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Strategies & Market Trends : Joe Copia's daytrades/investments and thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Joe Copia who wrote (24359)	3/25/2002 8:54:20 AM
From: Joe Copia	Read Replies (1) \| Respond to of 25711

IS PITT STILL FIT? some remarks to speech SEC Chief strikes back at growing chorus of critics. Is Harvey Pitt the "Reluctant Regulator" he is said to be? sec.gov investrend.com The Chairman of the U.S. Securites and Exchange Commission, Harvey L. Pitt, has been under fire in Congress and elsewhere for a previous cozy relationship he had with accounting firms and other teetering institutions he is now charged with overseeing, and the scrutiny is beginning to wear thin. This past few days he has assailed his critics in a speech in Palm Desert, and most recently to members of the Senate Banking Committee, saying the media has "deliberately" mischaracterized a meeting he held with executives from Big 5 accounting firms, and calling the resignations of the members of the Public Oversight Board "petulant." Previous to his appointment, he was a partner at Fried Frank Harris Shriver & Jacobson, where he represented clients that the New York Times characterizes as "virtually every major player on Wall Street, including account firms, stock exchanges and many of the major investment houses." The fun seems to have gone out of the job. His predecessor, Arthur Levitt, has continued to assert that accounting regulations should be more stringent, Senator Paul Sarbanes (D-Maryland) has complained about what he calls a "secret meeting" with Big 5 executives, and even the White House seems to have deserted him on his request for $75m more in funding to keep top SEC officials from moving on. The Chief's emotion-charged outburst was righteously indignant enough that even many of his critics concede that Pitt believes in his "heart of hearts" that he is being tough and fair-minded --- but the critics remain convinced he is yet certain to fall victim to the perceptions that his previous relationships render him powerless to lead in a time when unassailable moral leadership is required. In short, the man is not the problem here. The problem rises when "old boy networks" produce political appointees who are less than conflict-free coming into the job in the first place. Of course, even Chairman Pitt may have forgotten back two months ago when Enron first became a household word that he had just as indignantly chastised those -- including Fi/X, where you heard it first -- who even hinted that consultin' and auditin' ought not to mix (see Fi/X 01/22/02: Financial Community Still Reeling from SEC Chair to Auditors: Keep on Consultin'). It was soon enough seen that dog couldn't hunt. Senator Phil Gramm (D-Tex) immediately called criticism of Pitt "an old tactic of Nazi Germany of guilt by association." Of course, the support from these quarters, and in these terms, may not have helped. Gramm could, however, identify: his wife, Wendy, served on Enron's board, and Gramm, who is "retiring," helped Enron with significant legislation. Of course, Gramm was speaking in the heat of the moment, not realizing that "guilt by association" is a term more generally identified with McCarthyism (at least, he had the "ism" part right), and wasn't applied to public officials charged with regulating friends and past clients, whom you continue to bring in for private "consultations" on how best to do your regulatory job. The firefight may have taken this to the level of a skirmish-too far for the SEC Chief to recover relations with Congress, and the White House has grown quiet. Whether deserved or not, many predict the Enron fall-out will sooner than later produce yet another fall-out: Pitt.