Published on Sunday, July 7, 2002 by Reuters
Daschle Says SEC Chairman Harvey Pitt Should Go
by Lori Santos
WASHINGTON - Accusing the Bush administration of a "cozy, permissive relationship" with corporate America, Senate Majority Leader Tom Daschle said on Sunday the chairman of the Securities and Exchange Commission was largely responsible and should be replaced.
Daschle faulted Chairman Harvey Pitt for having "too cozy a relationship" with those his agency regulates, including meeting with accountants he used to represent "on many occasions before issuing regulation."
Asked on CBS' "Face the Nation" if he thought Pitt should leave the SEC, the top U.S. markets regulator, Daschle said, "That is an issue that I think we are going to want to explore a little more carefully."
"I have to say that at this point, we could do a lot better than Harvey Pitt in that position today. That cozy permissive relationship has to end and he in large measure has orchestrated that over the last 18 months."
In Kennebunkport, Maine, where President Bush was on a long Fourth of July weekend, White House spokeswoman Claire Buchan said Bush had total confidence in Pitt and rejected Daschle's charges.
"The SEC under Harvey Pitt is doing a great job of taking steps to increase disclosure and increase the level of information that is available to shareholders and potential shareholders," she said.
"And the SEC has stepped up enforcement and has a very strong record of getting tough on corporate wrongdoing," she said, adding that Bush wanted the Senate to approve his proposal for giving the SEC administrative authority to punish corporate officers involved in wrongdoing.
In the wake of WorldCom Inc.'s announcement of a $3.85 billion accounting error following last year's spectacular collapse of Enron Corp. and other corporate debacles, Daschle said greater regulation was needed and Pitt instead was overseeing "a kinder and gentler SEC, just the opposite of what we should have had."
"He has been a huge disappointment," Daschle said.
Though many of the actions took place before he became chairman last August, Pitt, a former Wall Street lawyer with prominent clients that included the major accounting firms, has faced criticism. Daschle last week said Pitt, a Republican appointment under Bush, had "a perception problem" and needed to prove his independence.
Pitt told CNN last week that he would "not stoop to the level of those who seek to attack a diligent agency for political advantage."
Rep. Michael Oxley, whose U.S. House of Representatives Financial Services Committee opens a hearing on Monday on the WorldCom case, also defended Pitt. "This just didn't start on Harvey Pitt's watch," Oxley told "Fox News Sunday." "I have nothing but faith in Harvey's abilities, his integrity."
Daschle spoke before Bush was to unveil a crackdown on corporate misconduct in an address on Wall Street on Tuesday, and said others in the administration were also to blame for the permissive attitude that has allowed corporate earnings scandals to happen.
"There has been too much of a permissive attitude ... all the way through," he said. "We've seen this from top to bottom. We've even seen that in relationships that some of the members of the administration have had with their own corporate roles, and the responsibilities they had in the corporate sector."
The SEC has launched an investigation of Halliburton Co., the company Vice President Dick Cheney ran from 1995 to 2000.
Daschle also called on Bush to release SEC information regarding his sale of stock while a director of Texas-based Harken Energy Corp. . The SEC investigated Bush in 1991 for being up to 34 weeks late in reporting stock sales worth more than $1 million but concluded he did not engage in illegal insider trading. Bush's father was president at the time.
"The president would do well to ask the SEC to release the file -- release it all. Let everyone see just what is there," Daschle said. "There have been some real questions I think about what happened."
The White House blamed a "mix-up" by company lawyers for Bush's failure to comply with the stock sale disclosure rules more than a decade ago.
The South Dakota Democrat said Bush's comparing what he had done to driving 60 mph in a 55 mph zone was "illustrative of this permissive environment and this attitude about business that is very destructive and very disconcerting to many of us."
"That is the kind of thing that got us into the trouble in the first place, winking at regulation," he said.
Copyright 2002 Reuters Ltd