S.E.C. Chief Seeks Promotion; Chances Look Dim
The New York Times
July 24, 2002
By STEPHEN LABATON
WASHINGTON, July 23 - Harvey L. Pitt, who barely goes a week without new
calls for him to step down as chairman of the Securities and Exchange Commission
because of his handling of the crisis in the markets, is asking Congress for a
raise and more respect.
Congressional aides and commission officials said today that in private
discussions this week, Mr. Pitt had asked lawmakers to
add a provision to the corporate and accounting bill moving swiftly
through Congress that would elevate his office to the same
rank as cabinet posts like secretary of state and attorney general.
The plan, which was ridiculed by Democrats and disowned this evening
by the White House when asked about it, stands little
chance of becoming law. It proposes to catapult Mr. Pitt above
his counterparts at virtually every other independent agency. It
would rank him higher than the director of the Central Intelligence Agency,
the administrators of the Environmental Protection
Agency and the National Aeronautics and Space Administration,
and all the civilian heads of the various branches of the armed services.
While Mr. Pitt's agency is chronically pinched for cash, the change would
increase his salary nearly 21 percent, to $166,700
from $138,200. Mr. Pitt, who for the last decade had been
one of Wall Street's most successful lawyers as a senior partner at
Fried, Frank, Harris, Shriver & Jacobson, earned about $3 million
in the 17 months before becoming S.E.C. chairman last
summer.
Although he would have the same rank as all of the cabinet members,
an elevated status would not change the independent
nature of the commission or entitle Mr. Pitt automatically to attend
cabinet meetings at the White House. Moreover, it is
difficult to imagine that Mr. Pitt, who made millions of dollars a
year in private practice representing many companies now
facing inquiries, would have a better quality of life with the extra cash.
Mr. Pitt likes to joke that even though he took a 99.9
percent pay cut to take the job, he would never want to do any other.
But in a city driven by official status, the Level 1 designation being sought
by Mr. Pitt is the brass ring. Officials with that
designation tend to be showered with more invitations to state
dinners and choice seats at other occasions. It makes it easier to
qualify for burial at Arlington National Cemetery. Outside of members
of the cabinet, only Alan Greenspan, the chairman of the
Federal Reserve, and Jo Anne Barnhart, the commissioner of
Social Security, have the designation.
Brian Gross, the S.E.C.'s director of communications, said the rise in the agency's
status had long been on Mr. Pitt's agenda,
and the proposal was dusted off for the short wish list sent to
Congress as the bill headed to a conference committee late last
week.
"I suggested this would be a good time for us to raise the profile of the
agency," Mr. Gross said today. "The markets are a little
bit flustered. The agency has been in the news."
"And the chairman said, `Yes, let's send that up there, this is good
timing,' " Mr. Gross said, adding that the proposal was
important because investors are grasping for reasons to renew their
confidence in the markets and this may be the most
significant securities legislation to be adopted in many years.
Asked if the proposal was met with criticism, given that it comes as
Mr. Pitt is defending his stewardship, Mr. Gross said, "No
one has said, `We think this is a bad idea or something we don't want to do for the S.E.C.' "
"No one to my face has rejected it," Mr. Gross added. He also said that the
White House had not been consulted about the proposal.
Claire Buchan, a spokeswoman for the White House, said Mr. Pitt's proposal
"could be a distraction from the real business of
providing the S.E.C. with more people, better systems and additional resources."
Democrats and Republican critics of Mr. Pitt snickered at the proposal, which they said
had no chance of passage and demonstrated Mr. Pitt's political tin ear.
A small but influential group of lawmakers including the Senate majority
leader, Tom Daschle, Democrat of South Dakota;
Senator Joseph I. Lieberman, Democrat of Connecticut;
and Senator John McCain, Republican of Arizona, have called on Mr.
Pitt to step down. Aides to the three lawmakers said today that their
bosses would be unavailable to comment on the proposal,
with some suggesting that the proposal would do enough damage to
Mr. Pitt's credibility without them piling it on.
Senator Jon S. Corzine, the New Jersey Democrat who as a former top
executive at Goldman Sachs has had more experience
on Wall Street than any other member of Congress, said he thought
the proposed pay increase was "a diversion from the basic
subject matter that needs to be dealt with."
Some critics said that even though it might be a good idea to elevate
the agency's profile now that the markets are in turmoil,
Mr. Pitt was the wrong person to be making the case given his political difficulties.
The proposal first surfaced last Friday. In a memo to lawmakers, the agency
asked for five items to be included in the legislation, like amendments to enable
the commission to impose greater penalties on dishonest executives and a provision
that would make it easier to coordinate its efforts with criminal investigators.
The final item was a request to elevate the bureaucratic status of the agency,
in governmentspeak, from Level 3 to Level 1, because of its importance to "our nation's
financial and capital markets."
The memo said the elevation of the agency's status "would enhance our ability
to attract qualified professionals at all levels."
The proposed changes would elevate the pay and status of only
the chairman and the four other commissioners who lead the
agency. The pay of those four would rise from $130,000 to $150,000.
Two years ago Congress passed legislation elevating the status of
Mr. Greenspan, making him the only financial regulator other
than the secretary of the Treasury in the top tier.
The change was made at the urging of Representative Jim Leach, the Iowa
Republican who was the chairman of the House
Banking Committee, as a reward for Mr. Greenspan's service and
recognition by lawmakers that he is among the most
important officials in Washington.
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