Posted on 01/14/2002 2:38:11 PM PST by Dane
Monday January 14 5:46 PM ET
Bush Team May Have Feared Enron Aid
By MARCY GORDON, AP Business Writer
WASHINGTON (AP) - The meltdown of Enron Corp. threatened broader financial problems, but administration officials chose to do nothing - even after being reminded by Enron that the government intervened in 1998(when Rober Rubin was Treasury Secretary and Clinton was worrying about a "daliance" in the Oval Office with an intern) to prevent the collapse of a big fund for wealthy investors.
Fears of a conflict of interest involving a big Bush donor may have led to the inaction, analysts suggest.
In any event, the White House should have made public the extent of the energy-trading giant's financial woes when Cabinet officials learned of them in calls from Enron executives last fall, some analysts(Henry Waxman's fax suggests) said Monday.
Because of Enron's heavy donations to President Bush (news - web sites)'s campaigns, administration officials ``were tied at the hip to Enron,'' said Bill Allison, an official of the private Center for Public Integrity. That made it hard to help.
``The appearance would have looked terrible,'' Allison said. ``They felt that they couldn't act on behalf of Enron because of the political fallout.''
White House spokesman Ari Fleischer (news - web sites) has said that, as far as he knows, nobody at the White House was told of calls from Enron's chairman to Bush Cabinet secretaries. Fleischer said Monday he was unaware of any other contacts between Enron and White House officials, but he said Bush aides were not searching for any.
Commerce Secretary Don Evans said Sunday he had discussed calls from Enron's chairman with Treasury Secretary Paul O'Neill, who also had been contacted, and later told Andrew Card, White House chief of staff, but that Card never informed the president.
Enron was the nation's seventh-biggest company in revenue, and its collapse has hurt both individual investors and big pension funds around the country. Florida's fund, for example, has lost more than $300 million. Also roiling the financial system was the impact on major banks, which had loaned billions to the high-flying company that had been a darling of Wall Street and viewed as a technological innovator.
As the company struggled to maintain its credit rating last fall, Enron Chairman Kenneth Lay - Bush's largest campaign benefactor - phoned O'Neill and raised the example of government intervention in the case of hedge fund Long-Term Capital Management, according to O'Neill.
O'Neill and Evans have said they saw no need to inform Bush of telephone conversations they had with Lay in late October and November as Enron careened toward collapse and its stock price slid. The company entered the biggest corporate bankruptcy in U.S. history on Dec. 2, leaving countless investors burned and thousands of employees out of work and stripped of their retirement savings, which were heavy with Enron stock.
Given the magnitude of the troubles at Enron, ``I think they (administration officials) had an obligation to be public about the controversy,'' said Paul Light, director of government studies at the Brookings Institution, a think tank.
The White House should have disclosed the Enron phone contacts to the press immediately, Light suggested.
As for intervening to help Enron, he said, the millions of dollars in Enron campaign donations ``create an appearance problem that would make any action - legitimate or not - questionable.''
But David Ruder, who was chairman of the Securities and Exchange Commission (news - web sites) in 1987-89, said administration officials simply concluded that Enron's troubles didn't warrant government action.
``It seems to me that they made the right call,'' Ruder said.
While Enron investors and employees were deeply affected by the collapse, there were no strong ripples through the overall U.S. economy, he noted.
By contrast, in Ruder's view, a failure of Long-Term Capital - which teetered during the Asian financial crisis in the fall of 1998 - could have had a serious domino effect on the system.
The Federal Reserve (news - web sites) stepped in and orchestrated a $3.6 billion rescue of the hedge fund by U.S. and European banks and brokerage houses, which took control of it. Fed Chairman Alan Greenspan (news - web sites) has said the central bank acted to avert potential damage to the U.S. and world economies.
The banks and brokerage firms lending to the fund could have faced huge losses, and there could have been panic selling and losses for other investors.
Lay also contacted Greenspan about Enron's troubles. In this case, the Fed chairman decided to do nothing.
That is why they are really getting crazy on this..
The only thing the Bush Administration is guilty of is being laissez-faire in regard to Enron. Bush let the weight of bad corporate decisions fall on the heads of those who 1) made the decisions, and 2) those who chose to back those decisions through their investments.
Fears of a conflict of interest involving a big Bush donor may have led to the inaction, analysts suggest.
Translation: We're not going to break the law.
I wonder if Waxman thinks W should have warned us about K-mart's demise?
There was a post on FR yesterday by an Enron investor (who apparently dumped his stock early) who said that the warning signs of Enron's imminent collapse were there for all to see, provided one knew how to read the market. Any investor whose 401K portfolio was dominated by Enron stock has learned a sad lesson that maybe now they won't repeat.
A public warning to Enron employees would have been viewed similarly.
What is believable is that the Bush Administration doesn't give a rat's patoot about anybody else. Witness their failure to act to help employees of Enron, Dumbya's biggest campaign donor; their callous indifference to the plight labor unionists now losing jobs gained during the 8 Clinton-Gore years; Paul O'Neill's failure to lift a finger to help Argentina out of its current economic misery; and the plight of stock market investors suffering from a stagnant DJIA.
Is anybody better off now than when Bill Clinton was President? What will Dumbya say when his opponent in '04 raises the issue of 4 years of economic failure, following 8 straight years of economic prosperity?
Think they'll ever get around to acknowledging Dubya's gravy-toss?
What, I thought it was 10 !
Tsk Tsk Tsk..
I guess this isnt the Bush Whitewater after all huh??
Tell Nostril boy Waxman....its over...haha!
That being said, however, the insiders at Enron appear to have committed the most blatant securities fraud on record. Having sold tens of millions of dollars of Enron stock through August, 2001, Lay then writes to his employees advising them that the company's future was bright and urging them to buy the same stock that he and his cronies had been dumping all year! This was really bush league (no pun intended) fraud.
The President appears to have been victimized just by knowing these guys
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