The New York Review of Books: The Betrayal of Capitalism In 1932, the congressional hearings conducted by Ferdinand Pecora of New York started a major process of reform of our financial system. As a result a regulatory structure was created which, until recently, has served us well, although such episodes as the savings-and-loan debacle required strong government action. Serious reforms again are needed, particularly to ensure that accounting firms will henceforth act honestly and responsibly. The securities laws require full disclosure; the accounting firms must ensure that their clients’ profits, losses, and assets are disclosed accurately and coherently. The current self-regulation of the accounting industry should be closely scrutinized, and, if necessary, abolished and replaced by a new system of controls. At present, five accounting firms have a virtual monopoly on the audits of most of the US companies listed on the stock markets, a highly unusual level of concentration for any industry.

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