If scandalous companies do not receive harsh and quick punishments, they could collectively drill a gaping hole in everything that is good with the U.S. free market system, Federal Reserve Chairman Alan Greenspan said last week.

At the same time, Greenspan said that companies with "character," those concerned with the sanctity of the markets and not the gluttony of their own wallets, could help return the markets to the good ‘ole days of effective self-policing, Reuters reports.

"I hope and anticipate that trust and integrity again will be amply rewarded in the marketplace as they were in earlier generations," Greenspan said via satellite to an Atlanta conference called "Wall Street Against the Wall." He added, "There is no better antidote for the business and financial transgressions of recent years."

The self-policing talk came after he warned regulators of the "collateral damage" that could result from over-regulation. "Some practices and rules have outlived their usefulness and require updating," Greenspan said. "But in so doing we need to be careful not to undermine the paradigm that has so effectively governed voluntary trade."

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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