[Congressional Record Volume 148, Number 95 (Monday, July 15, 2002)]
[House]
[Page H4657]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page H4657]]
                        TIME FOR SEC HEAD TO GO

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Oregon (Mr. DeFazio) is recognized for 5 minutes.
  Mr. DeFAZIO. Mr. Speaker, those who were watching television just 
before the vote would have been treated to a softball interview with 
Mr. Harvey Pitt. Mr. Harvey Pitt is a former lobbyist for securities 
firms and accounting firms and, knowing so well the backrooms, he was 
named by the President of the United States to be our chief watchdog 
when it comes to securities enforcement. There is a little problem with 
Mr. Pitt as a watchdog, unfortunately. He is so ethically and morally 
compromised, he often cannot vote.
  Recently, the Securities and Exchange Commission staff provided a 
compelling case against Ernst & Young, an accounting firm. There were 
three commissioners present, and apparently they found the evidence 
compelling, but unfortunately two of them were so ethically and morally 
challenged, both appointees of President Bush, Mr. Pitt, the chairman, 
and another member, they could not vote. The only person that could 
vote was a Clinton holdover. He did not have the ethical problems of 
voting for or against his former clients and buddies and he voted to 
fine them. An administrative law judge threw it out.
  So here we have it. The chief enforcement arm of the United States 
Government to rein in corporate misconduct, securities fraud, the 
accounting firms, and the chairman cannot vote. In his first 10 months 
in office, he had to recuse himself from voting 29 times because these 
were all people whom he had represented and he will represent again 
soon when he leaves his position as chair of the Securities and 
Exchange Commission.
  This is the tough new Securities and Exchange Commission which is 
supposed to instill confidence? Mr. Pitt carried on at great length 
about what he really cares about is the little guy, you know, Main 
Street. I do not think Mr. Pitt has seen Main Street from his penthouse 
apartment, his thousand-dollar-an-hour consulting with these securities 
and accounting firms for a heck of a long time, except maybe from the 
tinted windows of his limousine.
  He has represented other outstanding folks: MCI, WorldCom, a $4 
billion problem there. Merrill Lynch. Arthur Andersen. Whoops. Yeah, a 
little bit of a problem there. In April he met with a former client, 
KPMG Consulting, while their audits were being investigated. He said, 
``Hey, you can't tell me that I can't meet with people who I worked for 
who are currently under investigation because I wouldn't be able to 
meet with anybody.'' This is our chief watchdog, Harvey Pitt.
  Harvey Pitt. Yes, perhaps he would be a great enforcer because he 
knows all the backroom tricks. One of the big problems we have was 
conflicts of interest with the accounting companies. Mr. Pitt as a 
$1,000-an-hour lobbyist/lawyer, he always talks about himself as a 
lawyer, not a lobbyist--he was a lobbyist with a law degree and a 
license to practice law--had in fact worked very hard to prevent those 
conflict of interest rules from going into effect which, of course, 
allowed many of the current accounting shenanigans to go forward 
because these same firms, Arthur Andersen and others, were selling 
services to the companies that they were supposedly providing arm's 
length auditing services to and the companies were not going to be real 
eager to buy those services if their CEO was not earning tens or 
hundreds of millions of dollars of bonuses by inflating their earnings 
reports and having the accounting firms sign off on it. This is our 
chief watchdog.
  It is not just his actions that belie Mr. Pitt. It is his words. When 
he was sworn in, he said the SEC will be a kinder and gentler place for 
accountants. He would have us believe that now he has become a 
veritable pit bull of enforcement, that he is the best person for the 
job. It is extraordinary that the Bush administration has not joined 
notables such as Senator John McCain in asking for Mr. Pitt to resign. 
He is an embarrassment to this administration. To have a chief law 
enforcement officer who cannot enforce the law because he is so morally 
and ethically compromised, he cannot even vote on enforcement actions 
recommended by his own staff and investigators.
  It is time for Mr. Pitt to go if you want to restore some modicum of 
faith in how straight these markets, these reports and these 
investigations are.

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