LAS VEGAS -William Webster's decision to resign as chairman of a new national board to oversee corporate accountants was "the honorable thing" to do and will help the new agency's credibility, according to the former acting chairman of the Securities and Exchange Commission. "I think that was actually a very honorable thing for him to do," said Laura Unger of Webster's resignation. "If this board is to achieve integrity, independence and accountability and leadership of the auditing industry for the first time, certainly there can't be any taint or appearance of impropriety." Unger's comments came Nov. 12 at the opening of the 2002 annual meeting and convention of the California and Nevada Credit Union Leagues. Her speech at the Paris Las Vegas Hotel came the same day that Webster, a former federal judge and former head of the FBI and the CIA, said he was stepping down. He said his "continued presence on the board will only generate more distractions." The resignation was announced just one day before the Public Company Accounting Oversight Board was scheduled to meet in Washington, D.C., for the first time. Creation of that board was a key component in the Sarbanes-Oxley Act which was passed by Congress in July. Unger said the legislation was designed to "restore integrity, independence and accountability" to corporate auditing in the wake of corporate scandals at companies such as Enron and WorldCom. Corporate accountants had previously been mostly self-regulated. Webster's resignation was the latest in a series of departures that included SEC Chairman Harvey Pitt and SEC Chief Accountant Robert Herdman, both of whom quit last week. Both had backed Webster for the board job but failed to reveal that he had chaired the audit committee of U.S. Technologies, a company accused of fraud. Unger said it was no surprise that Pitt was forced to resign given today's corporate climate. "Clearly there is zero tolerance," she said. "He (Pitt) was held to the highest standard." "I think we're entering a period of hyper vigilance," she added. In her speech at the opening general session, Unger reviewed three factors that she said have led over the past two years to a major market meltdown: the dot-com bubble, greed and the events of Sept. 11. "While Sept. 11 really rocked our world quite literally, it did not rock the market anywhere near the extent that the corporate scandals of the last year have," she said. "Over the last year, the financial pages read much more like the tabloid pages than the financial pages." "Acts of greed have a greater impact on the market than acts of terror," she added. One of the things that she said has been learned from the corporate scandals-which she blamed on "fast and loose accounting, greedy CEOs and corrupt investment bankers and analysts"-was "how closely linked the financial markets are to the economy." "The economic downturn prompted CEOs with declining earnings to really look for creative accounting so they could manipulate earnings to meet the `streets' expectations about what the earnings would be," she said. Another lesson learned is that "integrity is key to investor confidence and investor confidence is really the key to a healthy and vigorous market," she said. Amid all the corporate scandals, Unger said credit unions now had an excellent opportunity to promote themselves. "I think now is your chance to shine," she said. "All of the other financial institutions have shown themselves to be greedy, without morals and integrity. Credit unions can counterbalance that and show what you're made of. I think it's time to pick up some more market share." [email protected]

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