Harvey Pitt resigned from his position as chairman of the Securities and Exchange Commission on the very day that Republicans regained control of the Senate and solidified their hold on the House of Representatives -- and on the eve of a decision by the Federal Reserve to reduce interest rates by a whopping half point. But his many critics have little reason to rejoice.
Pitt's removal from office, so long sought by opponents of Bush's economic policies, will change absolutely nothing. Secure in its mandate to continue business as usual, the Bush administration clearly now has no incentive to focus on a sheaf of pressing measures that are necessary to ensure economic growth. Accounting regulations won't be further tightened, the SEC won't be given the funds necessary to do its job, and corporations will be free from worrying about any kind of meaningful oversight that might hold their feet closer to the fire, on behalf of their shareholders and the general public.
It hurts to write these words, but in an ironic way, it's a shame that Harvey Pitt is gone: He kept the contradictions and hypocrisies of Bush economic policy clearly in view. No single person in the Bush administration better summarized exactly where the current crop of Republicans stand on the economy than this pit-bull lawyer, whose last job was as the accounting industry's No. 1 hired gun.
To head the Securities and Exchange Commission -- the preeminent government institution entrusted with being Wall Street's watchdog -- Bush appointed a man who was working full-time to reduce oversight of the accounting industry, a man who believed the SEC was too heavy-handed and insufficiently appreciative of how well the big accounting firms could police their own affairs.
Pitt, who is by all accounts a brilliant lawyer, and who had long experience both working for the SEC from the inside and lobbying it from the outside, specialized, in the latter years of the Clinton administration, in doing the dirty work necessary to build a conceptual framework for further deregulation. At the time, with the economy booming, it was easy to get away with. In a white paper he submitted to the SEC on behalf of the accounting industry in 1997, he mouthed the same platitudes about the "information economy" and "technological progress" as every other dot-com-besotted investor, all in the service of arguing that a hands-off approach to regulating accounting firms was the best way to ensure the future economic health of the country.
He was, of course, mind-bendingly, stupefyingly wrong. But so were many other bright lights of Wall Street at the time, so it's not entirely fair, although thoroughly enjoyable, to read through his 150-page treatise while chortling aloud and slapping one's knees. What made Pitt special was his being placed in a position where he could do the most damage, and his continued strong support from the Bush administration, long after it was painfully, abundantly clear that he was the wrong man for the job -- indeed, the worst possible man for the job.
We're going to miss you, Harvey. Because while it is true that your appointment as chairman of the SEC was akin to unlocking the gate to the sheep pasture and merrily waving the wolf in, as long as someone so painfully unfit for the position as you was in place, you really couldn't do all that much damage, after all. Watching your series of laughable missteps -- I mean, really, appointing as head of an accounting watchdog commission someone currently involved in an accounting scandal; how dumb is that?! -- was somehow reassuring. If that spectacle didn't wake up the American public to how dangerous the current administration is, well, nothing would. And now you're gone. But the policies that put you in place are still there, and stronger than ever.
Harvey Pitt wasn't the only predator that Bush and his cronies have nominated to rend farm-animal flesh from bone. When the Bush administration nominated to the Commodities Future Trading Commission two individuals who had been responsible for drafting the regulations that let Enron do whatever it wanted with energy derivatives, those who were paying attention could only shake their heads in amazement. What could be more brazen? Here you had one of the biggest corporate scandals of all time, a casebook in how to buy political influence and rig the system in your favor, and the riggers got rewarded with more influence and power, even as Enron's bust helped precipitate a crisis of investor faith that continues to plague the economy.
But Harvey Pitt was by far the most visible, and he gave critics of Bush's economic policies a handy whipping boy. With him off the scene, and control of both the Senate and the House in Republican hands, there is now nothing to stop the Bush administration from continuing to pursue policies of deregulation that are bound to set up the American economy for even bigger disasters in the future.
This is not to argue that deregulation is, per se, wrong, or that government intervention is the best way to run an economy. Markets can be pretty smart, and government officials can be pretty dumb. But one of the things well-organized markets, and governments, are supposed to do is correct themselves when they go overboard in the wrong direction. There should be a dynamic tension between government regulators and the market. When too much bureaucracy and too much micro-managing is stifling a market, you loosen up. But when things get out of control, you tighten up the rules. When Black Tuesday arrives and sets off a Great Depression, you pass a bunch of laws establishing new boundaries on what kind of behavior is permissible.
The system is currently broken. Corporations run amok, and instead of tightening up the rules, the powers that be are continuing, criminally, with business as usual. Instead of cleaning house, the current administration is appointing and promoting the very people who trashed the house in the first place.
And to this, the voters say, Right On! There will be no more gridlock in Washington. The brakes are off, and the runaway train is picking up speed.
We may not see the next crash for a while, especially with the big fat kiss that Greenspan and company just gave Bush. Low interest rates will goose the economy forward for a while. But for how long? As any parent of toddlers knows, once kids start roughhousing, they keep horsin' around and horsin' around until someone gets hurt. Then the grown-ups step in, restore order, and maybe make some new rules -- like, no tackle football in the living room.
This time around, the grown-ups surveyed the wreckage, smiled, and said "Carry on!"