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. Last Updated: 07/27/2016

Mr. Bush the Post-Enron Reformer

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Back in July, President George W. Bush signed the post-Enron reform bill and sought to share the credit for what he called "the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt." In a ceremony at the White House, the president declared that "the era of low standards and false profits is over" and that "no boardroom in America is above or beyond the law." Harvey Pitt, Bush's chairman of the Securities and Exchange Commission, rightly summed up the challenge presented by the law's enactment. "Now we have to implement it," Pitt said. "We've got our hands full."

The events of the past two weeks raise serious questions about whether Pitt and the president really meant what they said. The single biggest test of the law's implementation -- the selection of a credible chairman for the new audit oversight board -- is being inexplicably mishandled. Having asked a good candidate whether he would accept the job, Pitt is backing away from him, apparently as a result of pressure from the audit lobby. Bush, who could stiffen Pitt's resolve by threatening to designate a different SEC commissioner as chairman, has apparently forgotten his reformist promises.

The good candidate is John Biggs, the head of a large retirement fund and a long-standing advocate of honest accounting. Biggs meets each of the three qualifications for the job laid down in the reform law. He has a demonstrated commitment to the interests of investors, having run investments on behalf of pensioners and campaigned energetically for reforms of corporate governance. He has a strong grasp of accounting, having served as a trustee of the Financial Accounting Standards Board, which writes accounting rules. And he understands auditing, having been a member of the Public Oversight Board that used to oversee the profession. One could not ask for a better candidate, which is presumably why Pitt initially approached him.

Nobody -- not Pitt, not the White House, not even the lobbyists -- has made a public case against Biggs.

If Biggs does not get the job, there will be two kinds of damage. The most qualified candidate will have been passed over, depriving the new watchdog of a strong leader. Even worse, the lobbyists will have demonstrated their sway over the watchdog, undermining its credibility before it is even set up. If Biggs is pushed aside, what other credible candidate will want a job that's controlled by the industry it is supposed to stand watch over?

This comment appeared as an editorial in The Washington Post.