Almost forgotten in our fear of terrorism and armed conflict are the corporate scandals, which seem to be mounting. Many large corporations have to restate sales and earnings because of accounting finagling. And there's more to come. Investment houses have played all sorts of games. Securities analysts have favorably slanted their reports on corporations at the behest of investment bankers seeking their corporate finance business. Corporate executives have received sweetheart deals on IPO's in exchange for their banking business--called spinning etc.

The accounting profession, because of the Arthur Anderson debacle plus other firms' shenanigans, is in deep disarray. The SEC was forced to change chairmen and failed as a policeman for corporate, investment, and accounting communities. After a total recalculation, involving all questionable corporate financial statements, did the U.S. economy really have a boom in the 1990's or was it entirely an illusion--a sleight of numbers if not hand?

The key question is if U.S. capitalism is in a state of crisis? I am not referring to the economy, which clearly has undergone a recession, slump or slowdown. That will right itself. No, it's the underlying economic system that is imperiled because the character and integrity of its leaders and the statistics upon which investment decisions are based can no longer be trusted. Moreover, the regulators, who have been prone to overscrutinize the small companies, were guilty of underregulation of big companies that sported big-name accounting firms as their auditors. Our sanctimonious stewards of the corporate arena simply were asleep at the switch when it came to focusing on the right priorities. The numbers become so much larger when big firms lie. As a result, the American investing public has been seriously damaged, especially retirees with pension plans.

As an old corporate-securities lawyer, I am no stranger to business or investment fraud. But these deceits usually took place among an array of smaller companies or in odd-duck situations. Equity Funding and the Salad Oil scandals from the sixties come to mind. Of course, the S&L crisis of the eighties involved big losses and was widespread but was centered in one industry.

Yet this current round of disasters in the corporate and professional worlds as well as on Wall Street trouble me even more. Too many key players from critical institutions in different spheres of influence-household names if you will-had their hands in the proverbial cookie jar and were caught in outrageous wrongdoings. The dollars involved in their misdeeds dwarf practically anything that has come before.

For the most part they were not engaged in ingenious schemes that pushed the legal envelope to extremes. To the contrary, those corporate wrongdoers indulged in tried and true formulas of deception-purposely fabricating or distorting sales and earnings or underestimating costs, all to make their results look better so their company's stock prices would rise or maintain their high levels, their equity ownership or bonuses being the driving motivation in their illicit conduct. They had to meet the projections, handed out to Wall Street, so what should we expect. On the other hand, the investment bankers tended to be more imaginative in their scheming. They concocted cloaked, subtly integrated methods to fatten their fees and keep stock prices aloft.

Existing laws clearly prohibited nearly all these malefactions. Yet the regulators-Congress, the SEC, the NYSE, the NASD-animated by the glaring lights of publicity-took belated actions to close that barn door after the horses had escaped. The public demanded they do something constructive so they acted. New rules and pronouncements bombard us daily from on high in the hope of preventing future violations. More government money is budgeted for enforcement and detection. Yet, where were they before the bubble burst?

One can visualize the class action bar in ecstasy at the new economic opportunities present in this landscape. Tobacco, asbestos and other product liability litigation now obviously will take a back seat to these more fashionable and equally lucrative cases. Attorney Generals and other prosecutors rub their hands in anticipation of putting the more egregious violators behind bars.

However, I remain extremely skeptical that new rules reinforcing or extending old ones or lawsuits with large damage awards or criminal penalties can deter this anti-social behavior over the long run. For all our society's regulation and punishment of wrongdoers, it is naïve to think we can fully curb future excesses in the muted jungle in which we operate. Greed after all is such a compelling human vice nearly everyone is swept away amid its disruptive impact. Unfortunately, adults cannot be taught ethics.

What we may experience is a temporary lull. The examples of corporate executives going to prison and Wall Street analysts and bankers paying heavy fines and being banned from their business for life will register and serve as a short-term deterrent. But when the economy revives and public offerings are rampant once again, pressures will build to maximize profits, stock prices and fees, retain client relationships and soft-peddle conflicts of interest. Almighty greed raises its scepter, and another cycle of fraud, corruption and deception will begin. I have no panaceas to offer for this dilemma. Tinkering with rules and procedures will not solve it. In the end it all comes down to a question of character and character, if it exists at all within the psyches of the individual decision-makers, often loses out when a big enough carrot is waved in front of them.

This pessimism, I admit, may not be well founded. Our economy may be so large, powerful and diverse that it will simply shrug off these pests like buzzing flies in the path of a charging bull elephant as it moves to loftier heights. Perhaps. Yet I am curious to hear what my fellow classmates think. With all their knowledge, street smarts and expertise, they should have many apt insights. So please respond.