What would make you reconsider the job?
I don’t know. I urged them not to make it a full-time position. I thought it would be difficult to get people of the stature they wanted full-time, and that’s proven to be the case.
Isn’t the SEC in a crisis of its own?
“Crisis” is a strong word, but I think it is in sort of a crisis. Not just because of this. The SEC has been underfunded and understaffed for some time, and it hasn’t had the ability to keep up with all that’s going on in the market. And it’s lost, I think, the confidence just because of a lack of manpower. All the government has lost prestige, but the SEC had a lot of prestige and moral authority and integrity. I still think it’s got integrity, but it’s lost some of its resources. One of the things that Sarbanes-Oxley did was to authorize a big, big increase in expenditures — small in terms of the total budget, but big for the SEC. That was important, and the Administration has refused to provide the funds that were authorized. [The agency] needs more money; it needs higher salaries.
Why did you decide to take on the job of IASC Oversight Board chairman?
I’m a sucker for punishment! It just came out of the blue. I’ve had some interest in international accounting standards just in a very general way, and I had no idea that this kind of international group was working on it, including Arthur Levitt, who was then the head of the SEC. He called me up one day and invited me to chair the oversight board. It sounded interesting, so I did it.
What progress have you made so far?
Well, the board has been reorganized. We’re now getting to the point where we are issuing standards. The issues will be very controversial. I wish the first points [on financial instruments] didn’t have to be so controversial, but that is perhaps inherent in the business.
Where the real progress has been made is in the general environment. All the scandal has been a big help in one sense: it has challenged the traditional American view that if you want international standards, use our standards, because we’ve got the best and the brightest.
The Americans are now more cooperative — there’s more public understanding of the need [for international standards], which has been helpful. There’s good cooperation between the Financial Accounting Standards Board and the IASB. The new head of FASB [Robert H. Herz] came from the IASB, so that’s a reflection, I think, of some mutual sympathy.
We have a big work program, because European countries and some others want to adopt international standards, by law, in 2005… [and that means] the companies want to know where they stand by 2004. There’s a lot of work to be done in the next year or so.