The new board overseeing the accounting profession got off to a troubled start Friday when the members of the Securities and Exchange Commission split bitterly over the qualifications and competency of the board's new leadership.
They voted 3-2 to approve the selection of William H. Webster, the former director of the CIA and the FBI, to head the new board.
The three Republicans on the commission and Republicans in Congress hailed Webster for his integrity and extensive background in law enforcement, but the commission's two Democrats said he lacked the credentials to lead an accounting board.
They emphasized that he had no recent experience in accounting issues and noted the possible public perception that the Republicans had caved to the accounting profession, whose lobbyists had complained that an earlier choice of some of the commissioners, John H. Biggs, had been too aggressive a reformer.
The handling of the selection process left Harvey L. Pitt, the SEC chairman, further politically wounded after a year of missteps. The choice of Webster over Biggs was widely criticized by leading members of Wall Street and by Senator Paul Sarbanes, who was the main author of the law creating the new board. Until Friday Sarbanes, the chairman of the Senate Banking Committee, had carefully refrained from joining his Democratic colleagues in seeking Pitt's ouster.
"He has eroded credibility and he has detracted rather than contributed to investor confidence," Sarbanes said in a telephone interview. "Chairman Pitt missed the opportunity to put in place an oversight board with widespread credibility. The country would be best served if he stepped down as chairman of the SEC."
But there was no sign that Pitt's most important constituency, the White House, had withdrawn its support. President Bush's chief of staff, Andrew Card, had personally pressed Webster earlier this week to take the job. The selection was also widely endorsed by executives in the accounting profession and by one of their strongest allies in Congress, Representative Michael G. Oxley.
Oxley, who opposed the selection of Biggs, prevailed on the commission to appoint Willis D. Gradison Jr., a former House colleague who has become a lobbyist for the health care and insurance industries, to the board, which the commission did in approving a slate of the other members by a vote of 4-1.
The other members approved were Kayla J. Gillan, a former general counsel of the California Public Employees Retirement System; Daniel Goelzer, a former general counsel at the commission; and Charles D. Niemeier, chief accountant of the enforcement division at the SEC.
Pitt, who for weeks had vowed to seek a new oversight board that garnered unanimous support, was criticized Friday by the two dissenting Democratic commissioners. They accused Pitt at a public hearing of reneging on a pledge to support Biggs in the face of pressure from the accounting profession.
Pitt declined to specifically address the accusations that he had promised to endorse Biggs at a luncheon on Sept. 11 and then withdrew that support as industry objections were raised.
He said he never spoke to anyone in the accounting profession about the selection, and that if there were any lobbying campaign under way, it was to install Biggs.
"I know what took place at that meeting and it isn't worth getting into specifics," he said. "At some point, efforts were made to create false impressions."
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