WASHINGTON, Nov. 12 (UPI) -- Recently appointed chair to the newly formed Public Company Accounting Oversight Board William H. Webster on Tuesday handed in his resignation to Securities and Exchange Commission head Harvey L. Pitt, who himself resigned last week and awaits a replacement.
Webster, a longtime public official who has served as head of both the FBI and the CIA, had been appointed to the post two weeks ago.
He was selected over the objections of the SEC's two Democratic commissioners who said he lacked the financial expertise to head the board. Those SEC commissioners, along with a number of prominent Capital Hill figures, favored pension fund head John H. Biggs, who is retiring from pension fund giant TIAA-CREF.
Biggs was favored by many on the assumption that the pension fund head would make for a tougher accounting industry regulator.
Further controversy ensued when it was disclosed that Pitt had failed to inform his former commissioners that Webster had headed up the audit committee for failed tech company U.S. Technologies, which is facing shareholder lawsuits for alleged fraud over accounting problems.
In a Tuesday afternoon statement, Pitt said, "I regret that Judge William Webster has chosen to resign as chairman of the Public Company Accounting Oversight Board. Judge Webster's proven integrity and long record of accomplishment would have served the American people well, as it has time and time again."
Pitt submitted his own resignation to the White House on election night last week after questions surrounding his backing of the Webster appointment over Biggs. President Bush is expected to name a new head of the SEC soon, but has not released a target date.
Thanking Webster for briefly stepping back into public service, Pitt said "I continue to believe that investors would have benefited from Judge Webster's dedication to the best interest of the American people."
Pitt has been a lighting rod for political dissatisfaction of the administration's handling of a string of high-profile corporate financial scandals, which led to a precipitous drop of confidence in the U.S. financial markets.
In the past year, the markets and public confidence have been rocked by scandals at Enron Corp. and WorldCom Inc., among others.
According to a poll released last week by RoperASW, public faith in the SEC is at an all-time low, with only 40 percent viewing the agency favorably. That puts the SEC last among 21 government agencies ranked in an in-person survey of 2,000 American adults and a telephone survey of 1,000 American adults.
Criticism of Pitt had reached a zenith in recent weeks.
"Unfortunately, the turmoil surrounding my chairmanship and the agency makes it very difficult for the commissioners and the dedicated SEC staffers to perform their critical assignments," said Pitt in his election night letter to Bush.
"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."
In October, The New York Times reported that the accounting industry, working with Rep. Michael Oxley, R-Ohio, covertly pressured Pitt to drop Biggs, who is retiring as the head of pension fund giant TIAA-CREF, as his first choice.
Pitt, who first worked at the SEC in the late 1960s, eventually reaching the post of general counsel, returned to SEC service last year after a lucrative career in the private sector advising corporate clients and chief executive officers in their dealings with the agency.