Louis Lowenstein

Louis Lowenstein, the Rifkind Professor Emeritus of Finance and Law at
Columbia University and a former corporate CEO and member of corporate boards,
is the author of What's Wrong with Wall Street.

Recent Articles

Uncooking the Books

F inancial accounting has one quite simple goal: to give investors and other outsiders an honest report on a company's performance and management's stewardship. Accurate accounting ("transparency") is something that we Americans preach to other nations as an essential precondition for successful capitalism. In practice, of course, it's enormously difficult to reduce to a handful of useful numbers the complex operations, spread over many countries, of a modern industrial enterprise. But in recent years, that task has been badly skewed by Wall Street's obsessive focus on short-term results and by an array of executive-compensation schemes that provide corporate officers huge personal incentives to manage--that is, manipulate--earnings to meet those market expectations. The public's primary line of defense has been, now as always, the auditors, whom we expect to remain not just skilled and diligent but, above all, independent. Independent of whom? Management, of course. The auditors'...

The Predators' Accomplice: How High Theory Abetted Speculative Excess

The prosecutor builds a case against academic apologists for the casino economy.

You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. --Benjamin Graham In the 1980s some things went right on Wall Street but much went wrong. The fallout is still being felt today. Prudential Securities, which once boasted that "the most important thing we earn is your trust," now apologizes for having systematically duped many of the hundreds of thousands of investors who bought its limited partnership deals. Carl Icahn boasted of having bought TWA; but leaving none of his own money there, he succeeded only in leaving the flying public with 20-year-old aircraft and poor service. Banks and insurance companies bankrolled so many new buildings that we will not work off the excess until the end of the century, if then. As we close the books on the worst era in modern U.S. financial history, Prudential at least has the resources to make amends. The victims elsewhere must often grasp at straws. This is a good time...