Every so often, I'm overcome by what I like to describe as " Enron nostalgia."Remember Enron? That was a brief, shining moment, a bit like Camelot, only more annoying, and without Lerner and Loewe. Instead of mythical knights, there were very real CEOs cooking the books, accounting firms going along with it, boards of directors looking the other way and regulators who actually seemed to give a damn. Even Congress seemed to care (remember Sarbanes-Oxley?), as did prosecutors. People actually went to jail. Today, in the post-Camelot era, we have everything that I just described and then some. The difference is that regulators don't care, and the same goes for Congress, law enforcement -- you know, everybody we're supposed to count on to enforce the law. There is, believe it or not, a law against misleading financial statements. Several laws, even if you include the long-forgotten, never-enforced Sarbanes-Oxley. But the Securities and Exchange Commission, et al., got out of the business of policing corporate chicanery while the ink was still wet on the Enron headlines, by the time clownish SEC Chairman Harvey Pitt crawled into the sunset in 2002. Pitt's message to corporate America was a simple one: "Don't worry, guys, I've got your back." And, with only minor modifications over the years, that pretty much remained the SEC's mission statement. My most recent attack of Enron nostalgia was brought on by word that Bank of America ( BAC) was, oh, perhaps just a bit overoptimistic in its asset disclosures a few years ago. The company said it pushed billions of dollars in debt off its balance sheet between 2007 and 2009, as Lehman Brothers did in its Repo 105 scheme (which, in turn, bore a remarkable resemblance to the schemes Enron used to manipulate its books). Just to show you how casual and ordinary it is for a company to cook the books nowadays, Bank of America clued in the SEC on its hijinks in a genial exchange of correspondence with a commission accountant. Apparently, the bank had told the SEC about the repos. But rather than proceed to an enforcement action, the way any self-respecting regulator would behave, the SEC sent Bank of America a letter and the bank wrote back. Thus, we have the bank's "dog-ate-our-homework" explanation in a letter to an agency underling, rather than our reading about all this in a more suitable venue, such as an SEC litigation release.
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