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To: RetiredNow who wrote (61286)	9/14/2002 9:05:04 AM
From: puborectalis	Respond to of 77399

"Only capitalists can destroy capitalism," said Felix G. Rohatyn, the financier and a former ambassador to France. "Populist capitalism of a type is very beneficial to the vast majority in our system, but an ethical tradition is needed to make it all work. When you have senior people walking away with hundreds of millions, leaving everyone else in the dirt, that is hugely depressing and very dangerous." Mr. Rohatyn, like many believers in capitalism, is especially dismayed by the role that venerable financial institutions played in the scandals that are still unfolding. And, he argued, because these financial pillars are at the heart of the Enron and WorldCom debacles, the problems they may have helped create have a greater and longer-lasting impact on the economy. That is one element that makes the current scandals different from their predecessors. In the 1970's, when many Wall Street firms collapsed, the cause was technological incompetence and lack of capital, Mr. Rohatyn said. The closing of the firms had little impact. Even the failure of Drexel Burnham Lambert, which ruled Wall Street in the 1980's only to evaporate in 1990, seems small when judged against today's messes. In both earlier periods, the effects of the scandals were relatively muted. "They didn't cost 50,000 jobs, people's savings and a decline in market value of trillions of dollars," Mr. Rohatyn said. Now, however, the corruption in the financial system looks more endemic, he added. "This is not about a bunch of rogue C.E.O.'s. Once this sort of thing gets to the establishment of the financial community, then you'd better stop and say, `Wait a minute, what's happening here?' " But while the nation's law enforcement officials work to protect the citizenry from future terror attacks, investors are pretty much on their own. They may have to figure out their own set of defenses against fraud. So far in this election year, Congress has seemed willing only to parade the miscreants before the people, rather than institute reforms that might work to correct what is wrong. Doing away with the Glass-Steagall Act — which forced financial institutions to choose between banking and investment banking — helped get us to where we are today, but building up new barriers to eliminate the conflicts of interest now rampant in the largest financial institutions will be difficult indeed. Some investors believe that the worst is over, that no other scandals will erupt. But even so, the damage to investor confidence has been done. "Does the system work to spread the wealth in some way that's reasonably fair?" Mr. Rohatyn asked. "Clearly at this point, the answer has to be no, and that's not tolerable." The loss of lives on Sept. 11 remains an unspeakable horror. There will be no getting over it for the families and friends left behind. But the nation has proved it can bounce back from devastating terrorism. Recovering trust in Wall Street and corporate America is a taller order.