In choosing a new SEC chairman, Bush may have wider latitude because the confirmation will be up to a Senate controlled by his party. But any choice comes with risks. Choosing a tough prosecutor would no doubt win public acclaim, but if that person knows little about securities laws it could be a major handicap.
"You want someone who is technically proficient," said Joel Seligman, the dean of the Washington University law school in St. Louis and a historian of the SEC. "This is a very hard job to learn."
Indeed, the SEC faces major issues in many areas, ranging from the structure of securities markets to reforming the way research is done.
Seligman pointed to the 1973 appointment of Roy Garrett Jr., a highly respected securities lawyer, after his predecessor, G. Bradford Cook, was forced out as a result of a scandal that made his honesty suspect.
"That is the kind of person you want, probably someone with an accomplished career in securities law, someone who will be a healer and a consensus builder," he said.
But any lawyer who had represented a wide variety of clients would also face questions of conflicts of interest, like those that followed Pitt during his first year in office. To some others, it is important to avoid such questions.
Politicized
With the SEC having been politicized to an extent that is unusual, with Democrats having called for Pitt's ouster and voiced suspicions that he was doing the White House's bidding in opposing one candidate for the accounting board, there is clearly a case to be made for a chairman who does not appear to have strong political ties or leanings. Some wonder whether a veteran commission staff member, like Steven Cutler, the director of enforcement, might have a chance.
Bush may need to decide quickly whether to change any members of his economic team.
He will also have to decide whether to propose large block grants for the states, whose fiscal problems will probably get more attention now that the election is over and the winners must confront large deficits that -- unlike the federal one -- must be closed somehow. To do so would increase the federal deficit, but to not come to the aid of the states would run the risk of their budgets acting as a severe drag on the economy in coming months.
The results of those decisions will become clear only over the next couple of years. But by then, they could have a major impact on whether Bush can win a second term as president.
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