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CNN Live At Daybreak

Bush Administration Has Vacancy On Its Hands

Aired November 07, 2002 - 05:12   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: The Bush administration has a vacancy on its hands. Securities and Exchange Commission Chairman Harvey Pitt has resigned amidst controversy over an accounting oversight panel.
CNN financial correspondent Allan Chernoff tells us part of Pitt's problem may be that he wasn't politically correct.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Sir, would you tell us at all what was the straw that pushed you to resign last night?

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): One misstep after another led to the SEC chairman's rapid downfall.

REP. BARNEY FRANK (D), MASSACHUSETTS: Actually, I thought maybe he was trying out to replace Bill Mahr on the newer version of "Politically Incorrect."

CHERNOFF: The last straw was his failure to reveal damaging information about former FBI and CIA Director William Webster, Pitt's choice to head the new board that's supposed to crack down on accounting fraud. It turns out Webster himself led the audit committee of a company now facing fraud charges. Webster now says he's willing to give up the position if he doesn't get support.

In July, Pitt pushed for elevation of his job to cabinet level without first getting an OK from the White House.

SEN. JON CORZINE (D), NEW JERSEY: I think he had real trouble dealing with sort of the political leadership that the SEC needs because it operates in a political environment.

CHERNOFF: Among those pressuring Pitt to resign, New York Senator Schumer, who had praised him to the heaven's at last year's confirmation hearing.

SEN. CHARLES SCHUMER (D), NEW YORK: His reputation, deservedly so, has achieved, at least in securities law, almost godlike proportions. He is, he could well be described as the Zeus of his field.

CHERNOFF: It appeared Mr. Pitt agreed. Responding to criticism, he told the "New York Times": "There is an enormous advantage to the public to have somebody who knows about the securities business. It would be unthinkable to deprive people of my expertise." As a lawyer, Pitt had represented the top accounting firms and he appeared reluctant to impose new rules on them. Pitt also allowed New York Attorney General Eliot Spitzer to take the lead in fighting Wall Street conflicts. But Harvey Pitt did retain his sense of humor at a hearing Wednesday on new ethics rules for corporate lawyers.

HARVEY PITT, FORMER SEC CHAIRMAN: Unlike other things we do at this agency, this may actually generate some press attention, as well as controversy.

CHERNOFF: Nobody questions that Harvey Pitt is book smart, but Washington insiders agree Pitt lacks political street smarts, which eventually cost him his job.

Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired November 7, 2002 - 05:12   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The Bush administration has a vacancy on its hands. Securities and Exchange Commission Chairman Harvey Pitt has resigned amidst controversy over an accounting oversight panel.
CNN financial correspondent Allan Chernoff tells us part of Pitt's problem may be that he wasn't politically correct.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Sir, would you tell us at all what was the straw that pushed you to resign last night?

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): One misstep after another led to the SEC chairman's rapid downfall.

REP. BARNEY FRANK (D), MASSACHUSETTS: Actually, I thought maybe he was trying out to replace Bill Mahr on the newer version of "Politically Incorrect."

CHERNOFF: The last straw was his failure to reveal damaging information about former FBI and CIA Director William Webster, Pitt's choice to head the new board that's supposed to crack down on accounting fraud. It turns out Webster himself led the audit committee of a company now facing fraud charges. Webster now says he's willing to give up the position if he doesn't get support.

In July, Pitt pushed for elevation of his job to cabinet level without first getting an OK from the White House.

SEN. JON CORZINE (D), NEW JERSEY: I think he had real trouble dealing with sort of the political leadership that the SEC needs because it operates in a political environment.

CHERNOFF: Among those pressuring Pitt to resign, New York Senator Schumer, who had praised him to the heaven's at last year's confirmation hearing.

SEN. CHARLES SCHUMER (D), NEW YORK: His reputation, deservedly so, has achieved, at least in securities law, almost godlike proportions. He is, he could well be described as the Zeus of his field.

CHERNOFF: It appeared Mr. Pitt agreed. Responding to criticism, he told the "New York Times": "There is an enormous advantage to the public to have somebody who knows about the securities business. It would be unthinkable to deprive people of my expertise." As a lawyer, Pitt had represented the top accounting firms and he appeared reluctant to impose new rules on them. Pitt also allowed New York Attorney General Eliot Spitzer to take the lead in fighting Wall Street conflicts. But Harvey Pitt did retain his sense of humor at a hearing Wednesday on new ethics rules for corporate lawyers.

HARVEY PITT, FORMER SEC CHAIRMAN: Unlike other things we do at this agency, this may actually generate some press attention, as well as controversy.

CHERNOFF: Nobody questions that Harvey Pitt is book smart, but Washington insiders agree Pitt lacks political street smarts, which eventually cost him his job.

Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com