From the Wall Street of Manhattan to the Wall Street of New Haven, the Enron financial crisis has left some Americans wringing their hands in frustration and amazement.

At the Law School last Friday, a panel of lawyers, professors and businessmen tried to look past this consternation to find the causes and consequences of the scandal that has rocked capital markets across the globe.

Professor Alan Schwartz, the director of the Yale Law School Center for the Study of Corporate Law, moderated a discussion of what has come to be called “the Enron situation” before an eager and critical audience of approximately 100 people.

The December bankruptcy of the Houston-based energy giant Enron Corp. has left $15 billion of debts, with high-profile firms like JP Morgan revealing up to $800 million in exposure to debt.

New York University professor William T. Allen, acknowledging the gravity of the Enron debacle, set the tone for the entire discussion by posing a simple question about Enron.

“Is it a remarkable systematic failure of all the controls that regulate business?” he asked.

The sheer complexity of Enron’s business practices and trading strategies prevents even the most experienced analyst from fully comprehending the situation, professor Richard Ippolito of George Mason University said.

Ippolito, who focused on the effect of the bankruptcy on middle management employees, said he has 20 years of experience studying pension plans. But despite the 30 hours he has spent examining Enron’s pension plans, he said he still does not understand what was going on at the company.

Ludwig attributed the Enron bankruptcy to a schism “between the dynamism of finance and, by necessity, the complexity of accounting.”

The questionable accounting practices of Arthur Andersen LLP, Enron’s accounting firm, have been at the center of the scandal.

“Accounting — is very much like physics,” said Eugene A. Ludwig, a managing partner of the Promontory Financial Group who appeared via videophone. “The best we can hope for in our dynamic world is being within a boundary of accuracy.”

Ludwig said he believes the most powerful factor in the Enron situation was “poor regulatory oversight.”

He said the federal government should establish a new regulatory commission to oversee accounting firms.

Not all the panelists agreed that the primary solution should be increased government regulation.

Yale law professor Roberta Romano said the Enron case shows that “no system is foolproof.” Rather than be swayed by overenthusiasm toward regulation, she said policy makers should not forget “the self-correcting features of markets.”

Accounting firms that do not want to suffer a fate similar to Arthur Andersen’s are going to scrutinize their clients of their own accord, Romano said.

An audience member asked whether the Enron debacle was a surprise considering the substantial deregulation of financial markets in the last 20 years.

“If we look at innovation and finance at any time — any new financing will end up with some scandal because people don’t understand how these innovations work,” Romano replied.

Allen said Enron was a company that many considered innovative, aggressive and imaginative, and its sudden and unexpected collapse has left many wondering about the further implications of the debacle.

“Are there other Enrons out there?” he asked.

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