Will Bush be tarnished by Enron's collapse?

The crash of his top corporate backer should discredit the president's anti-regulation economic policies, but it's unlikely to lead to reform.

By Andrew Leonard

Nov. 30, 2001 | When President Bush surveys the wreckage that currently goes by the name of Enron, he must feel something akin to the discomfort of a lover looking to get out of a relationship suddenly gone sour. Has a president of the United States and a single corporation ever been locked in a tighter embrace than Bush and Enron?

As anyone who has glanced at the business pages this week is aware, Enron, once the darling of Wall Street, is now a synonym for corporate catastrophe. The SEC is investigating a series of private partnerships set up by Enron executives that allowed the company to keep at least half a billion dollars worth of debt off its books. In the past two months, the company has fired its CFO, treasurer and top lawyer, and is facing a flood of class action suits from both investors and employees. And after the failure of its last-gasp merger attempt with competitor Dynegy, Enron is now frantically struggling to set up a bankruptcy plan that will allow it to keep some semblance of its operations intact. Its stock, which traded at $85 a year ago, is now at 26 cents.

So what does any of that have to do with Bush? Well, it's not just that the Houston-based energy trader has been the primary bankroller of Bush's political aspirations, back to his first run for Texas governor. The current Bush administration is also studded with Enron connections. Secretary of the Army Thomas White is a former high-ranking Enron executive, and Robert Zoellick, the U.S. Trade representative, was a paid member of Enron's advisory board. The Washington consulting firm run by Lawrence Lindsey, the White House's top economic advisor, worked for Enron. And other top officials, including Karl Rove, Bush's chief political strategist and I. Lewis Libby, Vice President Dick Cheney's chief of staff, both owned huge chunks of Enron stock when they joined the Bush administration. It's also worth remembering that at the end of the first Bush administration, Enron hired chief of staff James Baker and Commerce Secretary Robert Mosbacher.

Current CEO Ken Lay was also widely rumored to be a possible pick as either Bush's treasury secretary or energy czar, although in retrospect, given the huge profits Enron was raking in during the California energy crisis just as Bush took office, such an appointment might have been politically problematic.

Given all those links, it's fair to think Enron's collapse, at the very least, raises questions about the Bush administration's energy and economic policies, given that much of the administration shares Ken Lay's oft-stated views on promoting deregulation and allowing markets to rage unchecked by any government meddling.

But some Bush critics are going one step further, succumbing all too easily to the proposition that Bush is somehow culpable for Enron's misdeeds, or at least a co-conspirator. The argument appears to be this: If, as it seems increasingly clear, Enron's executives are guilty of cooking their books, defrauding investors and ruining the lives of thousands of their employees, shouldn't Bush come in for criticism too, given his close ties to the company? And isn't it even possible some administration figures, past or present, might be involved in Enron's misdeeds? Some are even whispering "Teapot Dome" -- as if the current situation were analogous to the Warren G. Harding administration scandal in which Secretary of the Interior Albert B. Fall leased oil reserves to private companies in return for kickbacks.

Next page: The list of the guilty is endless