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Posted on 01/10/2002 4:30:08 PM PST by MeekOneGOP
Thursday January 10 6:09 PM ET
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By Arshad Mohammed
WASHINGTON (Reuters) - The collapse of Enron Corp. entangled the Bush administration on Thursday as the White House said two Cabinet officers were warned of its looming bankruptcy and Attorney General John Ashcroft (news - web sites) recused himself from the criminal investigation into the company.
Trying to inoculate himself from the political fallout, President Bush (news - web sites) ordered a review headed by Treasury Secretary Paul O'Neill of U.S. pension and corporate disclosure rules to avoid a repeat of the energy trading firm's collapse, in which thousands of employees lost their pension savings.
In a series of stunning disclosures that followed Wednesday's announcement of a criminal probe into Enron, the energy firm's auditor, Andersen, said its employees had destroyed documents related to the former energy giant's balance sheet.
Bush's team has close ties to Enron and its chairman, Kenneth Lay, a major Bush campaign contributor who last autumn called O'Neill and Commerce Secretary Don Evans, Bush's 2000 campaign manager, to warn them of the impending bankruptcy.
The White House said O'Neill and Evans opted to do nothing about Lay's calls, which appeared to hint at the possibility of a private bailout like the one orchestrated by the New York Federal Reserve (news - web sites) in 1998 for hedge fund Long Term Capital Management.
A senior U.S. official, however, said that Lay ``did not ask for anything'' in the telephone calls.
The Justice Department (news - web sites) on Wednesday announced it had opened a criminal investigation into the energy trading company, whose December bankruptcy threw thousands out of work, devastated investors and wiped out the pension plans of many employees when its stock price plunged.
Ashcroft removed himself from the investigation, which is expected to focus on whether the firm misled investors about its accounts, because Enron gave him political contributions for his run for a U.S. Senate in his home state of Missouri.
DOCUMENTS DESTROYED
Anderson, the Big Five accounting firm that served as the company's auditor, on Thursday said its employees had deleted documents related to its review of the company's finances and congressional sources said thousands were destroyed.
Rep. Henry Waxman (news), a California Democrat who has already been seeking information about contacts between the White House and Enron, questioned whether the Bush administration could have done more to help the company and its employees.
``The White House had knowledge that Enron was likely to collapse but did nothing to try to protect innocent employees and shareholders who ultimately lost their life savings,'' he said in a statement. ``I am deeply troubled that the White House stood by and let this happen to thousands of families.''
Bush, who worked in the oil industry and has known Enron's chairman since he was governor of Texas, appeared to distance himself from Lay, saying he never discussed Enron's financial difficulties with him and last met the executive last spring.
``I have never discussed with Mr. Lay the financial problems of the company,'' Bush said, adding that the last time he had seen Lay was last spring at a literacy fund-raising event organized by his mother, former first lady Barbara Bush.
PHONE CALLS
White House spokesman Ari Fleischer (news - web sites) disclosed on Thursday that Lay telephoned O'Neill and Evans last autumn saying his company might not be able to meet its obligations.
Fleischer said Lay suggested the possibility of using the case of Long Term Capital Management (LTCM), a hedge fund which benefited from a private bailout orchestrated by the New York Federal Reserve in September 1998, as model for his company.
After studying the matter and concluding that Enron's problems would not have the kind of systemic effects on the economy that were feared in LTCM's case, O'Neill and Evans decided against taking any action.
``They both agreed no action should be taken to intervene,'' Fleischer said, adding that Bush was not informed of the decision but believes O'Neill and Evans acted ``wisely.''
At his daily briefing, the spokesman fended off questions about why Bush was not informed of the decision, the propriety and timing of Enron contacting top government officials about its problems, and whether Evans and O'Neill acted properly.
``Communication is not a wrong-doing. What took place here was they received phone calls and took no action,'' Fleischer said. ``The charge has been did the government take any action, and the answer from these two officials is no.''
Treasury spokeswoman Michele Davis said Lay called O'Neill on Oct. 28 and Nov. 8 -- after Enron's key Oct. 16 disclosure that it was taking huge charges related to its partnerships, which provided the first hint of its spectacular unraveling.
Speaking to reporters after meeting with economic advisers on Thursday, Bush placed the emphasis on workers and investors who suffered as a result of Enron's troubles and ordered two reviews to recommend how to better protect them in the future.
He said the first review, by the Treasury, Commerce and Labor departments, would analyze pension and 401(k) rules and recommend ways to reform them so that ``people are not exposed to losing their life savings as a result of a bankruptcy.''
The review of disclosure rules would be conducted by the Presidential Working Group on Financial Markets, which includes the Treasury Department (news - web sites), Securities and Exchange Commission (news - web sites), Federal Reserve and Commodity Futures Trading Commission.
Once the world's largest energy trader, Enron slid in mere weeks last year from Wall Street stardom to the largest bankruptcy filing in U.S. history on Dec. 2. Its downfall, after withdrawal of a rescue takeover bid by rival Dynegy Inc., threw thousands out of work and hammered investors.
The episode sapped the life savings of many Enron employees who held large amounts of company stock in their 401(k) retirement plans, while top executives allegedly pocketed fat profits by selling before a plunge in Enron's share price.
``I have great concerns for ... (those) who put their life savings aside and, for whatever reason, based upon some rule or regulation, got trapped in this awful bankruptcy and have lost life savings,'' Bush told reporters at the White House, saying the groups would take a ``good hard look'' at the matter.
Earlier Stories
Bush Reviews Pension, Disclosure Rules After Enron (January 10)
Bush Orders Pension Rules Review After Enron Woes (January 10)
Bush Orders Treasury to Review Pension Rules (January 10)
1. Whitewater was primarily HILLARY. They needed cash. They actively participated in a scheme to defraud people - including their friends. Many people in Arkansas never heard of Whitewater until it became a scandal.
2. Enron has been and is in the public eye for years. SEC, the press, stockholders, board of directors, anyone and everyone had access to their activities. GWB did not take any money from Enron except as a perfectly legitimate and legal campaign contribution - recorded in the proper fashion.
3. Whitewater had limited players - all taking a virtual vow of silence and covering up for each other - until Jim McDougall decided to spill the beans. But by that time, he was ill - making him the male equivalent of 'nuts and sluts' - except this was 'sick and senile'.
4. Someone at Enron will talk - probably a lot of someones. They will turn on each other like rats. There's not going to be a Susan McDougall - (not) pretty in orange - willing to go to the slammer as a favor for Bill.
5. GWB will cooperate, but he will not be a patsy. He also will not lie. This is where his straight-shooting type of talk will pay off. He will get the benefit of the doubt from all but the most rabid left-wingers, and of course, the press. In the past month, he has exhibited a very savvy approach to taking on his enemies in a field where his experience is fairly limited - politics. He can now take on his enemies on a playing field where his experience is considerable - energy.
6. The Dems will try to tar and feather GWB and Cheney with the 'BIG ENERGY' mantra. This is the one area where they will both have to be in-your-face defiant of the environmentalists.
7. Hillary tried to stonewall Whitewater - in the face of advice from nearly everyone. Why? She was guilty - she knows it and we know it. GWB is going to encourage the Enron investigation . Why? Because he's innocent - he knows it and WE know it - now we will have to wait for the investigation to prove it.
8. Is there a big mess w/r/t Enron? Of course, and probably a great deal of culpability on the part of the executives - if it can be documented. The SEC will be under scrutiny, too.
9. Remember how everyone hated Ken Starr because he was 'effeminate' and 'pasty' looking, etc.? Well, put a picture of Henry Waxman in your mind's eye. He's not going to glean a lot of support either. Who wants to watch him on TV all day? Rosa Lauro, Patty Murray?
10. I know I'm going to get flamed again (I do every time I bring this up), but GWB needs to replace Ari Fleischer. He cannot handle the press on this issue; they will chew him up. It's so bad now that I cringe every time I see him step up to the podium. Nice guy? Yes. Smart? Probably. Press Secretary? Bush can and should do better.
Terry Keenan (FOX) gave Bill O'Reilly an excellent summary the other night. She said savvy investors did not put a lot of money in Enron because they were trading broadband instead of dealing in energy. She said 'what does an energy company know about broadband? It made ME very suspicious and it should have made the employees very suspicious too.' O'Reilly admitted he had shares in Enron and he wanted a 'full investigation'. She suggested that if Enron was worthy of investigation, then so were many other companies.
There's way too much wailing and gnashing of teeth about this. GWB's got a lot at stake and I for one would never want to play poker with him. Besides, he's from TX and they just love a good fight. The Democrats may be biting off more than they can chew.
Bush & Waxman - wanted dead or alive. Wanna bet who wins?
By Arshad Mohammed, ooops was I profiling?One of OBL's boys.
Apparently his admin is charged with meeting with Enron people and talking with Enron people. I read an article yesterday with a headline something like, "Cheney admits Enron Influenced Energy Policy." What the article actually said was that Cheney said that he met with Enron six times. That's it. That's the big admission.
I think Brit's people hit this dead-on tonight, especially Kondracke, which surprised me. The "sharks in the water" remark by Feinman indicates just how overblown the press is making this affair in re: Bush/Enron. This will turn out to be a financial scandal.
Enron was engaging in funny stuff and the smart guys on Wall Street knew about it, which is why Enron was tailing off throughout the summer.
So in October, Lay calls Evans and O'Neill and intimates that there might be need for Federal help. O'Neill shields the President (God knows how many Freepers have been asking for his scalp, I don't know why) and directs his undersecretary to investigate whether the Administration should push for a bailout of Enron.
The Undersecretary, apparently a good Republican who believes that There Ain't No Such Thing As A Free Lunch, recommends no dice. O'Neill says no. Evans says no. Lay and Enron are out of luck. Three weeks later, he's in bankruptcy court.
For the Democratic theory to be correct, Bush should have helped Enron get a bailout to help his rich cronies hold on to their stock values.
But he didn't. That's where this whole thing is going to fall apart.
Meantime, however, there will be some good to come of this. Apparently, Enron higher ups were selling stock as fast as they could while the little guys were getting screwed. And they lied to their auditors, the SEC, and Wall Street.
That's called bad juju.
There will be an insider trading scandal because of this and several Enron execs will be attending seminars at Club Fed. Bush will make sure that this happens.
Needless to say, Enron's CEO is off of the Bush family Christmas card list.
Be Seeing You,
Chris
That's all you got, nostril-boy?
End of Whitehouse story.
Please cite the misdeeds of which the Republicans stand accused.
Works every time as in the lib formula/logic 2+2 equals 7.
Right.
I've been hearing this stuff on the radio talk shows......and I keep listening, waiting for them to add something of substance that makes this such a huge "scandal".....and there's NOTHING.
Nobody even calls in to discuss it because there is nothing to talk about.
This is so typical of the Democrats. Trying to smear and damage Bush with these blown up non-issues.
Remember the huge revelation about Bush "drunk driving" that was supposed derail his campaign?
How about the HUGE Seminole and Martin County absentee ballot scandal that was supposed to end Bush's chances of winning the FLA recount? That huge "crime" turned out to be nothing.
Then Bush was trying to poison us with arsenic in the water.....and he was supposedly "changing Taiwan policy" and going to get us in a war with China.....and his missile defense backing out of the ABM treaty was going to return us to the cold war arms race with Russia....etc. etc. etc.
I'm sure there's plenty others can add to this list...but let's face it...the Dem's are always running around sounding the alarm like a bunch of hysterical children.
I suspect this Enron "scandal" is more of the same.
Or, to paraphrase: "I did not have financial discussions with that man, Mr. Lay."
Give me a break!
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