Enron's Lay Sought Cabinet Officials' Help; Ashcroft Recuses Himself From Investigation

The Wall Street Journal ^ | Friday, January 11, 2002 | JEANNE CUMMINGS and MIKE SCHROEDER

[TroutStalker]

WASHINGTON -- President Bush called for a thorough government review of the Enron Corp. debacle, amid disclosures that the company's top executive unsuccessfully lobbied two cabinet secretaries for help as the energy-trading concern neared filing for bankruptcy-court protection.

Enron Chairman Kenneth Lay also called Federal Reserve Chairman Alan Greenspan around the same time that he was seeking assistance from the administration, a Fed spokesman confirmed.

[74dodgedart]

I'm not saying that anything incriminates Bush (I don't think anything has gotten that far yet), but I think it is hard to believe that a personal friend of the president has conversations with two cabinet members and the chairman of the Fed stating that his company (the largest energy broker in the world, one of the largest companies in the country) is in financial straits and no one mentions it to the president (nothing wrong with that except that the president said that he was unaware of the situation).

Its also kind of hard to believe that Lay didn't atleast try to contact the president (again there would be nothing wrong with that--money talks).

[RichardW]

Bush had better be a terrific politician to dig out from under this mess. I would imagine we will now lose the House as well as the Senate. The Democrats will hang this around his neck just like Watergate. After this has played out there had better be some top execs who are trotted off in their orange jump suits. There can be no rational defense for this behavior and no stonewalling. Bush needs to get all the bad news out immediately; not later.

[smith288]

All I can gather is that Bush was a friend. Enron called for a little help and the Fed said no after comparing their situation with another similiar situation. Sadly, the common sheep will just hear what the vocal Dems will say. If the Repubs can open their mouth and pass it off as a sad attempt to hurt W equally as loud as the Dems will shout, then we shouldnt be hurt at all. Couple this with their stupid tax attack people will hopefully see them as reachers. Trying to use anything to spoil Bush's popularity.

[T. Jefferson]

Bush had better be a terrific politician to dig out from under this mess. I would imagine we will now lose the House as well as the Senate. The Democrats will hang this around his neck just like Watergate. There can be no rational defense for this behavior and no stonewalling. Bush needs to get all the bad news out immediately; not later. Last time I checked Bush didn't work for Enron, nor make any decisions for them.

[shrinkermd]

Not mentioned in the WSJ or elsewhere is actually when, how and why they lost a lot of money. To be sure, we know they could not service their debt. Until this is answered the whole imboglio is nothing but whistling in the wind.

A big alleged expose is the destruction of records. My guess is they destroyed everything not directly a work product relating to their final audit. This is custumary. Most public corporation audits have the additional onus of always bullet proofing their audit from future, frivolous litigation by money mad trial lawyers. I would hope a public auditor reads this post and addressses this issue.

Finally, as one of the biggest energy players Enron was worthy of notice --even by a "rat" administration. The fact they called the Treasury and others is anticipated in such a dire, financial circumstance.

As an addendum, I tried to make some money off of Calpine (CPN). When it lost 20%, I bailed. The whole issue with the big futures players are derivatives. The real scandal some day is going to be JP Morgan Chase. They have 17 trillion (yes trillion) of financial derivatives supported by 40 billion of unencumbered stockholder equity - over a 700 to one ratio! They are highly profitable, but could be decimated by increasing volatility in interest rate futures. The point is, the people running these highly leveraged financial conglomerates are risk takers and the usual investor is looking at p/e's and pro forma earnings. When the axe falls, everyone is shocked and immediately convinced a bad business decision and model have failed; hence, they look to the congress to criminalize a bad business decision.

[Wyatt's Torch]

Basically, big friggin deal! Is calling someone asking for government help illegal? Did Chrysler do it in the late 70's and early 80's? Did the airlines do it after Sept 11th? Did LTCM do it in 1997? If the 7th largest corporation in the U.S. is about to declare bankruptcy, it might, just might, have some impact on the economy. Basically, this is a non-event.

[RichardW]

This Enron mess has the potential of Watergate. Before anyone dismisses this out of hand it is well to reflect on the way that mess was handled. It was a "third rate" burglary and then got worse and worse. Cheney had six meetings with Enron. He will have to release any records of those meetings as will Bush and all of his cabinet members. Otherwise, there will the endless charges of a "coverup." This is political reality. Look, I am on Bush's side and don't want this to damage his presidency but I'm also a political realist and know what can happen in these matters. And again, the Enron executives belong in federal prison. They have ruined the lives of thousands of innocent Enron employees who were denied the chance to get at their retirement funds. The American people will never stand for this.

[angkor]

Enron’s Campaign Contributions, 1989-2001- Senate & House

[TLBSHOW]

and you might be from the DU you rat!

[MarkWar]

>Bush had better be a terrific politician to dig out from under this mess.

Is this really a big issue?! What the heck. The Feds bailed out Chrysler.

It seems to me that in this day and age -- as much as I dislike it being this way -- corporations, especially giant corporations, have investments from millions of citizens and, when a big corporation fails, it is not just a business event, it's also a political event.

So these business losers went to the Feds for help? Big deal. Chrysler went to the Feds for help, too.

At least Bush told them to piss off and didn't throw any more of our money their way...

Mark W.

[colorado tanker]

Enron was a big contributor that used it's influence to ask high officials for a bailout. The officials said no. Democrats also received big money from Enron, including Bill Clintoon, Chuckie Schumer and Shiela Jackson Lee.

Am I missing something here? How is this another Watergate? To borrow another phrase from the past, where's the beef?

[d14truth]

"Enron's Lay Sought Cabinet Officials' Help; Ashcroft Recuses Himself From Investigation"

Didn't get any. What worked with the Clinton Administration did not work with the Bush Administration. The investigation should be into the Clinton Administration's influence peddling. Enron GOT the India deal after paying for that President's ear.

[d14truth]

"The real scandal some day is going to be JP Morgan Chase."

BINGO!!! But, I believe ALL(???) of their relevant records were in the 'Twin Towers', no?

[lewislynn]

On Oct. 26, Mr. Lay called Mr. Greenspan, (three days before the employee shut down) but the Fed wouldn't disclose details of the call. "Mr. Greenspan did nothing in response. That would have been inappropriate," a Fed spokesman said.

On Oct. 28, Mr. Lay spoke by telephone to Treasury Secretary Paul O'Neill. The next day he reached Commerce Secretary Donald Evans, an old friend who, as Mr. Bush's chief campaign fund-raiser, knew Mr. Lay well.

At the time, there were reports that Moody's Investor Services was considering lowering its credit rating on Enron debt securities.

The company said employees were notified by mail Oct. 4 that accounts would be frozen from Oct. 29 through Nov. 12. Enron said several reminders were sent via the company's internal e-mail system before Oct. 29 as well.

But did Enron inform their employees prior to Oct.29 that during the shutdown/blackout Enron was going to go begging the Federal government and the FED for a bailout because they were about to go under, or more accurately, sinking fast?

[nettlsome]

This is a good example of the networks showing their true biased colors. Everything is "Enron scandle this and that traced to the White House.." No one mentions the nearly equal contributions they made to demrats but they will eventually pull out some instance over the last few months when somebody tried to protect our nation reserve fuel during the war and forgot to record a conversation. These fatassed dems must be pretty secure about the rest getting the job done(which is not over) or they would not be pulling this old s#@t again.

[trutexan]

The Enron employees that left their money in Enron stock were stupid. The price had already fallen from around $80/share earlier in the year to around $13/share when the freeze started, which is a 74% drop. The drop during the period that they could not sell was at the most $9. The damage was already done, and is a case of shoulda-woulda-coulda.

I live in Houston and all I heard from Enron employees before the fall was look at how valuable my Enron stock has become. If the government had set a limit of 10-20% of a company's stock in a retirement plan in 1996 all of the Enron employees would have complained that they could not participate in the increase in stock value.

I do think that Fastow & Skilling knew what was going down, Skilling is a micromanager. Lay & the Board didn't know the extent of Skillings game, Enron had over 200 lawyers plus Vinson & Elkins and Anderson signing off on everything they did. The Board would ask if everyone signed-off and would approve accordingly.

Lay was the ultimate businessman. He covered his bases with donations to whomever could assist his company in it's endevors.

First rule of investing, never leave all your eggs in one basket, diversify!

[d14truth]

PBS Frontline 2001 Interview with Enron's Ken Lay on the California Energy Story

"You understand when people read this in the newspaper ...

I think you need to keep in mind also, for better or for worse, we had a lot of access in the Clinton administration. Certainly [former Secretary of Energy Bill] Richardson called on me and Enron on a number of occasions to at least discuss different energy matters, [I] was asked a few times even by then-Chief of Staff Mack McLarty about various energy matters, and [former Treasury Secretary Robert] Rubin on other matters. As a major energy company in the country doing a lot of international business too, we have a lot of reason to, in fact, talk with different officials in our government just like they have many reasons to talk with us.....

You recently had a meeting with Governor Davis in Sacramento?

I did.

Is Governor Davis correct in saying that you told him that things are going to get a lot better because Pat Wood is going to be on the commission?

I think he's told me that. He said he met with Pat Wood and he was convinced that, in fact, things would get better with him on the commission. ... He was convinced that Pat Wood would take a lot more proactive role in trying to help California solve its problem."