Enron’s collapse will echo through the nation’s economy for a long time to come. And it will be felt across the country, not just in Texas or Washington, D.C.
No amount of rules and regulations can force people to behave ethically if they’re determined not to. Nobody can force wheeler-dealers, obsessed with their own supposedly creative ideas, into acting as responsible stewards of other people’s money or retirement funds.
Our regulatory and legislative institutions must, however, pursue the lessons that can be learned from Enron’s collapse. And responsible business leaders can find ways to steer themselves and their institutions away from financial traps.
Already, there must be companies in the Northwest which are reassessing the kinds of joint dealings Enron had with one major accounting firm for both auditing and consulting business. Companies who rely on public confidence in their operations will want to review such ties with Arthur Andersen or other major accounting firms.
Although there have been repeated discussions about the need for higher standards among accounting firms, the public generally has been able to rely on the integrity and ethics of individual accountants and the major firms. As Congressman Rick Larsen, D-Lake Stevens, observes, "You depend upon these accounting firms to be a watchdog regardless of who is paying the bills." Society likewise depends on other professions — from medicine to law — to act ethically and serve all of us well.
Most of the time, honesty and ethics can head off trouble. But, as members of Congress and the administration realize, the Enron mess suggests that better accounting rules and practices must be sought. Treasury Department undersecretary Peter R. Fisher, remarked this week that changes in corporate finance may have moved ahead faster than accounting practices. He said that if loopholes in existing rules were exploited by Enron, "new rules should be written."
If any crimes or breaches of trust occurred in the Enron affair, the victims will have a number of avenues for possible compensation. At the same time, the nation must look for larger lessons that can help protect society against the kind of dishonest behavior that sometimes masquerades as financial creativity. If the administration and Congress are diligent, stronger rules can renew trust in corporate financial practices and provide greater protection for victims of future financial misdealings.
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