The sub-prime mortgage crisis shows the lessons of Enron’s collapse have not been heeded, says Bethany McLean, the Fortune magazine reporter famous for breaking the story that the energy giant was an emperor with no clothes.
A lack of transparency, the use of off-balance sheet vehicles and the dodging of responsibility underlie the carnage on credit markets.
“It’s Enron all over again,” McLean said in an address to journalism educators in Wellington.
In financial markets, innovation would inevitably get ahead of regulation.
“Ordinary people end up paying a very high price, while those responsible walk away with millions. Capital markets depend on trust. If that breaks down, we’ve got a really big problem.”