"We thought The Wall Street Journal was on a witch hunt of Andy Fastow," Lay testified Tuesday, referring to a series of articles the newspaper published about the partnerships beginning in October 2001.

"It was absolutely destroying the confidence investors had in the company and driving down the stock price," he added.

A time-honored ploy! Blame the media! Today, Bear-Stearns CEO Alan Schwarz attempted the same maneuver, according to Muckraked, which obtained a copy of his prepared testimony for a congressional hearing held Thursday.

Continue Reading...

]]> When Enron CEO Ken Lay testified in his criminal fraud trail in 2006, he accused the Wall Street Journal of bringing down his company.

“We thought The Wall Street Journal was on a witch hunt of Andy Fastow,” Lay testified Tuesday, referring to a series of articles the newspaper published about the partnerships beginning in October 2001.

“It was absolutely destroying the confidence investors had in the company and driving down the stock price,” he added.

A time-honored ploy! Blame the media! Today, Bear-Stearns CEO Alan Schwarz attempted the same maneuver, according to Muckraked, which obtained a copy of his prepared testimony for a congressional hearing held Thursday.

Continue Reading...

]]> http://www.salon.com/2008/04/03/bear_stearns_and_enron/feed/ 3 http://www.salon.com/2008/03/10/spitzer_fall_from_grace/ http://www.salon.com/2008/03/10/spitzer_fall_from_grace/#comments Mon, 10 Mar 2008 20:15:00 +0000 http://www.salon.com/technology/how_the_world_works//2008/03/10/spitzer_fall_from_grace

"I acted in a way that violated my obligation to my family."

Eliot Spitzer, governor of New York

As a reporter and editor who spent a good part of his career critically covering the excesses of the dot-com economy and the Enron era of runaway greed, the emergence in the early 2000s of Eliot Spitzer as a crusading attorney general, clad in shining armor and pointing his lance directly at Wall Street's biggest fat cats, was an unexpected dream. While the politicians in Washington were betraying every trust, Spitzer had the effrontery to act as if he had a responsibility to prevent the powerful from profiting at the expense of the rest of us.

Continue Reading...

]]>

“I acted in a way that violated my obligation to my family.”

Eliot Spitzer, governor of New York

As a reporter and editor who spent a good part of his career critically covering the excesses of the dot-com economy and the Enron era of runaway greed, the emergence in the early 2000s of Eliot Spitzer as a crusading attorney general, clad in shining armor and pointing his lance directly at Wall Street’s biggest fat cats, was an unexpected dream. While the politicians in Washington were betraying every trust, Spitzer had the effrontery to act as if he had a responsibility to prevent the powerful from profiting at the expense of the rest of us.

Continue Reading...

The true story may be something like the denouement of Edgar Allan Poe's "The Purloined Letter," which was in plain sight all along, a solution that can, as Poe wrote, "escape observation by dint of being excessively obvious; and here the physical oversight is precisely analogous with the moral inapprehension by which the intellect suffers to pass unnoticed those considerations which are too obtrusively and too palpably self-evident." To be excessively obvious, Gonzales' resignation, following Karl Rove's exactly by two weeks, is the shadow of the first act.

Continue Reading...

There are two major exchanges where contracts to buy and sell natural gas futures are traded; the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange, (ICE). But there's a huge difference between the two. NYMEX is regulated, ICE isn't.

ICE has no legal obligation to monitor trading, no legal obligation to prevent manipulation or price distortion, and no legal obligation to ensure that trading is fair and orderly.

Continue Reading...

]]> “Excessive Speculation in the Natural Gas Market,” a 139-page report released June 25 by the United States Senate’s Permanent Subcommittee on Investigations, is a masterpiece of its genre. An account of the energy market shenanigans engaged in by the now-defunct hedge fund Amaranth, the report is well-written, extensively documented, and makes a dramatically persuasive argument: A broken regulatory system allowed Amaranth the leeway to distort natural gas prices, and the system needs to be fixed.

There are two major exchanges where contracts to buy and sell natural gas futures are traded; the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange, (ICE). But there’s a huge difference between the two. NYMEX is regulated, ICE isn’t.

ICE has no legal obligation to monitor trading, no legal obligation to prevent manipulation or price distortion, and no legal obligation to ensure that trading is fair and orderly.

Continue Reading...

]]> http://www.salon.com/2007/07/06/amaranth/feed/ 10 http://www.salon.com/2007/04/04/water_dereg/ http://www.salon.com/2007/04/04/water_dereg/#comments Wed, 04 Apr 2007 16:53:00 +0000 http://www.salon.com/technology/how_the_world_works//2007/04/04/water_dereg Don't blame overpopulation or climate change or environmental degradation for global water shortages, says the Financial Times; the real villains are government bureaucrats.

"The question is how to overcome political resistance to the involvement of the private sector," [said David Lloyd Owen, a British consultant].

"The water industry is one of the most conservative in the world. By and large, it is still run by bureaucrats and engineers," Mr Owen said. "There is also a passionate and well-organized lobby against privatization."

The thesis of the article is that an era of increasing drinking-water scarcity is a terrific business opportunity for companies that specialize in water treatment and desalination. Algeria, for example, is spending billions of dollars on desalination plants, "after suffering acute water shortages five years ago." Global warming, in this formulation, is just more good news for the private water sector. If only governments would get out of the way and let them serve the people.

Continue Reading...

]]> Don’t blame overpopulation or climate change or environmental degradation for global water shortages, says the Financial Times; the real villains are government bureaucrats.

“The question is how to overcome political resistance to the involvement of the private sector,” [said David Lloyd Owen, a British consultant].

“The water industry is one of the most conservative in the world. By and large, it is still run by bureaucrats and engineers,” Mr Owen said. “There is also a passionate and well-organized lobby against privatization.”

The thesis of the article is that an era of increasing drinking-water scarcity is a terrific business opportunity for companies that specialize in water treatment and desalination. Algeria, for example, is spending billions of dollars on desalination plants, “after suffering acute water shortages five years ago.” Global warming, in this formulation, is just more good news for the private water sector. If only governments would get out of the way and let them serve the people.

Continue Reading...

]]> http://www.salon.com/2007/04/04/water_dereg/feed/ 12 http://www.salon.com/2006/07/13/lay_7/ http://www.salon.com/2006/07/13/lay_7/#comments Thu, 13 Jul 2006 16:47:00 +0000 http://www.salon.com/news/politics//war_room/2006/07/13/lay In 1998, three Texas men attacked a 49-year-old African-American named James Byrd. They cut his throat, chained him to the back of a pickup truck, then dragged him along a road for several miles. Byrd was alive for at least part of the ordeal; a forensic pathologist said that Byrd lived until he hit a culvert and his arm and head were severed. His attackers dragged what was left of his body for at least an additional mile.

Gruesome? Yes, but it's apparently no worse than what happened to Ken Lay.

The former Enron chairman died of a heart attack at his vacation home in Aspen, Colo., last week. At a memorial service in Houston Wednesday -- with former President George H.W. Bush in attendance -- a local pastor likened Lay's prosecution in Enron's collapse to the attack on Byrd. "Ken Lay was neither black nor poor, as James Byrd was," said the Rev. William Lawson, pastor emeritus of the Wheeler Avenue Baptist Church. "But I'm angry because Ken was the victim of a lynching."

Continue Reading...

]]> Read this story at http://www.salon.com/2006/07/13/lay_7/

Continue Reading...

]]> http://www.salon.com/2006/07/13/lay_7/feed/ 30 http://www.salon.com/2006/07/06/lay_6/ http://www.salon.com/2006/07/06/lay_6/#comments Thu, 06 Jul 2006 13:00:00 +0000 http://www.salon.com/news/feature/2006/07/06/lay Those sympathetic to Ken Lay might think his sudden death of a heart attack on Wednesday morning has saved him from a miserable existence. The architect of the biggest corporate fraud in U.S. history died four months before his sentencing on 10 counts of corruption. With a sentence nearly certain to top 25 years, the 64-year-old Kenny Boy was destined to die behind bars.

Those less favorably disposed, like perhaps some of the 5,600 Enron employees who lost their jobs and $2.1 billion in retirement savings, may feel they were cheated of justice, and wonder if Kenny Boy somehow willed himself to dodge the embrace of federal prison. There is no suggestion of suicide, and results of an autopsy should be available later this week. But just how common is it for defendants like Lay to exit the scene with such good timing?

There are statistics on how many prisoners die in prison, but none on how many defendants die before they get there. "It's nobody's job to count them," says Marc Mauer, executive director of the Sentencing Project. "I'd be shocked if anybody kept those records."

Continue Reading...

]]> Those sympathetic to Ken Lay might think his sudden death of a heart attack on Wednesday morning has saved him from a miserable existence. The architect of the biggest corporate fraud in U.S. history died four months before his sentencing on 10 counts of corruption. With a sentence nearly certain to top 25 years, the 64-year-old Kenny Boy was destined to die behind bars.

Those less favorably disposed, like perhaps some of the 5,600 Enron employees who lost their jobs and $2.1 billion in retirement savings, may feel they were cheated of justice, and wonder if Kenny Boy somehow willed himself to dodge the embrace of federal prison. There is no suggestion of suicide, and results of an autopsy should be available later this week. But just how common is it for defendants like Lay to exit the scene with such good timing?

There are statistics on how many prisoners die in prison, but none on how many defendants die before they get there. “It’s nobody’s job to count them,” says Marc Mauer, executive director of the Sentencing Project. “I’d be shocked if anybody kept those records.”

Continue Reading...

]]> http://www.salon.com/2006/07/06/lay_6/feed/ 22 http://www.salon.com/2006/05/31/enron_27/ http://www.salon.com/2006/05/31/enron_27/#comments Wed, 31 May 2006 12:30:00 +0000 http://www.salon.com/news/opinion//feature/2006/05/31/enron Enron's managerial miscreants Kenneth Lay and Jeffrey Skilling are facing a lifetime in prison, and the press is gleefully reporting every last detail. After all, this was a bracing confirmation of not just the glories of the American criminal justice system but also, implicitly, the idea that this time things are Really Going to Be Different in Corporate America. Henceforth, corporations will be caught and punished with the certainty that one would have expected at the end of an old "Dragnet" episode. More prosecutions are coming, count on that. As Gretchen Morgenson put it in the New York Times on Sunday, the Lay-Skilling convictions were, "at best, the end of the beginning of this dispiriting corporate crime wave."

All this is true, I suppose, if what we have is indeed a 1950s-style "crime wave," its parameters defined as a grim statistical count of arrests, convictions and sentencings. But that's not what we have at all. Like the pipe-puffing Freudian liberals of that era, I prefer to examine the root causes, the home environment, in which regulatory agencies like the Securities and Exchange Commission function in the manner of an indulgent, all-too-forgiving Montessori school headmaster. Corporate delinquents, having failed to respond to counseling, are turned over to the blue-uniformed constabulary of the Justice Department only when they become too obstreperous to control.

Continue Reading...

]]> Enron’s managerial miscreants Kenneth Lay and Jeffrey Skilling are facing a lifetime in prison, and the press is gleefully reporting every last detail. After all, this was a bracing confirmation of not just the glories of the American criminal justice system but also, implicitly, the idea that this time things are Really Going to Be Different in Corporate America. Henceforth, corporations will be caught and punished with the certainty that one would have expected at the end of an old “Dragnet” episode. More prosecutions are coming, count on that. As Gretchen Morgenson put it in the New York Times on Sunday, the Lay-Skilling convictions were, “at best, the end of the beginning of this dispiriting corporate crime wave.”

All this is true, I suppose, if what we have is indeed a 1950s-style “crime wave,” its parameters defined as a grim statistical count of arrests, convictions and sentencings. But that’s not what we have at all. Like the pipe-puffing Freudian liberals of that era, I prefer to examine the root causes, the home environment, in which regulatory agencies like the Securities and Exchange Commission function in the manner of an indulgent, all-too-forgiving Montessori school headmaster. Corporate delinquents, having failed to respond to counseling, are turned over to the blue-uniformed constabulary of the Justice Department only when they become too obstreperous to control.

Continue Reading...

]]> http://www.salon.com/2006/05/31/enron_27/feed/ 20 http://www.salon.com/2006/05/26/enron_clinton/ http://www.salon.com/2006/05/26/enron_clinton/#comments Fri, 26 May 2006 18:30:00 +0000 http://www.salon.com/technology/how_the_world_works//2006/05/26/enron_clinton Yesterday's gleeful dancing on the grave of Ken Lay and Jeff Skilling elicited an unusually large number of anonymous posts from readers eager to pin the blame for Enron on the Clinton administration --"all that bad stuff happened on his watch, so it's his fault!"

How the World Works welcomes readers of all political stripes, though we prefer it if they attach real names, or at least persistent identities, to their arguments. We generally aren't predisposed to take an argument seriously if it's signed "No Name Given."

Then again, the argument that Enron was Clinton's scandal and not Bush's is so absurd that one can understand why no one would put an actual name behind it. Let's review some history, shall we?

Ken Lay was George Bush's number one financial backer. During the 2000 election campaign, Bush frequently flew on Enron corporate jets. Bush's first cabinet included a former Enron executive, Thomas White, as Army Secretary, and two former Enron advisers, Lawrence Lindsey (Bush's first chief economic adviser) and Robert Zoellick (Bush's first United States Trade Representative).

Continue Reading...

]]> Read this story at http://www.salon.com/2006/05/26/enron_clinton/

Continue Reading...

]]> http://www.salon.com/2006/05/26/enron_clinton/feed/ 31 http://www.salon.com/2006/05/25/guilty_3/ http://www.salon.com/2006/05/25/guilty_3/#comments Thu, 25 May 2006 17:33:00 +0000 http://www.salon.com/technology/how_the_world_works//2006/05/25/guilty The people have spoken. Kenneth Lay and Jeffrey Skilling are guilty, guilty, guilty. You name it: conspiracy, wire fraud, securities fraud. Lay was convicted on all counts. Skilling was convicted on 18 counts of conspiracy and fraud.

Let's hope that chief executives everywhere feel uneasy on their thrones. Because the ramifications of this verdict are profound. More than any other corporation, Enron symbolized a culture of greed and arrogance that made mockery of the values of a civilized society. From its "rank-and-yank" treatment of workers to its scorn for government regulation to its elevation of the scruple-free, gunslinging trader into highflying culture hero, Enron declared with every step: We know best; we are the state of the art of modern capitalism. Follow us to the future, or suck on our exhaust.

And at its height, the company was lauded for its balls-out braggadocio. The business press fawned over it: Fortune magazine named it "most innovative corporation" in America six years in a row. Lay hobnobbed with presidents and was considered on the shortlist for energy secretary. Skilling was the Harvard-educated, McKinsey-trained "genius" who created brand-new markets with the wave of a hand. Enron was endlessly innovative, endlessly creative, endlessly profitable. Enron was what all companies aspired to be, if only those darned governments would get out of the way and let them run free.

Continue Reading...

]]> Read this story at http://www.salon.com/2006/05/25/guilty_3/

Continue Reading...

]]> http://www.salon.com/2006/05/25/guilty_3/feed/ 31