and Exchange Commission Chairman Harvey L. Pitt resigned yesterday after just 15 months on the job, under pressure from the White House.
In a letter to President Bush, Pitt said that "the turmoil surrounding my Chairmanship" was making it difficult for the nation's securities regulator to do its 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," Pitt said. The SEC released the letter at about 9 p.m. as the nation was focused on election returns.
It was the end of a short, tumultuous tenure and a spectacular fall for Pitt, whom one Democratic senator acclaimed during his confirmation hearing last year as the "Zeus of his field."
For the Bush administration, which had stood by Pitt through past controversies, the last straw was Pitt's handling of the appointment of former FBI and CIA director William H. Webster to head a new board mandated by Congress to clean up the accounting industry.
Pitt failed to inform fellow commissioners or the White House that Webster chaired the audit committee of a company with accounting problems, embarrassing White House Chief of Staff Andrew H. Card Jr., who had urged Webster to accept the job.
The appointment of the oversight board was one of the SEC's most important tasks in years, meant to restore investors' trust in corporate financial reports after a series of accounting scandals at companies such as Enron and WorldCom helped erase billions of dollars of shareholder wealth.
For weeks, congressional Democrats had been clamoring for Pitt to resign, accusing him of giving the accounting industry undue influence over SEC decisions. As a lawyer in private practice, Pitt represented each of the Big 5 accounting firms and their main lobbying group.
Pitt told Bush his resignation would take effect "as soon as I can help your Staff ensure a smooth transition of leadership."
White House officials said Pitt had sent the message through staff members a few days ago that he was considering resigning. A senior official said Pitt notified an aide in the presidential personnel office early yesterday evening that he "had made the decision to step aside," and the aide did not object. Shortly thereafter, Pitt sent his letter to the president. The resignation was immediately accepted, the official said.
"All things being equal, he probably made the right decision," said Senate Minority Leader Trent Lott (R-Miss.). "You need someone who has the confidence of the people, and he had clearly lost that, fairly or unfairly."
Pitt's departure throws into question whether Webster will remain to head the accounting oversight board. He had been approved on a party-line vote at the SEC a week ago.
By securing Pitt's resignation on election night, the president may have hoped news of the first high-level ouster of his administration would have been lost in the shuffle, a senior GOP Senate aide said. But that is not likely, especially if more members of the Bush economic team head for the exits, the aide said.
White House sources said they were surprised at the timing but were very relieved. The sources said Card, the chief of staff, was furious at Pitt for not alerting him to the information about Webster. They said Pitt soon would have been told he did not have the support of the president if he had failed to take the numerous public hints from Bush's aides.
Pitt has said he had aspired his entire professional life to be SEC chairman. He was the youngest general counsel in SEC history. He later left the agency and established a lucrative practice as a securities lawyer, advising Wall Street firms and defending high-profile executives such as takeover arbitrageur Ivan Boesky in the 1980s and MicroStrategy Inc. chief executive Michael J. Saylor in SEC investigations.
