One year after Enron filed for bankruptcy, American capitalism is
still in a state of upheaval as corporations struggle to adapt to a
world in which CEOs are no longer lionized, and Washington struggles
to implement new rules meant to prevent Enron-like problems in the
If nothing else, the collapse of the Texas energy trading giant -
and subsequent troubles at Tyco, WorldCom, Adelphia and others - may
have changed the social context for US business. These stumbles
arguably marked the true end of the NASDAQ era of good feeling, when
investors thought old fundamentals that affected stocks no longer
applied. In that sense, Enron's Dec. 2, 2001, bankruptcy filing
marked the end of an independent firm - and an era of inflated share
"It was not the end of innocence. It was the chastening of
stupidity ... people should have known better," says Glenn Harlan
Reynolds, a law professor at the University of Tennessee and expert
on government investigations of business.
As a corporate entity, Enron survives, at least for the moment.
During the past year it has shed thousands of jobs and struggled to
compete in its core energy-trading businesses.
But few trading partners are eager to do business with a firm
whose name has become synonymous with corporate fraud. Now the rump
Enron is considering bids for its most valuable remaining hard
assets, such as Portland General Electric, an Oregon utility it
acquired in 1997. If its creditors go along, the firm could be
broken up and its remaining jobs scattered to the winds.
That is probably what should have happened a year ago, say
experts. But the US bankruptcy system has a strong predisposition to
reorganizing firms, and trying to get them back on their feet. And
at the time, Enron was the largest bankruptcy filing in the nation's
history, and regulators may have believed it was simply too big to
be allowed to fail.
A resilient stock market
Since then, the collapse of WorldCom and Arthur Anderson, among
others, have shown that huge firms can indeed crumble to dust
without the economy and Wall Street descending into panic.
"At the time it was an unprecedented case. But Enron was just the
front end of a wave, as we know now," says Todd Zywicki, a
bankruptcy law professor at George Mason University.
However, Enron's failure was unique in at least one aspect from
those that came after, says Zywicki. While WorldCom was a
recognizable old-style business - communications - Enron was a
symbol of the so-called New Economy. It made money not so much by
producing goods and services as by erecting financial edifices that
were difficult for the public to understand. …