NEW YORK (CNN/Money) - A former head of the FBI and CIA was named Friday to run a congressionally mandated accounting board meant to police an industry under fire.

But the party-line choice of William Webster, 78, the Republicans' pick, was swiftly criticized because of his limited accounting experience.

In naming Webster in a 3-2 vote, the Securities and Exchange Commission bypassed John Biggs, a pension fund executive said to be tougher on the accounting business and the favorite of Democrats.

William Webster

"I think William Webster is a man of unquestionable integrity, but he doesn't really understand that business," said Greg Valliere, political economist and chief strategist at Charles Schwab Washington Research Group.

Corporate accounting has come under fire following scandals at Enron and WorldCom. Accounting firm Arthur Andersen, convicted in June of obstructing justice, signed off on both companies' books.

An angry Congress passed the Sarbanes-Oxley Act in July, the biggest shake-up of U.S. securities laws since the 1930s. A key component was an order to the SEC to set up the accounting board, meant to crack down on financial book-cooking involving accountants.

Webster, appearing on Lou Dobbs Moneyline, said he would work vigorously to protect investors and restore confidence.

"The challenge is high. The stakes are important. I think it's manageable," Webster said. "We have disciplinary authority and will use it when appropriate."

But Doug Carmichael, director of the Baruch Center for Financial Integrity, praised Webster's law enforcement credentials but also worried about his experience.

Judge William Webster talks about his plans as the first Chairman of the Public Company Accounting Oversight Board. Play video (QuickTime, Real or Windows Media)

"The danger is that they [the new board] will be captured by the accounting industry," Carmichael said.

One of the Sarbanes-Oxley Act's sponsors, Michael G. Oxley, a Pennsylvania Republican, said Webster's "unparalleled experience as a judge and prosecutor, and as director of the FBI and of the CIA makes him a superb choice."

Webster, the only person to have headed up both the FBI and CIA, was also a U.S. District Court judge.

He heads a panel with four other members. They are Daniel Goelzer, a former SEC general counsel; Kayla Gillan, a former official of the California state pension fund; Willis Gradison Jr., a former Ohio congressman; and Charles Niemeier, chief accountant in the SEC's enforcement division.

Chairman Harvey Pitt and the SEC's two other Republicans, Cynthia Glassman and Paul Atkins, voted for Webster. Democratic commissioners Harvey Goldschmid and Roel Campos opposed Webster's selection and supported Biggs.

Pitt said that "under Judge Webster's capable leadership, I'm confident that this strong board will address the important issues it faces with wisdom and expedition."

But Schwab's Valliere said naming Biggs would have been a better move politically for Pitt, a President Bush appointee who has been asked to step down by Democrats.

The latest request came from Sen. Paul Sarbanes, co-author of the law mandated Webster's panel. A Maryland Democrat, Sarbanes Friday called for Pitt to resign over how he handled selection of members for the oversight board.

Biggs was said to almost have the job until he was reportedly pushed aside for his tough stance toward cleaning up the accounting industry. He runs TIAA-CREF, a big pension fund, with $274 billion in assets under management.

"I think this doesn't help his standing on the Hill," said Valliere. "I think [Biggs] would have made life much easier for Pitt."

SEC officials insisted that there was no pressure to back off on Biggs, who has called on company profit reports to expense stock options, a move that would cut profits. He also favors separating the auditing and consulting functions at accounting firms, an idea the industry opposes.

In releasing Webster's biography, the SEC Friday said that he served in audit committees at Anheuser-Busch Companies Inc., Pinkerton Inc. and Maritz Inc.

The accounting issue continues to dominate the markets. This week, Bristol-Myers Squibb (BMY: Research, Estimates) announced a $2 billion restatement and AOL Time Warner (AOL: Research, Estimates), which owns CNN/Money, announced a restatement that will erase $190 million in revenue. Standard & Poor's released earnings figures on Thursday on many of the nation's biggest companies that strip out controversial items that made profits look better.

The accounting board, known as the Corporation Accounting Oversight Board, will inspect and discipline auditing firms by revoking their registrations and imposing fines. But many details about the board remain to be worked out, making the choice of a chairman vital to setting its course.

James Cox, a Duke University law professor, said the divided SEC vote to name Webster reveals a political rift in the agency.

"I think what this does is create more issues as the SEC goes up the Hill and asks for funding," Cox told CNNfn. "I think this really did politicize the commission and it will take a long time to get past that."

Webster was named to head the FBI by President Carter, a Democrat, in 1978. Under Webster, the FBI exposed numerous frauds behind the massive U.S. savings and loan crisis. He was named to head the CIA by President Reagan in 1987.

In a statement, Webster pledged to do his new job with "fairness and firmness, without prejudgment or bias, but calling the issues as we see them after honest and thorough review."

His term runs though 2007 and he vowed to get the new office running "long before" the required start date in April."  

-- Reuters contributed to this report