Bush Crowd Needs Pitt to Stay Put

No matter who controls the Senate, the House and the statehouses, America still has Harvey Pitt to kick around. How long the country can enjoy that sport is uncertain, since the Securities and Exchange Commission is investigating his actions. For the S.E.C. chairman to order a probe of himself brings to mind Bob Dylan’s “Talkin’ John Birch Paranoid Blues,” in which the protagonist finally decides to investigate his own sorry self and concludes: “Hope I don’t find out anything.”

Yet Mr. Pitt may find out something very bad about himself and still avoid dismissal. Forcing his resignation is the only alternative worse than keeping him in office, from the perspective of the White House. The reasons have nothing to do with the poor performance of his duties-and everything to do with Harken Oil, Halliburton Inc., and the awkward questions that may be raised about those matters if the Senate must confirm a successor to Mr. Pitt.

So appalling are the most recent revelations about Mr. Pitt’s conduct that Senator Paul Sarbanes, the patient Democrat who chairs the Senate Banking Committee, at last has demanded his resignation. On Oct. 30, Stephen Labaton broke a damaging story in The New York Times : Mr. Pitt failed to tell the other S.E.C. commissioners a crucial fact about William Webster before they chose him to head a new panel overseeing the accounting industry. The former F.B.I. and C.I.A. director had sat on the audit committee of U.S. Technologies, a company being sued for fraud. (Still worse news emerged later-namely, that Mr. Webster helped to dismiss an outside firm that had warned of the alleged fraud.)

This disturbing news followed Mr. Pitt’s rejection of John Biggs, a clean, highly qualified nominee for that post. Instead, he chose the less-qualified Mr. Webster. On top of all the earlier doubts about the S.E.C. chairman’s judgment, bias and ethics, the Webster episode ought to have brought down the ax.

Perhaps the White House has prudently scheduled a post-election execution of Mr. Pitt, but perhaps not. There are conflicting rumors. Presidential adviser Karen Hughes publicly praised Mr. Pitt as recently as Nov. 3. Mary Matalin, counselor to Vice President Cheney, insists: “Harvey Pitt has had a great record over there in the S.E.C.”

Meanwhile, despite mounting reasons to get rid of Mr. Pitt, a compelling motive to keep him has materialized. Confirmation hearings for a new S.E.C. chairman would inevitably raise questions about the agency’s handling of sensitive cases that involve the President and the Vice President. The fraud allegations concerning Halliburton are an active matter. The Harken case is closed-but new evidence has emerged that suggests it was never adequately investigated.

When the furor over Harken erupted last summer, Mr. Pitt said he was “outraged” over the media’s interest in that sore subject. “I think this is ancient history,” he told Tim Russert, “and the President should do whatever he thinks is appropriate, but unless there is a reason to reopen ancient history, we should move on with the future …. “

The future is here, with fresh evidence that George W. Bush and his lawyers manipulated the original S.E.C. investigation of his controversial Harken trade. Last week, the Boston Globe revealed the existence of a letter that Mr. Bush received from the firm’s outside counsel a week before he sold his shares in June 1990.

The letter warned all Harken directors not to sell if they had “significant negative information about the company’s prospects.” But with suspiciously perfect timing, Bush attorney lawyer Robert W. Jordan didn’t turn that critical document over to the S.E.C. until the day after the agency’s staff determined that the then-President’s eldest son should not be prosecuted for insider trading. (Mr. Jordan now serves as the U.S. Ambassador to Saudi Arabia.) The Harken law firm’s opinion, according to a securities-law expert quoted in The Washington Post , was “the most important piece of evidence.”

Other new evidence uncovered by the nonpartisan Center for Public Integrity raises the possibility that the Harken stock price was manipulated, and that Mr. Bush was secretly rescued by another, still-unnamed investor. But harsh stories in the print media are of little concern until they become television news. Until now, the election, the Beltway sniper and the Wellstone plane crash have drowned out the new information about Harken. Given the pro-Bush bias of much broadcast media, the urge to examine this issue isn’t exactly overwhelming.

That would probably change if Mr. Pitt is fired and a successor is named. It isn’t difficult to imagine a Democrat on the Senate Banking Committee-such as Mr. Sarbanes or New York’s Charles Schumer-asking hard questions about reopening Harken and demanding that the S.E.C. release its Harken files. For the White House, it is far better to avoid that scenario by keeping Mr. Pitt.

The Bush crowd doesn’t much care about the integrity of corporate finance-and they always hope we don’t find out anything.