Dems Responsible for ENRON

[Bruzilla]

The last place that I ever thought I would see the Dems blamed for Enron and the other business misdealings that are being blamed on the Republicans would be on public television, but Frontline just did an episode that detailed how these deeds came about. In 1994 an effort was made in the Senate to craft a bill that would allow auditors to pull the scams that made scandals like ENRON possible. The bill was the brainchild of Sen. Chris Dodd and Sen. Joe Lieberman, both of CT. CT is where most of these auditors are located.

Clinton veoted the bill and Dodd led the effort to override the veto. A Democratic Senator apposing his own president. Without these laws being in place scandals like ENRON, Global Crossing, MCI Worldcom, etc., would never have happened. Frontline did several interviews with Clinton's SEC Chairman. He kept saying that he was pressured to go along with these schemes that the Dems wanted approved. He kept saying that "it was the worst thing I ever did..." and "Looking back I wouldn't have done that..." and "I felt like I had no choice but to agree with what they wanted."

This sure painted a different story from what the Dems would like everyone to believe. Way to go MPT!

 

[Duke]

U got some serious BS going here, Bru.

(It's me MGKrebs.)

First of all, the bill you are referring to only dealt with whether companies should count stock options as an expense. Certainly (to me) something that should be done, but NOT the central part of the scams that caused Enron, etc.

Second, let me quote the SEC chairman you referred to from the very same Frontline story:

http://www.pbs.org/wgbh/pages/frontline/shows/regulation/congress/
"In 1993, the Financial Accounting Standards Board (FASB) proposed closing an accounting loophole that allowed companies to avoid recording stock options on their balance sheets."

Arthur Levitt
Chairman of the SEC from 1993 to 2001.
“But what happened during the course of this fierce debate and dialogue was that the Congress changed, and Newt Gingrich brought to power a group of congresspeople who were determined to keep FASB from enacting this rule proposal. My concern was that if Congress put through a law that muzzled FASB, that would kill independent standard setting. So I went to FASB at that time, and I urged them not to go ahead with the rule proposal. “

And here is why he was worried:

+_Letter from House Commerce Committee
"In April 2000 the House Committee on Commerce, which oversees the SEC, sent this letter to SEC Chairman Arthur Levitt, warning of possible "hearings on the SEC's oversight of the accounting profession." Levitt tells FRONTLINE that he took the letter as a threat to the SEC's independence."

The REAL bill that caused Enron was passed in 1992. Your buddy Phil Gramm made it happen:

http://www.texasobserver.org/showArticle.asp?ArticleID=582

“As Public Citizen and others have thoroughly documented, ... Wendy Gramm served on the audit committee of Enron’s Board of Directors, and therefore is particularly culpable for failing to alert investors about the off-balance sheet hijinks that resulted in the largest bankruptcy in American history. In fact, Wendy and Phil helped create this disaster in the first place. As chairwoman of the Commodity Futures Trading Commis-sion, a federal regulatory agency, Wendy Gramm exempted Enron’s energy derivative contracts from regulation in the fall of 1992, setting the stage for the company to become a huge player in the wholesale energy market. That was one of her last official acts; Enron hired her a few days later to serve on their board, where she would earn at least $900,000 over the next eight years. After Wendy joined the board, Enron quickly became Phil Gramm’s top corporate contributor. It paid off. In December 2000 Phil Gramm pushed through–over the objection of regulators–a bill deregulating energy commodity trading, which set the stage for Enron’s online trading operation and ensuing dominance of the California energy market. That bill was a disaster for California ratepayers and a bonanza for Enron.”

 

[Larry Gude]

Krebs,

Here's the deal,

Clinton (democrat) gets credit for Welfare reform even though he had nothing to do with it. He was in charge.

Clinton got credit for the economic rebound that was happening before he took office. He was in charge.

Clinton gets credit for the exploding Wall Street years. He was in charge.

Clinton got credit for balancing the budget (which in fact didn't happen, but that's another argument). He was in charge.

The majority of the cheating and lying went on under Clinton. He was in charge. He certainly didn't do anything to fix it. Bruce Lindsey is culpable as is Leahy and Lieberman in terms of legislation they killed for their constituents, the accounting lobby.

Bush is in charge now and is fixing it. Harvey Pitt is gone and that is part of fixing it.

You'll notice that Enron disappeared as a mid-term election theme for the dems. It is simply because they had their fingers in that pie.

 

[Flo]

Interesting article in today's Washington Post.

http://www.washingtonpost.com/wp-dyn/articles/A40993-2002Nov11.html

 

[Larry Gude]

Good job Flo!

For Krebs...Bill Clinton was President at the time.

 

[Bruzilla]

Sorry Duke... maybe you ought to watch the whole show. The cause of the ENRON fiasco, and all of the others, was NOT the value of stock options. It was the change in the law that allowed auditors to provide services and support to their audited customers. This took the auditors out of the role of being honest brokers, and placed them in the role of being financially dependent on the companies they were suppossed to be keeping an eye on. This rule change resulted from the complaints of auditing companies who said that their revenues from auditing services were declining and that they needed other revenue pipelines. The change to the law was authored by Dodd and Lieberman... both Dems from CT, which is where most of these auditing outfits are located.

This change let auditors have a financial stake in the companies they were auditing, which opened the door for the abuses that we saw in ENRON, Global Crossing, MCI, etc. Also, just as a sidenote, Gingrich was never mentioned in that Frontline episode... ain't that funny.

 

[MGKrebs]

I'm confused, Bru...

Did you click on the link in my post above? Is that not a transcript of the show? The Gingrich mention was a direct copy and paste from that transcript.