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Top Democrats Call for Pitt to Step Down

Politics: Daschle and Gephardt question the SEC chief's handling of accounting oversight board's creation.

October 10, 2002|From Reuters

Congress' two top Democrats wrote to President Bush on Wednesday seeking the resignation of Securities and Exchange Commission Chairman Harvey L. Pitt and questioning the SEC chief's handling of the creation of a national board to police corporate accounting.

Senate Majority Leader Tom Daschle (D-S.D.) and House Minority Leader Richard Gephardt (D-Mo.) said in the letter that they were concerned about Pitt's actions in the selection of a chairman for the Public Company Accounting Oversight Board.

"We believe that you should replace him immediately as SEC chair," the letter said. It was the second time Daschle has called for Pitt's resignation.

White House spokesman Ari Fleischer dismissed the appeal. "It's a political charge that has no merit and substance," he said, adding that the SEC has a record of aggressively pursuing corporate misdeeds.

SEC spokeswoman Christi Harlan said, "The chairman serves at the pleasure of the president. We've heard enthusiastic endorsements from the president on the chairman's work." Pitt was unavailable for comment.

As Democrats try to swing voters' attention from talk of war with Iraq to the sluggish economy and corporate misdeeds, Pitt and his handling of the accounting board and the SEC are becoming a political punching bag.

Securities law experts said it was unlikely that Pitt--appointed in 2001 after a career as a Wall Street lawyer and earlier as an SEC staff attorney--would resign.

In a statement, Rep. Michael Oxley (R-Ohio), who co-sponsored newly enacted corporate reform legislation, called on Democrats "to stop this outrageous effort of politicizing the [SEC] and undermining its current chairman."

Congress ordered the SEC to set up the accounting oversight board this summer after a cascade of corporate and accounting scandals hammered Wall Street and undermined investor confidence.

The SEC was moving smoothly to set up the board--with John Biggs, chief of the TIAA-CREF mutual fund and pension company, seen as the front-runner to become chairman--until a flap broke out last week, with Biggs' backers accusing accounting lobbyists of moving to block him.

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