The implosion of Bear Stearns has left the investing public feeling as if it returned from a bad trip to the Laundromat. It seems to be missing some SOX.
The Sarbanes-Oxley law, spawned by colossal corporate frauds such as Enron and WorldCom, was supposed to protect investors from similar scandal. Yet last week, as clients and lenders began yanking money out of the firm, Bear Stearns' liquidity evaporated faster than civility in Paul McCartney's divorce.
Shareholder interest got torched in the fire sale to JPMorgan Chase orchestrated by the Federal Reserve. In the smoldering hole where once stood a venerable Wall Street establishment echoed the hollow phrase "run on the bank."
Bear's rapid demise and the Depression-era cliché prompted immediate Enron comparisons. The Economist, an otherwise lucid publication, has already predicted that Bear's collapse could help Jeff Skilling's appeal because he claims Enron, too, cratered from a bank run rather than fraud.
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