Washington ? A parade of witnesses and raised right hands, harsh questions and tense answers have transformed the Enron Corp.’s bankruptcy into a congressional spectacle, one that has inspired talk of reforms.

Already, members of both the House and Senate have introduced legislation to give employees more control over their 401(k) retirement plans, accounting firms more responsibility for the corporations they audit and the government more control over both. Waiting in the wings are campaign finance reformers, emboldened by Enron’s profligate political contributions.

But as bad as Enron might look on Capitol Hill, its failure may not be enough to bring about lasting financial reforms.

Still to come is Kenneth Lay, the former Enron chairman, who has been subpoenaed to appear Tuesday before the House and Senate, a week after he pulled out of two scheduled Capitol Hill appearances. No one knows if he will testify or invoke the Fifth Amendment; if he talks, Lay will give Congress another one-day publicity pop and some new insight into what happened within the failed corporation.

“Enron was a great pipeline company, a great energy company,” said Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee. “Beyond that, there is a real question that it was earning real profit … or conducting real business other than some rather clever accounting.”

Some reforms

In the Senate, reforms have focused on accounting regulations and more precise reporting when executives cash in stock options.

“I think you will see some reforms,” said Sen. Peter Fitzgerald, R-Ill. “Certainly, some reforms with respect to 401(k)s  it’s unclear what those reforms will be. You’re already seeing a de facto split up with the accounting and consulting, with several big accounting firms saying that they’re going to do it themselves. And I think you will possibly see greater resources given to the SEC to police the capital markets.”

So far, Enron fallout has prompted proposed changes in two broad areas: worker retirement plans and corporate accounting.

Thousands of Enron employees lost their 401(k) savings when the company’s stock plummeted last fall.

The White House has proposed allowing employees to sell company stock held in their plans within three years of receiving it. Several plans in Congress propose limiting the percentage of company stock that make up 401(k) plans. Sens. Barbara Boxer, D-Calif., and Jon S. Corzine, D-N.J., want to put that limit at 20 percent.

Either way, financial experts say Congress could do more harm than good by going too far to restrict the generally popular 401(k) plans.

The real reform rumble will come when Congress tries to attack the corporate accounting rules. Documents released during recent House hearings on the Andersen accounting firm’s role as Enron’s auditor have highlighted the sorts of legal interpretations  critics call it rules bending  that companies and accounting firms engage in.

In Andersen’s case, House investigators still want answers about the firm’s role as both Enron’s auditor and its business consultant. Did Andersen, they ask, advise Enron on the use of outside partnerships as a means of keeping losses off its public balance ledgers, and then use its accountant’s pen to keep the lid on such subterfuge?

Andersen has denied doing anything like that. The nation’s largest accounting firms, though, wasted no time in pledging to separate their own auditing and consulting services, a measure the industry successfully fought off in previous years.

SEC Chairman Harvey Pitt, who as an attorney once represented the accounting firms in that fight, has proposed the formation of an oversight board to keep the audit industry on track.

Fundamental changes

But some industry experts argue that more fundamental change is needed. Enron, they note, relied on an accounting procedure that allowed it to value assets based on their future earnings potential.

Walter Schuetze, co-author of a book on the Financial Accounting Services Board, calls that technique “earnings management,” and he said it is applied by thousands of companies, not just Enron.

Instead, he said, independent valuations should be made on assets, and then made public. Schuetze, however, says that his notion would only become law “when hell is the size of a hickory nut.”

His pessimism is shared by other Washington veterans who have watched scandals rise in prominence, only to see promised reforms sink under the weight of lawmaking and lobbying.

“I’m not real optimistic,” said Lanny Davis, a White House lawyer during a 1997 congressional investigation into presidential campaign fund-raising abuses. “Where is the pressure for reform? It is not coming yet from Wall Street, and it’s not coming yet from the financial investment and banking community. … The only place it’s coming from coming from at the moment is the politicians, who are afraid that Enron is going to hurt them,” Davis said, “so they’re reacting.”