Academic journal article ABA Banking Journal

Conflicts of Interest. (Editor's Column)

Academic journal article ABA Banking Journal

Conflicts of Interest. (Editor's Column)

Article excerpt

William W. Streeter

THE ENRON MESS IS ALREADY stirring up a potful of recriminations, hand-wringing, and calls for action. As well it might. There are some things that should change. But there are things that should not be done, one of which is to try to bring about ethical business behavior solely through legislation or regulation. Whenever the business community stumbles badly, attempts inevitably follow to throw up legal "walls" around certain activities. Banking long ago got a stiff dose of this with the Glass-Steagall Act. It took more than 60 years to remove that artificial barrier.

More laws and rules are not the answer. Based on what we have read and heard so far, the people at Enron and its auditor, Arthur Andersen may not have broken any laws (leaving aside the matter of document destruction), or even accounting rules. They, like countless others in every line of business known to man, stretched, bent, and twisted the rules to accomplish their ends. The motives for doing that sometimes are good, sometimes nefarious. More rules won't change this. It was the Chinese philosopher Lao Tzu who wisely observed, "The more the laws are in evidence, the more do thieves and robbers abound."

Conflicts of interest are one of several evils uncovered in the rubble that was Enron, and are the focus of some attention. Conflicts of interest basically are human temptations. All of us face subtle conflicts every day from the moment we wake up and face the fact that we really don't want to go to work this particular morning and begin to contemplate half a dozen beckoning alternatives, like calling in sick and going skiing.

Most of the more potentially damaging conflicts have already been codified. …

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