In the Pitts
Since the collapse of WorldCom last month, the rhetoric in Congress sounds like something you might hear at an anti-globalization protest. Our very own Rep. Jay Inslee, D-Greenwood, Edmonds, Lynnwood, was among those this week who joined the ever-louder chorus calling on Securities and Exchange Commissioner Harvey Pitt to resign, because Pitt is too cozy with the industry he supposedly regulates.
Before being tapped to regulate the accounting industry, Pitt was one of its chief lobbyists, arguing against a June 2000 proposal for rules that would have prohibited auditing firms from also serving as consultants for their corporate clients. Consumer advocate Barbara Roper at the Consumer Federation of America says these obvious conflicts of interest encouraged companies like Arthur Andersen to look the other way as auditing and consulting clients such as Enron and WorldCom got creative with their books and hid billions in debt from investors and regulators.
But even after the Enron and WorldCom debacles, Pitt maintains that regulation of auditors by auditors is better than overbearing government intervention. Pitt's former clients include the nation's Big Five auditing firms, one of which was Arthur Andersen.
Given his penchant for placing foxes in charge of proverbial chicken coops, it's easy to see why Republican Bush tapped Pitt to serve as America's chief corporate watchdog.
Now as Democrats increasingly try to bludgeon the Bush administration with the club of corporate responsibility in the run-up to November's midterm elections, Inslee is among those who now says it's time for Pitt to go.
"The president of the United States needs to ask for Mr. Pitt's resignation," Inslee said. "He needs to do that because this country right now needs an agent of change, not someone you have to drag kicking and screaming every time you want to regulate, in the most modest way, one of his former clients."
Of course, calling for Pitt's head now is kind of like demanding that a priest doesn't run the eight-and-under all-boys day-care center without supervision. Where were all those Pitt critics last year when his nomination sailed through the Senate without a single "no" vote? And what about all those Democrats (including Inslee) who sided with Pitt back in June 2000 over then-SEC chief Arthur Levitt, who was advocating for regulatory reform?
Inslee concedes he was among those who did not understand the need for Levitt's reform plan back in June 2000. "I think to a lot of us, Enron was a real eye-opener," he told The Stranger. "I certainly would love to present the idea that I was omnipotent and prescient, but the truth is I didn't understand how deep this problem was. I didn't understand the extent to which various groups who are supposed to be checking on one another are just scratching each other's backs."
After years of bipartisan cozying up to big business, corporate-bashing rhetoric is back in vogue on Capitol Hill. Especially when the TV klieg lights await.