Mr. Chairman, I commend you for scheduling this full Committee hearing on the lessons of Enron. A week ago today the KidsPost page of the Washington Post I think summed it up nicely under the banner headline "Greedy Liars? The Enron Scandal." There was a picture of Enron CEO Ken Lay with the caption "Did this man get rich..." and a picture of a former Enron employee and his wife with the caption "...while these people got poor?" Then there was a little box at the bottom on the accountants with the caption "The Watchdog Doesn’t Bark." In a nutshell, that pretty accurately sums up what happened here, and it’s disgusting.

Last month SEC chairman Harvey Pitt declared: "There is nothing rotten in the accounting profession." This is bunk. There are many honest accountants -- I happen to think that I retain one -- and many honest accounting firms. But there are systemic problems with the way the profession is governed and compensated. Coupled with the corrosive pressures put on honest auditors to bring in nonaudit business at almost any price, it is almost impossible for honest people to stand up and blow the whistle on management. I held hearings on these issues in the late ‘80s and early ‘90s. The accountants said I was wrong, but we now know they were wrong. The accountants promised that they would reform themselves. They did not. We will now do it for them.

Today we start the process of looking broadly at regulatory issues. I welcome this morning’s distinguished panel of witnesses and I look forward to their testimony and guidance. I note that, among others, we have before us today a witness suggested by the Minority, Mr. James Chanos who appeared on the cover of a recent Barron’s issue as "The Guy Who Called Enron." I ask unanimous consent to include a copy of that article in the hearing record, along with a copy of Bethany McLean’s March 5, 2001, Fortune article, "Is Enron Overpriced?" Apparently, there were red flags waving all over Enron’s financial statements if you wanted to see them. Was everybody else blind? And, if so, why?

We also have, at the Minority’s request, Mr. Bevis Longstreth who had a distinguished career as an SEC commissioner during the Reagan Administration. He recently served two years on the O’Malley Panel on Audit Effectiveness which reported a number of critical findings and recommendations in August 2000 for improving the performance of the profession and its governance system.

All the witnesses are here today because Enron is not unique. It is huge but it is not unique. The SEC has been reporting annually increasingly record numbers of financial fraud cases involving bad accounting. Enron is the exclamation point in a long list of accounting frauds that include Waste Management, Sunbeam, Cendant, Rite Aid, and Microstrategy, to name just a few. I supported Arthur Levitt’s efforts to rein in the abuse, and I supported FASB’s efforts to write tough accounting standards. Others in the Congress, however, saw fit to bully the SEC and FASB on behalf of special interests who were opposed to what the regulators were trying to do. I hope today we all stand shoulder-to-shoulder in our resolve to do the right thing by the American people and fix this badly broken system. The continued health and wellbeing of our financial system depends upon it.

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