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Enron Mail |
This article from NYTimes.com
has been sent to you by gwoulfe@enron.com. The Flipped-Over Rock February 21, 2002 By WILLIAM SAFIRE WASHINGTON -- What wife of a United States senator profited from her close association with a big company that did heavy lobbying of the federal government and then went bust, costing investors billions and workers their jobs? Why, Wendy Gramm, most recently awakened watchdogs would say, wife of the Republican Phil Gramm of Texas, previous chairman of the Banking Committee. As a director of Enron, she was on the audit committee that didn't question the fast-and- loose auditing, and (subtracting the deferred compensation that went into the tank) received about $220,000 over eight years. That's peanuts, say Republicans. The senatorial wife who hit it big was Anne Bingaman, married to New Mexico's Jeff Bingaman, chairman of the Energy and Natural Resources Committee. As lobbyist for the telecommunications comet Global Crossing, which went bankrupt last month, she received $2,500,000 for six months' work during 1999. Both senatorial wives are accomplished executives who parlayed responsible government appointments into lucrative private positions. Wendy Gramm was chairman of the Commodity Futures Trading Commission. Anne Bingaman was Bill Clinton's assistant attorney general for antitrust until leaving in June 1996. Her lobbying fee for delaying approval of a competitor's undersea cable still makes Beltway bandits gasp. This juxtaposition shows that the Enron scandal is having only bipartisan political fallout; in this case, the "everybody did it" defense works. (You can bet that neither spouse will be subpoenaed and publicly humiliated by the club member Fritz Hollings at the Commerce Committee.) Because both the biggest bankrupt (Enron) and the fourth-biggest bankrupt (Global Crossing) made contributions to politicians of both parties, the resulting public disgust has been used to advance bipartisan campaign finance reform. Enron, which mostly embarrassed Republicans, has been wrung dry in the media; the sight of the tilted "E" symbol elicits yawns from viewers. It's the telecommunications giant Global Crossing's turn in the barrel; now we'll be hearing about Clinton connections on its board and its boss's million-dollar contribution to the Clinton library. Especially delicious will be the examination of Terry McAuliffe, the fabled fund-raiser whom Bill Clinton insisted the Democratic National Committee take on as chairman. McAuliffe says he merely invested $100,000 in Global Crossing and sold it for $18 million, and what's the big deal? What his D.N.C. spokesman won't say is what price per share he paid before the company went public, and what that stock was worth when it went on the market - and what he did to earn the difference. (Same question could be directed to Bush the elder.) But after the politicians tire of wounding each other and declare a truce, we may see some overdue action on the control of financial derivatives. These are the investments, often off the books, in futures and currencies that slice and dice risk and have made instant billionaires, but whose abuse has been disastrous to investors from Orange County to Long-Term Capital Management. Hedge funds are supposed to spread and reduce risk; in reality, they are often used to make huge bets unknown to their institutional investors. Accountants are supposed to enforce disclosure of all liabilities, but many have become expert in the concealment of risk. I don't profess to understand the worries some of my financial sources express about dangerous excesses in the convertible bond market, "swaptions" and ever-narrowing derivatives. But my unwillingness to break my head learning these intricacies gives the wheeler-dealers an edge. Complication and secrecy are mother's milk to them, while the average investor's best protection is full disclosure. When you flip over a flat rock like Enron or Global Crossing, you see much panicky scurrying-about by those who like to work in the dark. For too long, new-economy corporate creeps and their accounting Heeps have hidden risk in arcane off-the-books dealing. The new S.E.C. chairman, Harvey Pitt, seems not to get it: Stop pretending it's a political scandal and start dealing with the accounting and derivatives scandal. http://www.nytimes.com/2002/02/21/opinion/21SAFI.html?ex=1015395556&;ei=1&en=2af09e94be84eaa6 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company
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