But by then, Enron was sinking fast and a rescue operation probably looked fruitless. Paul Begala, a Texas native and a Democratic consultant, has another theory about why the Bushies sent “Kenny Boy” packing. “He was broke!” Begala says. “It’s like a hooker at the port of Houston. When the sailor ran out of money, she fell out of love.”
To believe Enron got nothing is to believe that all there is to this debacle is what we know now. Granted, Begala is a partisan observer. But the experience of the past several weeks suggests a burgeoning scandal with much more to uncover. “All we’re seeing is the tip of the iceberg,” says Begala. “If there’s nothing more, this will be the first iceberg in history with nothing more there.”
To unravel the story of Enron, a trip down memory lane is in order. Enron owes its spectacular rise from minor energy player to global trading powerhouse to the loosey-goosey regulatory environment in Texas. Founded in 1985, Enron predated George W. Bush’s reign as governor, but Bush did his part to line the streets with gold for Lay, who was known as “Mr. Houston.” Lay got to pick who he wanted on the state Public Utilities Commission, and he chose Patrick Henry Wood, the same Pat Wood Bush named to head the Federal Energy Regulatory Commission. Nothing wrong here–unless you mind having the fox guard the chicken coop.
In Houston, Enron employees hated big government; they thought the government had no role in the marketplace. The company’s philosophy–from the top down–was that Enron should have complete freedom to run its business as it saw fit. Enron managers wanted no messy bureaucratic forms to fill out, no pesky public servants peering over their shoulders.
They got what they wanted. In fact, there is a certain irony in the way that Enron employees, most of them ardent believers in the infallibility of the marketplace, now demand to know why the federal government hadn’t protected them.
Government tried when Bill Clinton was president. The Clinton administration made a half-dozen attempts to tighten federal regulations that might have changed the course of history at Enron. Former SEC head Arthur Levitt waged a valiant but losing effort to separate accounting and consulting functions at the big accounting firms. Industry lobbyists drafted letters of complaint to the SEC and got Democrats and Republicans that they had supported with big campaign contributions to sign them. Levitt’s reform died.
Meanwhile, Clinton’s appointee at the Commodity Futures Trading Commission, Brooksley Born, fought for full disclosure of derivatives and was berated in 1997 by Republican Jim Leach, then chairman of the House Banking Committee. Her reform died. Larry Summers, now president of Harvard, then deputy Treasury secretary, cracked down on off-shore tax havens. Bush’s Treasury secretary, Paul O’Neill, made quite a show of undoing Summers’ reforms when he took office.
Lloyd Bentsen, who was Clinton’s Treasury Secretary for a year, went after something called MIPs (Monthly Income Preferred shares), a tax-sheltering loophole. Congress made sure that didn’t happen. Sen. Barbara Boxer, the California Democrat, sponsored legislation to cap company stock in 401(k) plans at 10 percent. The legislation passed the Republican Congress, but was so watered down it has had no practical effect.
Finally, Clinton vetoed the Private Securities Litigation Act in 1995, and the Republican Congress overrode his veto with help from Democrats. That legislation made it harder for shareholders to sue corporations, particularly in the kind of situation we are now seeing with Enron. Clinton’s opposition was portrayed as evidence that he was in the pocket of the trial lawyers.
Just as Watergate exposed the smarmy way politicians did business, the Enron scandal is showing us the dark underside of the corporate world, and how it intersects with politics. The White House refuses to release the names of those Vice President Cheney met with while formulating the nation’s energy policy. What would we learn? That some of those people gave large sums of money to the Republican Party, perhaps on or near the dates they visited the White House? That Ken Lay laid out in a memo some policy provisions that he wanted–and later got them?
How can we believe the Bush administration when it says it did nothing for Enron when we don’t know what Enron asked for? Democrats should avoid turning this into a partisan witch hunt, as Republicans did with Whitewater. But Democrats are on safe ground in demanding full disclosure–not just of energy task-force records but documentation of Enron’s contacts throughout the administration. Did Ken Lay contact the FCC when his broadband business ran into trouble?
Clinton had to produce videotapes of donors showing up for coffee at the White House and was shamed for it. Rightly so. Where are this administration’s videos of Ken Lay visiting the White House when he was still riding high?
HOUSE MANEUVERINGS
Among the well-wishers at Nancy Pelosi’s swearing-in this week as Democratic whip was Mayor Jerry Brown of Oakland, Calif. Asked if the elevation of Pelosi to the highest position ever achieved by a woman in either party indicated that the Democrats are getting more progressive, the ever eclectic Brown gave the party a grudging compliment. “A little bit,” he said.
Pelosi ran Brown’s presidential campaign in Maryland in 1976 where he beat Jimmy Carter in the primary and briefly became a media darling. Brown remains a big fan of Pelosi’s, referring to her new role as “the axis of good.”
If Democrats regain the majority in the House, Pelosi could well become the next speaker. Democratic Leader Dick Gephardt is quite obviously running for president, and friends say that he wouldn’t hesitate to leave the speaker’s post for a formal campaign. His ambition is elsewhere. Besides it’s no fun being speaker with a sliver-thin majority. Pelosi’s real rival is Texas Rep. Martin Frost, who has leadership designs and would not step aside for the rookie Pelosi.
Pelosi has already begun to leverage her support for any future challenge. She drew the ire of Michigan Rep. John Dingell by giving $10,000 from her Leadership PAC to his opponent, Michigan Rep. Lynn Rivers, who because of redistricting is challenging Dingell in the Democratic primary. Not coincidentally, Rivers was a key lieutenant in Pelosi’s whip race; Dingell supported her opponent.
