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Pitt's successor needs to set reform agenda

President George W. Bush should choose a successor to Harvey Pitt at the Securities and Exchange Commission with the stature to restore market confidence and the political savvy to avoid the conflicts that doomed Pitt, institutional investors and lawmakers said.

Possible candidates for Pitt's job include former federal judge Stanley Sporkin, past Bush lawyer James Doty and Frank Zarb, former chairman of the NASDAQ Stock Market, according to lawmakers and former SEC officials. All three declined to comment or did not return calls seeking comment.

The choice is crucial for Bush, who faces a deteriorating economy and a declining stock market that has eroded more than US$2 trillion of investor wealth this year. Pitt's close ties to the accounting profession and the controversy surrounding his choice of William Webster to head the new accounting oversight board have undermined investors' confidence in Bush's ability to crack down on corporate malfeasance, investors said.

"The markets were cynical that the administration would take a strong stance on corporate reform and that cynicism has been justified," said John Bogle, founder of Vanguard Group, which managers US$550 billion in assets. "Bush now has the opportunity to correct that impression."

White House spokesman Ari Fleischer said Bush will look for someone to take "strong action" against corporate misdeeds.

"He's going to look for somebody who is going to do what needs to be done, to focus on corporate corruption, to continue to take strong action," Fleischer said.

Representative Barney Frank, a Massachusetts Democrat who serves on the House Financial Services Committee, called on Bush to name a replacement for Pitt who "has a demonstrated commitment to the interests of investors; possesses broad experience with the capital markets and enforcement matters; [and] is unburdened by conflicts of interest."

Following the accounting scandals and collapse of Enron Corp and WorldCom Inc, candidates with proven enforcement experience could be first in line for the job, experts said. Former New York Mayor Rudolph Giuliani, a former prosecutor who has been mentioned as a possible candidate, has said he is not interested.
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