New York Times
Lead Editorial

January 4, 2002

The Enron Post-Mortem

The most spectacular corporate demise ever cannot remain a befuddling mystery. In order to restore confidence in American capitalism and in the integrity of its financial markets, the public needs to understand what brought Enron down so suddenly last year. How could the Houston-based energy company, ranked seventh on the Fortune 500 list of America's largest companies, and often touted as one of its most innovative, fail so unexpectedly, wiping out $60 billion in shareholder value? There are plenty of reasons for Congress to try to find out why it happened and how it can be prevented from ever happening again.

Congress is appropriately holding a number of hearings to seek answers to that question. Enron's financial bankruptcy, triggered in part by revelations of faulty financial reporting, was a shocking national calamity. Its post-mortem, which will take the form of a Securities and Exchange Commission investigation and private lawsuits as well as the Congressional hearings, is likely to reveal serious deficiencies in how the public interest is protected on an array of regulatory fronts. It may lead to new federal regulations of pension plans, accounting procedures and energy markets.