When President Bush delivers his speech today at Wall Street, calling for a tough crackdown on corporate misconduct, his audience will not just be the few hundreds of corporate executives, their investment bankers, lawyers and accountants, but the tens of millions of Americans who own stocks and mutual funds and have had their confidence shaken by the roster of corporate “villains” parading through the press — from Enron to Tyco to Martha Stewart and Imclone and WorldCom.

The expansion of equity ownership that has taken place over the past generation is no small thing. In 2001, 52% of American households owned mutual funds, according to the Investment Company Institute. In 1980, only 5.7% did. To slice those statistics another way, in 1999, an estimated 78.7 million Americans owned stocks directly or through mutual funds, accord ing to the Securities Industry Association. In 1983, only 42.4 million Americans did.

Part of this, of course, was the result of the shift in corporate retirement plans from defined benefit pen sion funds to defined contribution 401(K) plans. But part of it, too, had to do with the tremendous bull market of the 1980s and then the 1990s. From such television outlets as MSNBC and CNBC to such magazines as Money, SmartMoney and Worth, consumers were bombarded with the notion that stocks were the best investment in the long run, with one famous study showing an annual return of 10% a year. The jacket copy of one strong seller, “Stocks for the Long Run,” by Wharton professor Jeremy Siegel, actually reads, the boldface type theirs, “Siegel’s conclusion — that, when long-term purchasing power is considered, stocks are actually safer than bank deposits! — is now more convincing than ever.”

Well, as the investors in Enron and WorldCom are now learning, stocks are not safer than bank deposits. Bank deposits are insured by the Federal Deposit Insurance Corporation up to $100,000, while — at the moment — stock investments are not backed by the full faith and credit of Uncle Sam. That risk — the risk of losing it all, or of experiencing a down year or two or three — is the reason that investors in stocks can, on average, expect a higher return than if they stuck their money in a federally insured bank savings account. The higher return is the reason that investors are willing to take the risk. The difference between the higher return on the higher-risk investment and the lower return on the lower-risk investment is called the risk premium.

All this may seem like a detour on the road to the more interesting tales of huge mansions, crooked chief financial officers, and celebrity stock tips traded in the Hamptons. And no doubt there are some crooks who belong in jail — and who will no doubt end up there if the current laws are enforced as they should be. But at the crux of the matter the president is responding to today is the disconnect being experienced by investors who were told that stocks are “safer than bank deposits!” and who have since seen their portfolios take a haircut.

The worst mistake government could make would be to try to eliminate the risk for investors entirely — and with it the opportunity for reward — by imposing so many regulations on companies that they are deterred from issuing public stock in the first place. It would be easy for the president to score political points in his speech today by bashing the examples of corporate irresponsibility. They do deserve condemnation. But what the country could use more is some straight talk about one of the bedrock principles of capitalism that was often forgotten during the long boom of the last generation — about the trade-off between risk and reward.