Harvey L. Pitt, the beleaguered chairman of the Securities and Exchange Commission, resigned under pressure late Tuesday after his latest misstep left the White House embarrassed and unwilling to fight for his future as Wall Street's chief regulator.
Fifteen months after his appointment, Pitt submitted a four-paragraph resignation letter to President Bush in which he said the controversy surrounding him was blunting the SEC's efforts to restore investors' faith in financial markets.
"Unfortunately, the turmoil surrounding my chairmanship and the agency makes it very difficult for the commissioners and dedicated SEC staffers to perform their critical assignments. 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 wrote.
His resignation ends a term marked by repeated gaffes and controversies in a year when public trust in markets has been shaken by a steep slide in stock prices, widespread allegations of Wall Street misconduct and massive accounting scandals.
But the decision by the former star securities lawyer to depart also creates new complications for the SEC and the Bush administration. The agency faces a huge workload in negotiating Wall Street reforms and implementing corporate governance changes mandated by Congress.
"Whoever the next chairman is has got a lot of work ahead of them," said Lynn Turner, a former SEC chief accountant.
Yet it is unclear how quickly a new chairman can be named by President Bush and confirmed by the Senate, given partisan politics that Pitt helped inflame in recent weeks.
Washington sources have suggested several possible successors to Pitt. Among them: James Doty, a former SEC general counsel; and Michael Chertoff, an assistant attorney general at the Justice Department.
Pitt sparked a firestorm last week after it was revealed that he did not share with the four other SEC commissioners potentially damaging information about William H. Webster, whom Pitt had championed to be chairman of a new accounting industry oversight board.
Webster, a former federal judge, had served as a director of a small Washington-based company that had a run-in with its accounting firm and has been sued by shareholders on allegations of fraud.
Webster told Pitt about the issues before the SEC voted on Webster's appointment Oct. 25. But Pitt did not inform the other SEC commissioners. Webster was confirmed in a 3-2 vote, with the Republican majority in favor and the two Democrats against.
