Posted on 01/12/2002 8:25:23 AM PST by Bad~Rodeo
WASHINGTON, Jan. 12 (UPI) -- A Senate panel probing energy conglomerate Enron Corp.'s sudden collapse sent a subpoena Friday to Texas Republican Sen. Phil Gramm's wife, Wendy Gramm, panel sources confirmed, while a new contact with a Bush administration official -- by a prominent Democrat -- was disclosed by the Treasury Department.
Wendy Gramm has been a member of Enron's board of directors for eight years and of the crucial Audit and Compliance Committee as the giant company's financial condition was deteriorating.
Her subpoena is among 51 issued by the Senate Permanent Subcommittee on Investigations chaired by Sen. Carl Levin, D-Mich., seeking documents from Enron, the Arthur Andersen LLP accounting firm, and current and former officers, employees and board members of Enron.
Of the 51 subpoenas, 49 went to individuals, one to Enron Corp. and one to the Andersen firm seeking documents as far back as January 1999.
Phil Gramm is the second-largest recipient in the Senate of financial contributions from Enron, receiving $97,350 from the company between 1989 and 2001, according to data provided by The Center for Responsive Politics. The senator receiving the largest contribution from Enron is Sen. Kay Bailey Hutchinson, R-Texas, who received $99,500.
The subpoenas came as government and congressional scrutiny of the collapse intensified.
Friday evening, the Treasury Department disclosed that Clinton administration Treasury Secretary Robert Rubin contacted a department under secretary in early November to suggest he call ratings agencies who were poised to downgrade Enron's credit rating.
A Treasury spokesperson said Rubin, now chairman of the executive committee of a banking conglomerate with hundreds of millions of dollars of exposure to the Enron collapse, Citigroup, called Under Secretary for Domestic Finance Peter Fisher to ask what he thought of Fisher contacting the ratings agencies to encourage them to "worth with" Citibank and other Enron banks.
The spokesperson said Fisher responded negatively, saying he did not think such a call was appropriate and Rubin responded that he thought that was a reasonable position. "Fisher made no such call," the Treasury spokesperson said.
It was Fisher to whom Enron President Lawrence Whalley made six to eight calls in late October and early November, calls a Treasury spokesperson earlier Friday said Fisher took to be suggestions he call Enron's banks.
Then too, the department maintains, Fisher decided not to do anything.
Over Thursday and Friday, it was disclosed that Enron's chairman, Kenneth Lay, contacted top Bush Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and Alan Greenspan, chairman of the Federal Reserve, in October about Enron's financial difficulties.
Secretary of Commerce Evans said Lay sought assistance from the federal government, but Lay said in a statement late Thursday that he only sought to alert top financial leaders that his mammoth firm was having difficulties. O'Neill said he agreed with Evans that nothing was to be done.
President Bush, who has received political and financial support from Enron and Lay in all his political races, said the Enron chief did not contact him.
Several prominent Democrats have attempted to use the various Enron entreaties as evidence of a close association with the Bush administration but no one has accused White House officials of wrongdoing.
When Enron received no outside financial assistance and as the ratings agencies ultimately downgraded its credit standing, the company reported to stockholders that it had $500 million of previously unreported debt. The subsequent selloff of Enron stock was swift and dramatic -- and left many of the company's 21,000 employees with life savings that diminished to near nothing as the stock fell below a dollar a share.
As several employees later told a congressional hearing, they were prohibited from selling their Enron stock from their 401K retirement plans even though top executives sold $1 billion in shares while they still retained their value.
The company sought protection under Chapter 11 of the U.S. Bankruptcy Code on Dec. 2.
Arthur Andersen, the company's auditing firm, reported in testimony in December that it told Enron officials that some of their financial transactions might be illegal. Joseph Berardino, Andersen chairman, also testified that Enron withheld financial information from Andersen. He admitted that his firm's accountants may also have made some mistakes.
Then Thursday, Andersen disclosed that a "significant" number of correspondence, electronic files and other data may have been destroyed, some of it after investigations had begun.
Well before the Enron debacle began gathering steam, on Sept. 5, Sen. Gramm announced that he would not seek re-election after serving 18 years in the Senate. During his retirement announcement, Gramm said that he had achieved his goals as a senator and would move on to another career.
Gramm's spokesman, Larry Neal, declined comment on the subpoenas, but said Enron had nothing to do with Gramm's decision not to seek another term.
"He outlined in detail in his retirement announcement his reasons for leaving, and those were his only reasons," Neal said.
The House Energy and Commerce Committee, run by Republican Rep. Billy Tauzin, R-La., also wants to talk to Wendy Gramm. Tauzin requested the interview with Wendy Gramm by name in a Dec. 10 letter to Enron.
The spectacular financial collapse of Houston-based Enron has drawn broad scrutiny from a host of federal agencies and congressional committees.
On Wednesday, it was revealed that the Justice Department had opened a criminal investigation into the Enron matter.
On Thursday both U.S. Attorney General John Ashcroft in Washington and U.S. Attorney Michael T. Shelby in Houston recused themselves from the investigation. Selby's office announced that he and several other attorneys had relatives who were employed by Enron.
Ashcroft received a $25,000 contribution from Enron during his run for re-election to the Senate from Missouri and in an unsuccessful attempt to win the Republican presidential nomination.
The Securities and Exchange Commission also has opened a probe into whether Enron officers were capitalizing on their knowledge of the firm's financial condition when they sold millions of dollars in stock prior to its nosedive.
The agency also wants to determine whether Enron financial claims to investors were misleading and whether Arthur Andersen's audit of those statements was proper.
The House Energy and Commerce Committee led by Tauzin and Ranking Minority Member John Dingell, D-Mich., Friday announced that it was demanding a host of financial records -- including some that Arthur Anderson says were destroyed -- as well as interviews with Enron's financial oversight officials.
That request covers 43 areas of Enron's finances and corporate behavior including all earnings-related documents and memos, details about the finances and discussions related to several outside investment vehicles operated outside the company's normal procedures.
In the Senate, a Commerce Committee subcommittee -- led by North Dakota Democrat Byron Dorgan -- already has held a hearing on the loss of pension funds when the stock price collapsed. At that hearing, a top Arthur Andersen official said he thought there was a possibility that criminal acts had been committed by the company.
Dorgan plans more hearings into the loss of the retirement funds but so far has been unsuccessful in getting Lay to appear before the committee.
The Senate Government Affairs Committee also announced an investigation on Jan. 2 into the collapse, choosing to focus on whether government agencies failed to detect, or ignored, signs of the impending collapse. The committee plans a hearing on Jan. 24, according to Chairman Joe Lieberman, D-Conn.
The House Government Reform Committee has been slower to formally step into the fray, but its ranking member, California Democrat Henry Waxman, has been vocal about the possibility that Enron used undue influence on administration officials to avoid additional scrutiny of its finances and practices before the collapse. Waxman also has been engaged in a fight with the Bush administration over releasing details of meetings between Enron officials and high-ranking Bush administration officials, when the White House was preparing a national energy policy.
On Jan. 3 the vice president's office provided Waxman with a list of contacts between the vice president or his staff and Enron officials. The letter, from David S. Addington, the vice president's counsel, said that neither the vice president nor his staff had ever discussed Enron's financial status with the company's representatives.
(Mark Benjamin is UPI's chief congressional correspondent, and Nicholas M. Horrock is UPI's chief White House correspondent.)
There are five firms that are not questioned as being capable. She choose one of the five.
This is patent nonsense.
The directors of a company are the people responsible for that company. When something goes wrong, they are the people to look to. As a result, directors do get sued from time to time. That is why their companies provide them with special 'directors insurance' to cover their liability.
A man in a coma should not be on a board of directors.
Sure sounds like the "superb" Mrs. Gramm just sat on her ass collecting Board fees though, doesn't it? She's either incompetent or lazy from the looks of it, having apparently done nothing to protect shareholders or warning of accounting scams within the company. She IS on the Audit Subcommittee, isn't she?
Maybe she's not incompetent or lazy. Maybe she's corrupt. We'll see.
Republicans need to take the blinders off. Politicians are politicians - these parasites ALL want to acquire power, run your life and steal your money. Which, by the way, is the "mother's milk of politics", according to Wendy Gramm's husband.
The federal government sued 20,000 people merely because they sat on the board of organizations that went bankrupt and they were grossly negligent.
Heck, Henry Hyde (R) was sued too.
So being on the Enron Board of Directors is, what, just a political payoff?
I'm shocked.
'Sitting' on a board is not a passive act. Gramm was a member of the board, overseeer of its management. She was also a member of its audit board, overseer of the audits. How can you possibly think she is not responsible?
These people merely sat on the boards of S&L's that went bankrupt. In Arizona 100% of the S&L's went bankrupt and 100% of the Board members were sued by president Bush.
Those board members were in charge of businesses that lost tens to hundreds of millions of dollars each, losses that had to be covered by the U.S. government. Yet many of them made handsome profits. The government was right to go after them.
President Bush took money from the taxpayers at $150/hour to pay lawyers who got paid more the more they sued, then all of those private citizens had to hire expensive lawyers to defend themselves from what was basically frivilous and ridiculous charges.
The director of a company is not a private citizen. They have a fiduciary duty to the shareholders of that company to be resonsible in the management of the company.
You seem to regard the board of directors of a firm as a honorary title which carries no responsibility or authority. That is not the case at all.
Citigroup lent Enron 3 billion. Do you think they relied on Mrs. Gramm's due diligence ? I have helped clients with loans of 3 million where the banks send in their own auditors.
About the only thing possible that she could be held neglient for is if she ignored a warning from someone at the accounting firm or at the company.
Also... does a President sue anyone?
And even if that is in the President's job description, is it in any way believable that Poppy Bush would "maliciously" sue his own son, Neil?
However, I do like his assertion that Directors were sued, whether or not there was indication of guilt…
I’ve never believed that a Bush son could have been guilty.
In 1985 it was known that the S&L's were troubled and that it could bring forth a huge financial expense to the taxpayer because 100% of their loans are insured. Many S&L's had fallen into the mentality that any loan for any real estate development was a good thing. Professional opinion in the industry believed that was true. As all of their loans were 100% insured unlike in any other nation on this earth it was a big concern for responsible leaders in our guv.
Jim Wright was Speaker of the House at that time. He was also the Democrats' top fund-raiser. The S&L industry was giving lots of money to the democrats and had a very close relationship with Wright.
Ronald Reagan tried to introduce legislation in 1985 concerning the S&L problem. Wright wouldn't let the legislation be voted upon though. The legislation would've caused the guv to do some bailouts at that time, but basically would've prevented the S&L's from making the problem worse which conventional wisdom in those days believed that the S&L's would do and thus lead to a much larger bailout later.
Jim Wright lived in a condo provided to him by an S&L. I think Wright's income from his book came from the fact that somebody (S&L's I think) purchased tens of thousands of copies and merely warehoused the books. Wright was crooked. Gingrich gave speeches about it all over the country while the media ignored it. Wright resigned rather than let the scandal go public.
In 1986 the congress passed a big tax reform act which basically was the final trigger for the S&L disaster. The new tax law changed dramatically how real estate development investments were treated making them much less viable. The Wall Street Journal predictdd that if that bill was passed, then it would result in massive real estate development depression and wholesale bankruptcy of parts of the nation's S&L industry. It was passed with both Democrat and Republican support and the WSJ's prediction came true.
Many of the S&L's invested also in junk bonds. The government under Bush ruled that all S&L's had to sell all junk bonds in one year. This caused the junk bond prices to decline dramatically and hurt the S&L's further.
Then the government spent about 200 billion dollars under Bush to cover the insurance of all those bad loans. Then they spent even more money on those lawyers sueing all those people unjustly.
If we hadn't been the only country in the world that insures 100% of these loans, or if the government hadn't passed the 1986 law the whole thing would've been avoided.
There was in fact massive damage done to the economy over it. It made GHWB look bad and when the recovery came it made Clinton look good.
The media successfully blamed the whole thing on Ronald Reagan who had supported the initiative that began under Carter to deregulate the S&L industry and let them invest in what they want to invest in. That deregulation had many positive benefits, but I admit its' mishandling did contribute very much to this problem.
It only demonstrates that politics is everything according to the American elite, the welfare of our people mean nothing. Wendy Gramm should have to live by the standards that the elite have created. She and her family should be destroyed.
Yes, of course. Politicians are always protected.
So, what was her role as a member of the Board and Audit committee? Showing up to eat donuts on a quarterly basis? No responsibilities to actually DO anything?
The whole thing smells, and all most people on this thread want to do is cover it all over and pretend it's just sleazy democRats at the root of it all.
Was Wendy Gramm put on the Board and compensated for services she rendered, or was it just another standard political payoff?
I vote the latter.
Monitoring the details and the work produced is also needed.
As for Gramm's wife, I think she should be subpoened to find out what she knew and I am a big fan of Sen Gramm. I just think the Justice Department should be the one doing the subpoenas since LIEberman obviously has a conflict of interest between Citigroup and Enron!
I'm bitter that the American nation was treated so badly by the S&L crisis and by the Bush admin's role in it, but the S&L problems didn't effect me so negatively. I just think it so pitiful that Wendy Gramm is in the same situation now and the Republicans will no doubt defend her while 10 years ago it was official policy to really slam many citizens who were in a similar situation. I couldn't get a job in Arizona construction industry because 70% of Arizona construction industry was destroyed by this crisis. I had to move to Nevada, not a big deal. Now I'm back.
I did work for a big real estate developer in Arizona during that time. Our company used to fill out the paperwork for loans from S&L's with a lot of very dishonest information. The experts at our company told me on more than one occasion that it was completely normal in that industry to do that. The game was that even the S&L's knew the info was false. They were just shoveling money out the door. The lies were told so that the federal bureaucrats would approve the loans.
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