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Lessons of Enron: How could no one have seen it?

Bankruptcy forces a look at accounting, Wall Street practices, and pension plans.

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The company had fabricated revenues. Wall Street, which had run the stock price up, was fooled. Thousands of people lost their life savings. Regulators scrambled to pick up the pieces while Congress held hearings to determine what went wrong.

No, it's not Enron. The company in question was Equity Funding, an insurance firm based in Los Angeles that went bust in 1973.

Flameouts have long been a feature of American business. In fact, every few years, a new scandal seems to surface, often with the same ingredients: corporate greed, gullible accountants, high-powered connections, and broke investors.

But the latest such collapse is a particularly spectacular one. The name "Enron" has already become shorthand for "disaster," a symbol of what can go wrong when hubris spreads through an executive suite and financial reports become a skim coat over wide cracks in finances.

If nothing else, Enron's collapse will prompt a hard look at accounting practices, retirement plans, and other key aspects of US capitalism - as well as the enforcement powers of the Securities and Exchange Commission.

"When the seventh-largest corporation crashes and burns, the wreckage is diverse and scatters in many directions," says Robert Reischauer, president of the Urban Institute in Washington.

The degree to which Enron has fallen is summed up by the fact that its stock may now be worth more as a souvenir than as a certificate of ownership. Bob Kerstein, an accountant and financial historian, is offering Enron stock certificates on his collector web site, Scripophily.com, at $100 a pop. Or he was - right now he's sold out.

Thus a firm that once was seen as an economic pioneer is now keeping company with Disney figurines and pillows crocheted with sayings that purport to be witty.

"They will be great collectibles," says Mr. Kerstein of the Enron certificates.

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