Former Federal Reserve Chairman Paul Volcker told the Securities and Exchange Commission he won't accept a job heading a new board to police accounting firms, citing the time demands of his other activities, said people familiar with the process.
The rejection "is a blow to the board's credibility," said Charles Mulford, accounting professor at the Georgia Institute of Technology. "I can't think of anybody they could get that would have the kind of credibility that he has."
Volcker had been the choice of SEC Chairman Harvey Pitt and the other four SEC commissioners to serve as chairman of the five-member accounting oversight board, the people said. The SEC's choice of other members hinged on whether Volcker accepted the chairmanship, the people said.
Congress created the accounting oversight board in July to help restore investor confidence shaken by the failure of accounting companies to detect financial misstatements at Enron Corp, WorldCom Inc and other companies.
Calls to Volcker, who was Federal Reserve chairman from 1979 to 1987, weren't returned. SEC spokeswoman Christi Harlan said she had no comment.
Volcker's withdrawal would leave Mary Schapiro, vice chairwoman of the National Association of Securities Dealers, and John Biggs, the chairman of TIAA-CREF, among the leading candidates for the job, the people said.
Volcker was concerned that the full-time job would conflict with his other activities, such as chairing the foundation that oversees the International Accounting Standards Board, which develops worldwide audit rules, the people familiar with the selection process said.
The SEC has until the end of October to pick the accounting oversight board. The law allows SEC commissioners to make the choices after conferring with the chairman of the Federal Reserve and Treasury Department secretary.
Earlier this year, Volcker led an unsuccessful effort to separate Arthur Andersen LLP's audit work from its consulting services and stave off a criminal indictment of the fifth-largest accounting firm. Andersen was later convicted of obstructing an SEC investigation of its audit client Enron.
The prospect Volcker, who turned 75 last week, may take the job had also generated interest among lawmakers.
"Senator Daschle felt that Volcker had done a magnificent job at the Fed and would have supported him for this job," said Jeff Nussbaum a spokesman for Senate Majority Leader Thomas Daschle, a South Dakota Democrat. Daschle "knew that Paul Volcker was one candidate and felt extremely affirmatively about his candidacy."
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