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 future.
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 prices.
"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.
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.
Perhaps unfairly, many who are cynical about such cutting-edge business models believe Enron's problems discredit them.
"They seemingly produced nothing. Enron kind of embodied the new economy to people who didn't trust the new economy," says Zwyicki.
The financial costs of Enron et al might be considerable. Shaken public confidence in the economic system due to corporate malfeasance will reduce the US gross domestic product by about $35 billion over the next year, according to an economic model developed by Brookings Institution fellows Carol Graham and Robert Litan.
Up to this point the legal fallout has been limited. The firm's finance chief, Andrew Fastow, was charged with fraud in October, after an assistant of his, Michael Kopper, pled guilty to similar charges.
Prosecutors say they continue slowly building cases against other former top firm execs for constructing a series of illegal financial entities to hide the true state of the firm's balance sheet.
The political ramifications have focused on the auditing profession.
In July, Congress passed and President Bush signed, legislation that, among other things, created an oversight board with new powers to oversee accounting firms. But partisan disagreements over the board's new leadership led to the resignation of its first chief, former CIA director William Webster, after only a few days.
He was preceded into the private sector by Securities and Exchange Commission head Harvey Pitt, leaving the SEC leaderless and perhaps disorganized at a crucial time for government oversight.
The New York Stock Exchange and Nasdaq have themselves adopted some new corporate responsibility rules. A majority of the board of directors of any company listed on these bourses must now be independent of management, for instance.
Some experts argue, however, that all these legal changes are unnecessary. Enron's board met all these new criteria for independence at the time its financial shenanigans were going on, they point out.
"To the extent that the recent reforms usher in a period of better management by boards of directors and better performance by auditors, it will not be because of the new laws and regulations. It will be the result of a change in the culture that prevails in the boardrooms and within auditing firms," writes Peter J. Wallison, codirector of the Financial Deregulation Project at the American Enterprise Institute.