Just as Enron and WorldCom’s collapse precipitated a financial crisis in 2002, the recent turmoil in the securitized debt market, centered around mortgage-backed securities and similar collateralized debt obligations, has provoked a similar, if smaller, market meltdown, whose repercussions have already shut down the leveraged buyout boom and produced at least a short-term liquidity crisis.

As always, financial panics encourage fingerpointing and a search for villains. In 2002, the obvious villains were the major accounting firms, which had seemingly acquiesced in pervasive irregularities, arguably in order to market consulting services to their auditing clients. As a result, auditors became the principal target of the Sarbanes-Oxley Act.

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