How time flies. It was 10 years ago tomorrow that Enron filed for bankruptcy.
So what was the legacy? Seattle Times columnist John Talton makes the point that while Enron executives were sent to jail and the collapse helped usher in the Sarbanes Oxley Act, we have learned nothing from the experience. "Yet this didn't translate to Wall Street or the big banks, which avoided either jail or the fate of Arthur Andersen. Sen. Phil Gramm, a big recipient of Enron contributions, and President Bill Clinton led the repeal of Glass-Steagall in 1999. Wall Street, aided by Alan Greenspan's Federal Reserve and captured regulators, spent the next seven years cooking up the biggest batch of business rackets ("innovations") in history. We're living in the ashes, and nobody in charge was prosecuted or went to jail,'' Talton writes. "Between these two squalid bookmarks, more has been done to discredit capitalism, destroy the legitimacy of American institutions and damage the American economy than the most fervent communist plotter could ever have hoped."
As we are reminded here, we haven't learned much from Enron. Companies still pile on debt, they still use accounting tricks to hide their problems, the banks, like Enron, refuse to devalue their troubled assets and we still have fragile companies that took on too much debt like Bear Stearns, Lehman Brothers and MF Global.
Indeed, the collapse of MF Global tells us that companies are still using Enron style accounting practices where it disguised the piling up of debt as sales and shifted billions of dollars off its balance sheet.
So ten years on, companies are still acting like Enron. They pretend they are richer than they actually are, and that's made us poorer.
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