A decade ago the nation faced many of the same hurdles that confront us

today. In 1991, we were at the depths of a recession that forced many

companies to shutter and millions onto unemployment lines. Less familiar

hostile powers, with an untested capacity to destroy, seemed almost

inexplicably bent on crushing our open society. Technological change was

rushing over us so quickly that most justifiably feared being left behind. Little

of that has changed. But in the period of unmatched prosperity and opportunity

that followed, we became complacent to the prospects of bad things

happening, making the calamity of Sept. 11 all the more unfathomable.

Then as now, we had a George Bush and an Alan Greenspan to protect our

shores and financial markets. Then as now, we were headed to

war–although

at least in 1991 we knew where our enemy was.

But forces not at play in 1991 will shape the next 10 years. The most profound

of these is the Internet. Although we are feeling a bit less awed by it these

days, the Web has brought us closer together and made our world more

immediate. Global is actually coming to mean global–even in the United

States where an island mentality and cultural arrogance has stifled the trend.

Certainly, the Asian contagion of the late 1990s demonstrated our

interconnection and interdependence.

On the financial front, many of the complaints may sound similar, but the

landscape is vastly different. Waves of consolidation have linked former

household names and transformed others into historical footnotes. We finally

got past the tedious Glass-Steagall debate; financial reporters are still

rejoicing.

Ordinary people now watch the stock markets as closely as portfolio managers

at Fidelity. Although the process seems slower than globalization would

demand, international financial standards in accounting, disclosure, corporate

governance, commerce, capital markets, and intellectual property are starting

to emerge.

Through it all, Treasury & Risk Management has attempted to document

change and give it context. To commemorate T&RM's decade of operations,

the magazine has assembled a collection of business leaders to muse on the

past 10 years and give focus to the coming 10. Most of the interviews were

conducted when the tragic events of Sept. 11 were still inconceivable, and our

speakers were cautiously optimistic. But if we are to give our children the

same kind of promise we realized in the last decade, we cannot forsake

optimism about the future. For while a frightening picture is developing of what

the world has become, we cannot afford to lose our far-reaching vision of

what it could be.

Global Markets

Richard Grasso, Chairman and CEO

New York Stock Exchange

When the New York Stock Exchange emerges from the shadow of the World

Trade Center disaster, it will refocus its attention well beyond Broad

Street,

says its homegrown chairman. "We're going to have to become more global in

our product offerings to investors," says Grasso, 55. "We've got

to bring more

non-U.S. companies to the U.S. market faster. Just the top one-third [of the

3,000 companies that qualify to list] would produce roughly

four times the

market value of the entire market-cap opportunity available to us from

NASDAQ and the [American Stock Exchange]."

To reach his goal, he expects the Big Board to significantly expand its work

hours. "I don't think [operating] 24/7 is near-term, but I do think that 16/5

over

the next two to three years is something that has got to be seriously

considered," he says.

Grasso also predicts more exchange-to-exchange competition, and to that end

he promises that the NYSE will remain "insatiable" in its appetite to recruit

qualified NASDAQ companies to the Big Board. Indeed, he says he has no

plans to close the NYSE's Silicon Valley recruiting office, despite the

downturn there. "[We] are banging on those doors as we speak."

Payment Systems

Larry Marks, Director

PricewaterhouseCoopers

"Ten years ago everyone knew that electronic payment systems would be the

end game. They were wrong. The paper-based system is as healthy and

strong as ever, while electronic payment systems are coming on more slowly.

The mechanic that has brought the promise of change has been the

Internet,

[but] there are regulatory issues that were never really addressed: taxation in

different countries [and] different laws for moving money

cross-border. One

area I see as particularly crucial: How do you transact business electronically

but not over land lines? If we can find safe and secure ways over

mobile-phone connections, we are going to see something that will look like a

revolution."

Regulatory Shopping

Robert Glauber, Chairman, President and CEO

National Association of Securities Dealers In 1991, the National Association of Securities Dealers was a tenacious

terrier. It pursued high-tech companies to list on the exchange, it regulated

their capital-raising activities, and it served as their loudest cheerleader to

potential investors. Today, a much-sobered NASD has emerged as a

single-minded, self-regulatory body that by mid-2002 hopes to reduce its

current 27% stake in NASDAQ to zero. "When you have a for-profit

exchange, it should be totally independent and separate from its regulator,"

says Glauber, a former undersecretary for finance in George H. W. Bush's

Treasury Department.

Once it severs ties with NASDAQ, NASD could sell its services as a

regulator to world exchanges, and computerized trading systems such as

Instinet may register as exchanges. "Now that we don't own one of the

competitors, we can make a credible argument to other exchanges that they

ought to think about outsourcing to us. We can do it cheaper, and we think we

can do it better," he says.

Capital Markets

James Grant, Editor

Grant's Interest Rate Observer

"The most striking change in corporate capital raising is [that] a sizable class

of corporate securities is in the hands of highly leveraged people. There is no

due diligence. There is a boom in convertible bonds [being sold] to highly

leveraged hedge funds that buy them not for intrinsic value, and not to convert

the stock, but to hedge the equity against the debt. The arbitrageurs want price

volatility so companies are selling their price volatility, which is scary

because

it's not clear to whom [they] would sell these bonds if they had to.

"The last 10 years also have been a laboratory in dip buying, seizing evidently

bad news and making a great investment, with almost no regard for

valuation.

The hallmark of this bubble was the systematic mispricing of capital and risk

so when the price of capital shot up, the great swath of the new

economy

became unviable."

Retirement Plans

Ted Benna, Founder and President

401(k) Association

The "father of the 401(k)" says he laments having launched the first plan in

1981 without providing plan participants with a structure to help them make

smart investment choices.

Though he crows over the multi-billion dollar defined-contribution market he

helped spawn–plan assets soared to $1.7 trillion at the end of 2000 from

$385

billion in 1990, according to Access Research–Benna is now hawking a

structured portfolio plan to remedy its shortcomings.

Participants who want an easy answer "can put their money all in a single

portfolio regardless of their age, go to sleep and forget about it, letting

somebody else oversee and manage it for them. The level of risk automatically

ratchets down as they get older," he says. Self-directed employees,

meanwhile, could choose an open fund window, making their own investment

choices or picking from a wide range of advisers.

Current efforts by plan sponsors to "educate" participants about lifestyle

investing generally fail, he says. The structured alternative not only should

draw in more participants but also help plan sponsors avoid fiduciary liability

since participants will choose the investment structure. "The problem with

advice as a solution is that…only about 10% or 20% of participants are using

advice when it is available. You can't turn 40 million or more participants into

sophisticated investors through education or through advice."

Accounting Standards

Sir David Tweedie, Chairman

International Accounting Standards Board

Ten years ago, efforts to establish global accounting standards were far down

on the wish lists of regulators and the companies they oversee. But things

changed after the Asian financial crisis of 1997 and 1998. "Companies in Asia

went belly up and it was a great shock because the statements had looked

all

right," says Tweedie, formerly chairman of the UK's Accounting Standards

Board.

The accounting czar urges the business community to embrace accounting

uniformity, even if implementation is initially disruptive. It will encourage

"confidence in the markets, lower cost of capital [and] help further

investment," he says. "And it [will] mean you can pick up a set of accounts

anywhere in the world and understand them."

The IASB over the next few years will "settle upon the best-of-breed

[standards]. In many cases that will be the United States, but it won't be with

all of them," he says.

The Economy

Henry Kaufman, President

Henry Kaufman & Co.

Though he may never shake his 1980s reputation as Dr. Doom on the state of

the economy, Kaufman is surprisingly low-key about the consequences of

last

month's terrorist attacks on the nation."The events of Sept. 11 have increased

the chances of a brief recession, and, at the same time the economic

recovery

next year will be of a very modest proportion," says Kaufman, the former

research chief of Salomon Brothers, who now runs an eponymous

economic consulting firm. "The intermediate consequences of the attacks in New York

and Washington will include some very sharp declines in profits in

a number of

industries, significant increases in government spending and, therefore, the

sharp falloff in the U.S. government's surplus in the fiscal year

beginning Oct.1."

Kaufman says it's too early to discuss the long-term impact of the attacks in

light of unanswered questions about the scope of the "war" against terrorism

and its effect on various industrial sectors and the possibility of further terrorist

attacks.

Turning to the dot-com craze, Kaufman says that human nature has not

changed and that continuing cycles of boom and bust are inevitable. "We get

into periods of financial and economic excesses periodically because we tend

to forget the past," he says. "The dilemma is that very few people, despite

being well grounded in quantitative risk analysis, have historical perspective."

Careers

Judy Lewent, CFO

Merck & Co.

Her advice for treasurers aspiring to become CFOs is simple: "Look outside,

use all of the networks and contacts you have to provide the best

information

on what's going on with capital markets. Being insular or parochial is the

worst." She ought to know. A 21-year veteran of Merck, Lewent

leapt to

CFO from treasurer in 1993. "I always take issue with people who take the

treasury function as being separate from the business," she says. "If

you don't

understand the underpinnings of the business, you cannot be a top-flight

treasury person," let alone a competent CFO. She also advises

treasurers to

embrace technology. "Technology doesn't supplant analytics and people. It

may help transfer funds, but when you're talking about

state-of-the-art

treasury functions like risk management and enhancing shareholder value, that

takes people."

Bank Mergers

Samuel Hayes, Professor of Investment Banking

Harvard Business School

"W hen you become an 800-pound gorilla, you are muscle-bound, not nimble,"

says Hayes of the continuing consolidation in the financial services sector.

"I

have real doubts that in the long term these financial behemoths will return to

shareholders the profits that they are envisioning." Within 10 years, Hayes

says the number of banks with significant global reach could dwindle to

perhaps six, which is bad news for corporations. He also says that while

corporate clients have for many years been the dominant partners in banking

relationships, that is rapidly changing. "Banks are intent on redressing the

lopsided balance of power," he says. "This [consolidation] is a reaction to that

sense of impotence that many commercial banks have felt."

World Trade

Charlene Barshefsky

Former U.S. Trade Representative

As the Clinton administration's chief advocate of open trade, she had a

reputation as a tough negotiator on controversial issues such as the North

American Free Trade Agreement and the cultivation of China as a trading

partner. From her vantage point now as a partner at the law firm of Wilmer,

Cutler & Pickering, she shakes her head at the lessons learned from the failed

General Electric-Honeywell merger that was quashed by the European

Union.

"Government regulation is not only the bane of a company's existence in the

U.S., it's the bane of the global company's existence [wherever] it

wants to

locate and wishes to invest," she says.

She nevertheless is bullish about the expansion of free trade, and celebrates

last month's acceptance of China into the World Trade Organization. And

though she'll be watching to see if China can balance the WTO requirements

for open markets with its closed political system, she thinks that China's

entry

will impact trade with such countries as India, now "the de facto spokesman

for the developing countries in Asia."

Emerging Markets

Mark Mobius

Managing Director

Templeton Asset Management Ltd.

Coming out of one of the toughest years he's endured since launching his first

emerging markets fund in 1987, Mobius remains upbeat about the

developing-country sector. He still spends 250 days a year on the road as

manager of $8 billion of emerging-market assets, scouring the economies and

companies of nations that most money managers shun. "Emerging markets

exhibit all of the dangers that people who are risk adverse get scared

about–corruption, political upheaval, et cetera," he says. "[It's what] makes

emerging markets look pretty cheap." So where does he see a bright

future?

These days it's in South Africa ("a First World environment in a Third World

image"), Mexico (which he sees adopting both a political and

corporate

governance sensibility modeled on the U.S.), Indonesia and Thailand (full of

potential for those willing to put up with political risk).

FAS 133/Risk Management

William Fall, Head of Global Risk Management

Bank of America

In the wake of the FAS 133 mark-to-market accounting rule that became

effective last year, "we have seen some customers cease activity altogether,

although they are, fortunately, a rarity," says Fall. "I don't think 133 slowed

derivatives trading nearly as much as we feared it might. It amazes me that

we still seem to see some quite complex transactions."

To be sure, customers have had to work hard to figure out how to deal with

FAS 133, but he notes that issues such as the shrinking number of dealers

still

weigh on the minds of financial executives. "There's almost an oligopoly [of

six banks] emerging that are very broadly capable across a number of

different asset classes." That's leading customers to take "a much more

integrated approach" to managing risk, which he believes is for the best.

Insurance Brokerage

John Sinnott, Chairman and CEO

Marsh Inc.

"Ten years ago, corporate insurance brokers focused on arranging for

earthquake coverage, third-party liability, marine cargo insurance and other

property and casualty coverage," says the head of the world's biggest

insurance broker. "If [I had been] asked about risks that get into the broad

financial or operational or strategic areas…I probably would have said, 'you

need to talk to someone else.'

"[Today] the scope of risk that clients want to look at is broader than just

hazard risk, and it gets into broader solutions. I would have identified [those

solutions] as the capital markets 10 years ago,…but it has turned out to be

insurance capital or financial guarantee capital that has [most] expanded the

definition of the risk we're willing to underwrite."

Bank Capitalization

John Heimann, Senior Adviser

Merrill Lynch & Co

The Glass-Steagall Act separating commercial from investment banking

activities may have fallen at the end of the '90s, but Heimann says that the

regulatory system overlying financial activities still needs work, as it is

"antiquated [and] out-of-date with the realities of the financial system in the

globe today." The proposed new Basle international banking standards are

based on a simple theory: the higher the risk, the greater the capital required.

"Restrictions are the father of innovation. I don't know all of the things people

will come up with [to manipulate the standards], but they surely will. And

then

it's up to supervisors to clamp down."

Shareholder Activism

Robert Monks, President

Lens Investment Management

"When [shareholder activism] started 20 years ago, it was considered a rogue

act. Now it is widely recognized by those involved in ownership that it

produces a better company. But the problem is that [the activists] are mostly

the public employee pension plans…The IBMs and GMs [are not] getting

involved. As long as CEOs continue to be unwilling to instruct their pension

plans to obey the government law, there will only be a fringe [group of

corporate] activists. ERISA clearly says that trustees of pension plans must

manage assets solely for the benefit of plan participants. They have been

unwilling to, because it might jeopardize business relationships. Unfortunately,

government has acquiesced in not enforcing the law."