Clearly, there are critical lessons to be learned from the Enron debacle—about transparency in reporting, improper capital structures for derivative and commodity trading, and management hubris—all of which, and more, will be paraded before us as the regulatory and judicial process unfolds. From my perspective, one very significant lesson, or reminder, may be that there is a reason that most successful hedge funds (which, after all, is what Enron was) are not publicly owned: they are almost impossible for any but the most sophisticated investors to understand. In all that we will learn from this, however, we should keep in mind that the market worked, and this should be reported as a success. As important, we should strongly resist the tendency on the part of many to use this experience to roll back or impede de-regulation and privatization initiatives. For example, the failures at Enron are not an excuse to re-regulate the energy and electric utility markets; they are not a warning not to privatize Social Security; and they are not a message for tighter controls on defined contribution (401k, etc.) plans.
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