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Anyone else think if this happened under Clinton there would be impeachment hearings?
An interesting side story of this is that the Astros want out of the name for their baseball park but can't. Enron paid the naming rights for this year (where did this money come from?). Can you imagine with t shirts saying "Enron Field?"
 

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Yes, I suppose there would.



New letters hint at Bush-Lay friendship
February 16, 2002 Posted: 1:18 PM EST (1818 GMT)



Bush wrote a note in 1997 wishing Lay a happy birthday.


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AUSTIN, Texas (AP) -- Letters released by state archivists suggest a personal relationship between President Bush and former Enron Corp. Chairman Kenneth Lay, though the White House has insisted that the two were never very close.

Documents released Friday show that Lay wrote repeatedly to Bush throughout his governorship, seeking support for legislation benefiting Enron. Many of the letters concerned electricity deregulation and an overhaul of laws to make it harder to bring lawsuits.

Other letters were personal, with the two exchanging birthday, holiday and get-well wishes.

Some 350 pages of correspondence between them were released Friday following requests from news organizations and others under the state's open records law.

Bush wrote a note in 1997 wishing Lay a happy birthday: "55 years old. Wow! That is really old. Thank goodness you have such a young, beautiful wife. ... Laura and I value our friendship with you."

In a December 1999 letter, Lay wrote Bush and his wife, Laura, to thank them for a "Tejano Santa" print by artist Sam Coronado that the couple signed.

"It was so thoughtful of you to send it to us, and it is a gift we will treasure," Lay wrote, signing the note simply, "Ken." In a handwritten note at the bottom, Lay wrote, "Linda and I are so proud of both of you and look forward to seeing both of you in the White House."

White House and Enron officials have insisted that Bush and Lay were never very close.

Last month, Bush adviser Karl Rove said, "The president knows him. But the idea that he is a friend in the sense that this is a guy who's a close intimate is just ludicrous."

Bush said he met Lay in 1994 when the businessman was a supporter of Texas Gov. Ann Richards, a Democrat who was later defeated by Bush.

White House spokesman Scott McClellan said Friday that the documents were "old news."

"The president himself has acknowledged that Ken Lay was a supporter of his in the past," McClellan said.

In his two Texas gubernatorial campaigns, Bush received $312,000 from Enron officials, including Lay, who was one of his biggest donors. Bush received more than $100,000 from Enron officials for his presidential campaign.

In several of the letters released Friday, Lay urged Bush to support restructuring the state's electricity market, which would benefit the fallen energy trading giant.

Although Bush signed a law deregulating the market in 1999, the documents do not appear to show that Bush responded in print to Lay's interest in the issue.

In April 1997, Lay wrote Bush about Enron's negotiations for a $2 billion joint venture to develop Uzbekistan's natural gas fields. According to the letter, Bush was scheduled to meet with Uzbekistan's ambassador to the United States just a few days later.

Lay sold $70 million in stock
In another development, an official document shows that Lay sold some $70 million of his Enron stock back to the company to repay loans last year, including $16.3 million in the 13 days after he was warned by executive Sherron Watkins of serious accounting problems.

Lay frequently sold blocks of shares -- many worth as much as $4 million -- from February through October, a period in which the big energy-trading company's stock tumbled from around $78 a share to about $15.

Enron entered the biggest bankruptcy in U.S. history on December 2 after questions arose about its use of a complex web of partnerships that hid more than $1 billion in debt from investors and securities regulators.

Lay, who this week asserted his Fifth Amendment right against self-incrimination and refused to testify before Congress, had not previously made the stock-sale information public.

He filed it with the Securities and Exchange Commission, as he was required to do this week under a special rule giving officers and directors who make such stock sales to their companies more than a year to disclose them. A copy was provided Friday by his representative.
 

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jrj said:
Anyone else think if this happened under Clinton there would be impeachment hearings?
An interesting side story of this is that the Astros want out of the name for their baseball park but can't. Enron paid the naming rights for this year (where did this money come from?). Can you imagine with t shirts saying "Enron Field?"
Ohhhhhh Plllleeeeaaaassseeee!!! Does Everything Have Yo Be About Clinton?!?! :rolleyes: :rolleyes: :rolleyes:
 

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Well, I know the topic is about the government involvement on this but there are many things in the Enron case that just keep me shaking my head in disbelief.

1) How can Arthur Andersen walk away with this? if they can identify missing transactions and liabilities for billions of dollars, why the fuck do we need auditors for?, the whole accounting proffession is at stake now since you really think their work is worthless (or did they say it wasn't "material"?)

2) how could Standard & Poor, Moodys and other credit rating agencies don't see that coming? again, what are they good for? to tell us what we already know? Another proof that in modern businesses, a high percentage of population earn a wage for doing nothing useful.

3) Same for the financial advisors, those high-profile brokers. Enron was worth over 100 billion dollars, totally off line with other energy companies, their potential income, there were no possible calculation that would justify a value even half of what it had, and the brokers kept saying "buy", and charging their comissions of course.

I think the Enron case should teach a huge lesson and make clear that the accounting proffession, the brokers and the credit rating agencies are all fucked up and are useless, let's not forget the fall in the stockmarkets is largely due to the broker's stupidity, and they earn 6 digits salaries, at worst. A failure like Enron is simply not admisible, period and I hope the inverstors learn a lesson out of it, although I think they won't.
 

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I used to work in investment banking so this whole Enron thing came as no shock to me. In fact, I knew the whole Internet thing was gonna go bust.

So I see it very differently. I wonder how other people could have possibly trusted the bankers, accountants, VCs, etc.

A lot of the people forming and running these companies simply didn't know how to run their businesses. A lot of them thought that they could be very successful by growing very fast. You could say that the Andersens and CSFBs advised them very badly but if you saw some of the research and paperwork that came out of these companies you'd be scratching your head at their stupidity.

I used to have to type up presentations and other paraphenalia for roadshows. Sometimes my co-workers would look at the numbers and wonder how the bankers managed to get venture capitalists to put money into the stocks of these lousy companies. And some of these companies allowed additional offers of their stocks to raise capital...which effectively only diluted their stock and was just a ploy for the VCs to get their money back.

The PBS program "Frontline" actually did an episode about this whole mess called "Dot.con." (You could check the link for it here: http://www.pbs.org/wgbh/pages/frontline/shows/dotcon/ .) (NOTE: They mostly blast CSFB even though the other banks were just as bad. It's just that CSFB was the first one that got investigated.)

Apparently, it started with the Netscape IPO. They made tons of money on it and then the VCs and investment banks saw an opportunity to make a lot of money on Internet stocks in general. The banks competed to become the lead underwriters for these new companies and then they would rush them to IPO even if they weren't ready. The investment banks offered these IPO stocks to the VCs. Then the everyday daytraders would buy these stocks, the VCs would sell and the investment banks got nice commissions.

And that doesn't piss me off as much as the analysts on tv who would rate stocks or list them as "strong buys." What they wouldn't tell you is that their bank was the lead underwriter and thus got commissions for those stocks.

Networks now act like this wasn't a problem.

I remember during the presidential election Dick Cheney talking about how the private sector was good to him and how he made so much money in stocks. A lot of these people who made tons of money in stocks have "friends in high places." Of course, they gave off this illusion that investing automatically leads to good returns. Big fat lie. It's all about who you know.

The illusion thing really bugs me because my mom bought into it and kept trying to get me to buy stock for her. I kept telling her it was folly. I told her about the inflated numbers and all the "hiding" and she didn't believe me because of all these people on tv saying how great these stocks were...and all her friends at work (who all eventually lost their money) saying how much money they made (on paper).

Let me note that not everyone in investment banking makes a lot of money. Most of what they make is based on commissions but if you're a lowly analyst you're not making much and you're essentially "on-call" 24 hours a day.

Everyone is at blame in this:
  • The Companies - for not knowing how to run their businesses
  • The Investment Banks and the VCs - for colluding to make all this money on inflated stock
  • The Media - for having these analysts on their programs, for encouraging US to invest in these stocks and for not asking the questions that you'd expect good journalists to ask
  • Everyday Investors - for naively buying into the crap they were being fed
Nobody said anything because they were making good money. But once everything goes bust, everyone cries and points fingers.
 

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Cynicole, you are so right.

I used to work tracking investment portfolios and I could see that most of the brokers are just cheaters. There was one broker (won't say the name) that was actually very good, his account made amazing returns and I was told that has been the case for the last ten years, and you know what? this broker didn't buy dot.com, or enron, or nortel, they actually did research and looked for unknown companies with a viable business plan, one of the most succesful cases was a fitness equipment maker.

Most of the dot.com, including some very known one, had a business plan that truly sucked and anyone with a little of common sense would know that wasn't going to work, take photopoint for example, what a stupid idea! they gave you free space to post photos, then they realized they couldn't pay the costs out of advertising so they wanted to charge for that, who on earth would pay for that? specially when you can do it for free in Yahoo.

One amazing case in Canada was Nortel, the company's market value was over 200 billion. Some analysts pointed out that to sustain that kind of value the company would need to grow a double digit figure for the next 30 years, it was obvious it was going to blow, but people didn't listen. John Roth, the former CEO was choosen CEO of the year, then it turned out that he was only an idiot with education and influences, he made deals so stupid that a kid would have realised they were.

One wonders how all those CEO and brokers, and accountant of such a high profile make such a mess and they walk away with it, I deeply believe in capitalism but certainly certain things have to change.
 

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Fingon said:
One wonders how all those CEO and brokers, and accountant of such a high profile make such a mess and they walk away with it, I deeply believe in capitalism but certainly certain things have to change.
They went to nice schools and were in the right frat. And they jumped into investment banking because they thought it would make them tons of money.

A lot of the bankers I worked for were really dumb. I only spent a year and a half in college and I had more common sense than these guys. They just loaded up on these degrees...and somehow we're supposed to have confidence in their abilities.

They're also charismatic like hell.

And they have politician and lawyer friends. I saw a lot of these lists of directors and stuff. They'll get off or go down together.
 
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