FOR THE ACCOUNTING industry -- which hates government oversight -- what could be better than a badly underfunded Securities and Exchange Commission led by an industry insider? How about a badly underfunded commission without a leader?

That, of course, is the federal agency these days and likely for at least the next several months, following the not surprising resignations of SEC Chairman Harvey L. Pitt and his choice to head a new accounting oversight board, former FBI and CIA head William H. Webster.

Given the post-Enron outcry over corporate corruption and the resulting political impetus for reforms, it's an almost incredible turn of events.

It's now reasonable to fear that -- with Democrats having bungled this issue so badly in the fall elections, thereby losing control of the Senate -- the Bush administration will take the opportunity to retreat further from last summer's rhetoric about tough corporate accountability.

For most, the details at the core of all this are rather arcane, striking to the standards by which auditors assess and report on corporations' health, their independence and their liability in signing off on malfeasance.

But the simple truth is that the American economy isn't going to improve without the return of corporate earnings, and Wall Street won't fully shake off its doldrums until reports of improved earnings are widely accepted as credible. Investors can't fully buy into an earnings uptick without greater reason to rely on the numbers' accuracy. And right now, doubt lingers.

Last summer's Sarbanes-Oxley Act was supposed to restore credibility -- by setting up the accounting oversight board as a watchdog to deter the creative accounting excesses that were so much a part of the late 1990s' financial bubble.

And the SEC, so poorly funded that its examiners could only review less than 10 percent of all corporate filings by 2000, was supposed to get a 77 percent funding increase, giving it an annual budget of $776 million, so that it could hire more staff and pay more competitive wages.

Apart from ham-stringing the oversight board at its outset -- it met for the first time yesterday without a chairman -- the Bush administration also has already whittled the funding figure passed by Congress. The SEC, which provides some $2 billion a year from fees and fines to the federal Treasury, now may get less than half the increase Congress intended, only a $567 million annual budget.

The combined effect has been such a loss of momentum for reforming corporate accounting and Wall Street that New York State Attorney General Eliot Spitzer has thoroughly stolen the SEC's and Mr. Bush's thunder. His lawsuits, more than SEC action, have forced The Street's big investment houses to consider ending some of their most blatant conflicts of interest, such as having their research analysts serve as touts for their investment banking clients.

Anyone with a toe in the American economy has a stake in having a stronger, not weaker, SEC. The administration must act quickly to appoint a new agency leader, someone above reproach and politics. And that new chairman in turn must do the same for the accounting oversight board. Then they must carry out last summer's promise of tough structural reforms.