New York Times op-ed, Lawyers and Accountants Once Put Integrity First, by Mark. W. Everson:
It will take decades to fully untangle the causes of the 2008 financial crisis, but as our economy fitfully heals, it would be prudent to ask whether lawyers and accountants offer the same protection against corporate misconduct that they once did.
Three or four decades ago, investors and regulators could rely on these professionals to provide a check on corporate risk-taking. But over time, attorneys and auditors came to see their practices not as independent firms that strengthen the integrity of capitalism, but as businesses measured chiefly by the earnings of their partners. …
Lawyers and accountants who were once the proud pillars of our financial system have become the happy architects of its circumvention. Nowhere is this more the case than in the world of tax law. Companies (and wealthy individuals) pay handsomely for tax professionals not just to find the lines, but to push them ever outward. During my tenure at the IRS, the low point came when we discovered that a senior tax partner at KPMG (one of the Big Four, which by virtue of their prominence set standards for the others) had advocated — in writing — to leaders of the company’s tax practice that KPMG make a “business/strategic decision” to ignore a particular set of I.R.S. disclosure rules. The reasoning was that the IRS was unlikely to discover the underlying transactions, and that even if we did, any penalties assessed could be absorbed as a cost of doing business.
Just what role outside professional firms played in the genesis of the financial crisis has not been adequately explored. Perhaps it never will be. But at a minimum, we know that the widespread documentation problems associated with bank foreclosures demonstrate that in too many instances, attorneys and accountants abandoned their duties to assure integrity. Further, it seems unlikely that professionals will, of their own initiative, return anytime soon to their traditional posts as vigilant sentries guaranteeing the financial system’s integrity.
I will leave it to others to assess the propriety of being lectured on integrity by a married man who was fired as President of the American Red Cross after it was revealed that he was having an affair with a married female subordinate who became pregnant.
