- The Washington Times - Monday, July 8, 2002

Some key Democratic lawmakers say they favor the ouster of Securities and Exchange Commission Chairman Harvey Pitt and partially blamed President Bush for recent corporate scandals that have led him to promise a Wall Street speech on the topic tomorrow.
Senate Majority Leader Tom Daschle yesterday called Mr. Pitt a "huge disappointment," adding: "I have to say, at this point, we could do a lot better than Harvey Pitt in that position today. He's had too cozy a relationship [with the corporate sector]. He met with the accountants on many occasions before issuing regulations. He has been the one who has said we want a kinder, gentler SEC. Just the opposite of what we should have had."
Asked on CBS's "Face the Nation" if he believes the Bush administration has been too cozy with big business, Mr. Daschle said, "I think on many occasions there has been too much of a permissive attitude all the way through. We have seen this from top to bottom."
House Minority Whip Nancy Pelosi, California Democrat, interviewed on CNN's "Late Edition with Wolf Blitzer," said: "Pitt should not be in that job. He is the person who represented the association of accounting firms before he came in as head of the SEC."
Democrats are hoping the corporate scandals will give them an issue in the upcoming elections although, as Mr. Blitzer noted, "a lot of these scandals were brewing well during the Clinton administration."
Mrs. Pelosi did not disagree, but said: "The record will show that the Republican Congress was the enabler of some of these activities to go forward. The Republican Congress resisted the suggestions and recommendations of the then-head of the SEC, Arthur Levitt."
Most of the criticism of Mr. Pitt has come from Democrats, who have accused him of moving too slowly to end accounting fraud and of being too close to auditing firms and large corporations. Many such companies were his clients when he was a private securities lawyer.
"Face the Nation" host Bob Schieffer asked Mr. Daschle about "rumors" that Arizona Sen. John McCain, top Republican on the Senate Commerce Committee, "this week will call for the resignation of Harvey Pitt."
Mr. Daschle said he does not know what Mr. McCain is going to do. But Mr. McCain did level a scathing attack on Mr. Pitt last week. He said that there was an "absolute void" in leadership at the SEC and likened Mr. Pitt to a "fox guarding the hen house."
"That cozy permissive relationship [between the administration and business] has to end, and [Mr. Pitt], in large measure, has orchestrated that," Mr. Daschle said.
Asked if the SEC chairman might be forced out, Sen. Richard Shelby, Alabama Republican and a member of the Senate banking committee, called Mr. Pitt "very able," but added, "The question is, will he lead rather than follow? If he leads, if he gets in front of the issues, that's one thing. He knows where to go, and I hope he will. We'll know within a few days."
Mr. Shelby said it's too early to know if Republicans will be hurt or helped politically by the scandals.
"But I do believe the president needs to get in front of the issue. I think he's going to do that. And the way he can do that is to come out for the toughest legislation, the toughest penalties, criminal and civil, that we can do to bring hope and responsibility back to our capital markets. There are a lot of people who just don't trust the capital markets today, and for good reasons," Mr. Shelby said.
A new Gallup poll, cited on ABC's "This Week," found that 58 percent of Americans say they are less likely to invest because of the corporate scandals, which have involved some of the nation's largest firms.
The Washington Times reported yesterday that Mr. Bush is "furious" about the series of corporate accounting abuses and will present a reform plan tomorrow in a major address on Wall Street intended to reverse the sharp decline in investor confidence in the stock market.
Remedies are to include increased securities enforcement and tougher penalties on chief executives of publicly held companies that use fraudulent accounting methods to inflate corporate earnings. The president is also expected to call for more money and other resources for the SEC and, possibly the Justice Department, in a crackdown on stock and accounting fraud.
Lawmakers of both parties, including Rep. Billy Tauzin, Louisiana Democrat, yesterday said they support a proposal for mandatory prison sentences for CEOs who falsify company records. "Some of those corporate scoundrels need to go to jail for the thievery that has occurred," Mr. Tauzin, chairman of the House Energy and Commerce committee, said on NBC's "Meet the Press."
On CBS, Mr. Daschle said he thinks the president "would do well to ask the SEC to release" the entire file on a 1990 case in which Mr. Bush belatedly reported a stock sale to the commission, so "everybody can see just what is there." The SEC investigated that case and found no evidence Mr. Bush engaged in insider trading.
However, Sen. Paul S. Sarbanes, Maryland Democrat and chairman of the banking committee, said on ABC he is "prepared to accept" the SEC's findings that Mr. Bush "had not done anything improper."
Mr. Sarbanes is the chief sponsor of a bill that passed the banking committee 17-4 and would establish a new government accounting oversight board and impose new penalties for corporate misconduct. House Republicans previously passed a different bill that the president endorses.

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