Posted on 01/12/2002 7:10:08 AM PST by arete
WASHINGTON (CBS.MW) -- Former Treasury Secretary Robert Rubin called a top U.S. Treasury official in November, asking that the government intervene with credit agencies that were about to cut Enron's debt ratings, the Treasury Department disclosed Friday.
Rubin is now chairman of the executive committee at Citigroup (C: news, chart, profile), which is Enron's largest creditor to the tune of $3 billion, according to court documents in the collapsed energy trader's bankruptcy case.
A Treasury spokeswoman, Michele Davis, said in a statement released late Friday that Undersecretary Peter Fisher turned down Rubin's request to call the ratings agencies on behalf of Enron.
She said that on Nov. 8 Rubin asked him "what he thought of the idea of Fisher placing a call to rating agencies to encourage them to work with Enron's bankers to see if there is an alternative to an immediate downgrade."
Rubin said he thought that was a reasonable position, according to Davis' statement.
Fisher was among several government officials contacted by Enron Chief Executive Kenneth Lay in October and November, just before his company filed for the largest bankruptcy in U.S. history. Rubin is a Democrat who served under President Bill Clinton.
Role in bailouts
In the late 1990s, Rubin and Fisher, who was a top Federal Reserve official at the time, participated in several high-profile financial rescue efforts, including an effort led by the New York Federal Reserve Bank to stabilize the Long-Term Capital Management hedge fund.
An Enron spokeswoman declined to comment on the Rubin revelation. Representatives of Citigroup weren't immediately available for comment.
In the wake of Wednesday's news that the Justice Department opened a criminal probe of the Enron matter, U.S. officials have acknowledged that Lay also called Fed Chairman Alan Greenspan, Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans.
None of the officials gave Enron any assistance in rescheduling its debts or in averting the ratings downgrades that led to the bankruptcy filing, they have said.
In televised interviews, O'Neill said Lay didn't seek any bailout money. Evans' account, however, is that Lay did ask for help with the ratings agencies.
A Fed spokesman declined to characterize Greenspan's conversation with Lay.
Lay, who has close ties to President Bush and other administration officials, was a top fund-raiser in Bush's presidential campaign. He and has also contributed to many other Republicans' war chests, including Attorney General John Ashcroft, and he gave smaller amounts to some Democrats.
On Thursday, Bush vowed that his relationship with Lay wouldn't interfere with a full federal investigation surrounding the largest bankruptcy in U.S. history.
Davis, the Treasury spokeswoman, said undersecretary Fisher had six to eight phone conversations with Lay and other Enron officials, including President Lawrence "Greg" Whalley in October and November.
Ultimately, Fisher decided nothing should be done for Enron because its collapse posed no "spillover" threats to U.S. capital markets, Davis said.
Meanwhile, the congressional probe into Enron deepened as a Senate investigatory panel issued 51 subpoenas for documents relating to the financial collapse of the company that was once the nation's largest energy trader.
The Senate Permanent Subcommittee on Investigations issued the subpoenas to Enron, its auditor Andersen, and 49 individuals who worked for the Houston-based Enron dating back to January 1999. That list includes current and former members of Enron's board and company officers.
Looking into limited partnerships
As for the Senate panel's inquiry, no details on the kinds of documents sought were given. The return date on the subpoena is Jan. 31.
Andersen said Thursday that a "significant but undetermined number" of its Enron-related documents had been destroyed.
House investigators asked Andersen on Friday to turn over additional records Friday relating to the lost documents.
The Senate committee, chaired by Sen. Carl Levin, D-Mich., formally launched its investigation into Enron on Jan. 2. It is one of several congressional committees probing Enron.
Levin's committee is using its subpoena power in an attempt to uncover evidence about the internal dealings of Enron and its use of shadowy limited partnerships. It's been alleged that the partnerships were used to keep billions of dollars off the company balance sheet.
Levin told reporters Friday in Detroit he found it "troubling" that Andersen had destroyed documents, Dow Jones reported.
He said the committee's investigation wouldn't be affected by the Justice Department's newly announced criminal investigation.
The Justice Department is focusing on whether Enron executives committed financial fraud or violated insider-trading laws.
On Thursday, Attorney General John Ashcroft and his chief of staff removed themselves from any involvement in the investigation. Ashcroft received more than $50,000 in campaign contributions from Enron and Lay for his unsuccessful Senate re-election bid in 2000.
The Securities and Exchange Commission and the Labor Department are also conducting investigations.
In a related development, Bush said Thursday that the Treasury, Labor and Commerce departments are expected to convene a working group to examine whether pension laws should be amended to give workers better protection during bankruptcies.
Several Enron workers testified on Capitol Hill last month that their retirement savings were wiped out because the company blocked them from trading Enron stock in their retirement plans as the stock collapsed.
"At first blush, it looked like Enron operated within the rules and regulations that existed and still exist today with regards to how it manages its 401(k) plans," O'Neill told ABC's "Good Morning America" Friday.
Richard W.
The liberal demoSTUPIDs can beat their drums all they want, but they will come to find that there was probably a lot more political "hank panky" between Enron and the Clinton administration vs. Enron and the Bush administration.
They will try to paint the "BIG OIL" connection, but I think that we are all a little tired of that by now.
Next thing you know, the DNC will be running adds saying that it was actually Bush and "his Enron cronies" that were in the truck that dragged James Byrd to death. Don't laugh, I wouldn't put it past them.
Richard W.
Richard W.
Why is it that when a Republican administration is sought out for help and the Republican administration refuses to do so, is it a scandal? Conversely, why is that when a Democratic administration is sought out for help and the Democratic administration provides it, is it not a scandal?
I hate the press.
I wouldn't count on it. The RATS and their friends in the liberal media are pulling out all the stops trying to get some traction for the next elections. The real blame here goes to Enron management and I hope that they are forced to give back every single dime that they looted from the failing company. I don't care if Ken Lay is a great guy and takes cruises with Rush, he behaved poorly and more like a thief in the night than a responsible person in his position.
Richard W.
Great point. I did a quick check and some of the folks at Dirty Underwear are trying to say that Rubin's calls were not an issue at all. However, some folks are realizing that both Dem and Repubs got political contributions from Enron and more and more of the Enron follies took place several years ago.
I still believe that this has the potential to land with a dull thud if the Dems keep pushing it in the manner they have. I seem to remember reading last night on FR where a Fox poll shows that many Americans believe that the Dems are trying to use the economy as an issue rather than trying to work on the economy. Perhaps the sheeple are on to the Dems, and then again, perhaps not.
The manipulation of markets is not even hidden in the case of the Federal Reserve. The interest rate manipulation is not even considered unusual by most conservatives, but needed in a free market.
What is free about driving down the income of a saver to protect an investor that is leveraged in the market? What is free about boosting the sale of a stock when an investor is trying to buy a particular stock?
What is right about letting a drug dealer walk into a brokerage and invest $100,000 in the stock market, thereby laundering his money, but preventing him putting it in a bank for fear he will be reported? What is free about enabling an investor to wire 1000 shares for sale overseas in a stock market without any reporting requirements, while insisting that any money sent overseas exceeding $5000 be reported on his tax return?
These are questions people should be asking, instead of wondering why our government seems so corrupt. The entire concept of our financial system is manipulated from the gitgo.
The record of our former administration is one of corruption and manipulation. At least this administration has said no on several requests to tilt the playing field.
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