SEC Chairman Harvey Pitt Resigns Under Fire

Embattled Securities and Exchange Commission Chairman Harvey Pitt resigned late Tuesday over a series of political missteps that had embarrassed the White House.

Pitt served as top U.S. markets regulator for 15 tumultuous months, witnessing the Sept. 11 attacks that shuttered Wall Street, a rash of corporate scandals, a stubborn bear market and a massive securities law overhaul in Congress.

Last week, Pitt came under pressure to step aside for failing to tell SEC commissioners and the White House that his choice to head a new accounting oversight board, ex-FBI chief William Webster, had chaired the audit committee of a company facing fraud accusations.

"Rather than be a burden to you or the agency, I feel it is in everyone's best interest if I step aside now, to allow the agency to continue the important efforts we have started," Pitt said in his resignation letter, a copy of which was obtained by Fox News.

The White House quickly accepted his resignation.

Three anonymous administration officials, cited by the Associated Press, said the White House welcomed the resignation of a regulator who had created a host of political problems for President Bush in the runup to Tuesday night's elections.

The accounting board episode was just the latest in a series of stumbles by Pitt. He angered the White House last summer by suggesting to Congress, without first consulting the Bush administration, that the SEC be promoted in the government and he be made the equal of Fed Chairman Alan Greenspan.

A senior White House official said Bush aides heard over the weekend that Pitt was inclined to resign. Neither the president nor his aides requested the resignation, but Pitt called the White House personnel office Tuesday afternoon and said he intended to resign.

There were no objections, thus Pitt submitted his resignation late Tuesday afternoon. In it, Pitt said he thought the controversy was hurting his ability to lead the SEC.

The official said Bush won't have a replacement immediately. They had not begun to search for candidates as of Tuesday night and expected Senate confirmation to be difficult in the intense political climate, the official said.

Possible successors to Pitt could include former top SEC lawyer James Doty, corporate lawyer Gary Lynch or former federal judge Stanley Sporkin, sources said earlier this week.

However, sources also said a replacement would not be needed right away, and an interim chairman might be appointed from among two remaining Republican commissioners -- Paul Atkins and Cynthia Glassman. Both have refused to comment on that possibility and could not be reached Tuesday.

Pitt, who first worked at the SEC in the late 1960s and built his career as an attorney in appearance-conscious Washington, has been criticized for meeting with the heads of companies under SEC investigation and for his close ties to the accounting industry -- at a time when the SEC is investigating major accounting fraud at big corporations. Pitt represented the Big Five accounting firms while in private practice.

On Oct. 25, with the support of Pitt and two other Republican SEC commissioners, the 78-year-old Webster won a bitterly divided, 3-2 party-line SEC vote to become the first chairman of the Public Company Accounting Oversight Board.

Six days after the vote, it emerged that Webster had been the audit committee chairman of U.S. Technologies Inc, a small, Washington-based company facing accusations of fraud.

Sen. Richard Shelby, who is expected to be the new Senate Banking Committee chairman if the Republicans succeed in taking control of the Senate, said he had expected Pitt to go, but the timing had taken everyone -- apparently even the White House -- by surprise. "I thought it was coming, even last Friday," Shelby, an Alabama Republican, told Reuters.

"I thought then that the fact that he did not divulge relevant information to his fellow commissioners, was more than troubling, it brings about, I think, a tainted situation."

Pitt canceled a speech in New York earlier Tuesday, and was slated to speak at the Securities Industry Association annual meeting Friday. Pitt also was slated to preside over an open meeting at the SEC Wednesday to consider new rules for corporate attorneys.

Reuters and the Associated Press contributed to this report.