Ray,
I seldom choose to jump into such issues around here, but I find myself reminded of one of my pet peeves. While I share you disenchantment with the lies and deceptions that have been put over on the "investing public" by corporations, and their cohorts in the financial industry, I still see a huge danger in what I call the "typical institutional response" to such problems being exemplified by "Enronitis"
On the one hand, it is my impression that there is far too much focus on the "victims" of Enron, and too little on the broader community who have been misled over the last several years and have lost their retirement assets just like the Enron workers. So in a sense, I welcome the spillover from the Enron focus into other areas, such as the article that has been posted on SI several times disclosing the $100B GAAP reported losses of the Nasdaq 100 companies compared to the $teenB pro forma gains.
What bothers me is that the regulators (our public institutions) knew, or should have known of the dangers associated with practices that everyone is now up in arms about, but instead of addressing problems where and when those problems arise, and targeting the individual problem spots, they wait until there is a catastrophe and then deal with it in a manner that is punitive even to those who were "innocent" by creating more rules, or proofs of compliance, past and present, etc., etc. Litigation now against corporations who were doing what was generally accepted will not be confined to those who were perpetrating the deception, and none will be immune from the burden of newly imposed safeguards. Every company will now be staring at a whole new set of regulations and will be targeted by anyone who lost money on their stock. It is very likely that the innocents will be damaged every bit as much as those who deserve to be penalized for their actions, and perhaps more so. I fully expect that the "institutional response" to this "crisis" will be woefully ineffective.
Dan |
