Companies run by people with high ethical standards arguably do not need detailed rules to act in the long-run interests of shareholders and, presumably, themselves.
But, regrettably, human beings come as we are--some with enviable standards, but others who continually seek to cut corners (chainsaw)
Yet there can be only one set of rules for corporate governance, and it must apply to all.
Crafting the rules to provide the proper mix of regulatory and market-based incentives and penalties has never been easy.
And I suspect that even after we get beyond the Enron debacle, crafting and updating such rules will continue to be a challenge.
"I have found a flaw," said Greenspan, referring to his economic philosophy. "I don't know how significant or permanent it is. But I have been very distressed by that fact."
"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms," said Greenspan.
Greenspan continued that his trust in the responsibility of banks had been misplaced: "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity (myself especially) are in a state of shocked disbelief."
Think about this in the context of the current CEO, the lack of progress in fixing the problems at the bank, and instead CEO is focused on cost cuts and stonk buybacks.