William K. Black
December 13, 2018 Bloomington, MN
The Wall Street Journal published an article on December 12, 2018 that should warn us of coming disaster: “Banks Get Kinder, Gentler Treatment Under Trump.” The last time a regulatory head lamented that regulators were not “kinder and gentler” promptly ushered in the Enron-era fraud epidemic. President Bush made Harvey Pitt his Securities and Exchange Commission (SEC) Chair in August 2001 and, in one of his early major addresses, he spoke on October 22, 2001 to a group of accounting leaders.
Pitt, as a private counsel, represented all the top tier audit firms, and they had successfully pushed Bush to appoint him to run the SEC. The second sentence of Pitt’s speech bemoaned the fact that the SEC had not been “a kinder and gentler place for accountants.” He concluded his first paragraph with the statement that the SEC and the auditors needed to work “in partnership.” He soon reiterated that point: “we view the accounting profession as our partner” and amped it up by calling accountants the SEC’s “critical partner.”