In the decade I've been at the helm of this publication, I'm always amazed - and disappointed - at the sort of double standard that exists when it comes to the treatment of the accounting profession versus other services in the wake of a crisis.
As the bespectacled canine wizard Mr. Peabody used to urge his assistant Sherman, let's "Turn the Way-Back Machine" back about eight years or so I doubt you could find a profession that occupied a lower place in the court of public opinion than did accounting following Enron and WorldCom.
By the same token, the legal and medical professions do not suffer comparably when similar scandals surface involving Medicaid for example, or fraudulent class-action suits where plaintiffs are paid by law firms to testify.
Or when the New York Times or 60 Minutes inexplicably failed to rein in their reporters when they suddenly transitioned to, fiction writers and storytellers, journalism took nary a step backward.
But I digress.
I mention this finger-pointing inequality because last week Congress convened a hearing on the role of the accounting profession and its relation to the financial crisis and potential steps that could be taken to prevent a redux.
Many of the high-profile professionals, regulators and occasional critics appearing before the Subcommittee on Securities, Insurance, and Investment of the Senate Committee on Banking, Housing, and Urban Affairs, opined that while auditors were not the root cause of the crises, the events of circa 2008-2010, it warranted a closer look at financial reporting and its relation to GAAP reported results, fair value, and the auditor's role as independent "gatekeepers."
And while I have no doubt that there undoubtedly were cracks all the way up the audit chain in many of the mortgage servicers and financial institutions, there were certainly a truckload of abettors and co-conspirators in this fiasco.
Let's begin with one of the wonderful legacies of the Carter Administration - The Community Reinvestment Act of 1977 - which more or less gave banks a Sopranos mandate of lending to those underserved communities who had little or no potential of ever meeting loan payments. That, according to estimates, only resulted in about $1 trillion in bad loans.
Ditto for the toxic mortgage financing twins Freddie Mac and Fannie Mae, which, since being placed under government receivership, have cost the taxpayers $150 billion to keep these useless hulks afloat.
One could also point to the 1999 Gramm-Leach-Bliley Act, which was passed under President Clinton and repealed parts of Glass-Steagall that paved the way for banks and other financial services concerns to begin packaging and marketing inflated products like collateralized debt obligations.
Again, not that auditors were blameless, and one of the best proposals to come out in the hearings was PCAOB chair James Doty urging lawmakers to amend SOX and allow for public disciplinary hearings of auditors. He pointed out that auditors and audit firms charged with violations have little incentive to consent to opening the case against them to full public view and, in contrast, secret proceedings serve as an incentive to litigate.
You could potentially spend months and a lot of Ben Gay pointing endless fingers at myriad culprits.
But inevitably, it's the numbers folks who'll become blame magnets. It's always far easier to follow the money.
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