Enron was just the beginning

July 17, 2008

It was you know; it was just the beginning. We sat on our sofas and around dinner tables and spoke about how shameful that scandal was, sympathetic to Enron’s victims; but, all the while we were thankful that we had no dealings, no connections with Enron.

Well, as the Rev. Wright has said, “The chickens have come home to roost.”

That is the real legacy of what has been ballyhooed as the “Reagan Revolution,” which Clinton went along with, but which found its full flowering in the administration of George W. Bush. The bookends of the Bush years are the Enron debacle and the federal bailout of bankers drunk on their own greed. And no two people in this country are more responsible for enabling this sordid behavior than the power couple Phil and Wendy Gramm.

Memory refresher: Phil Gramm made certain the approval of a bill that exempted energy commodity trading from government regulations and public disclosure.

Now, not wanting to let her husband outshine her in this endeavor, Wendy Gramm played a role also. She was head of Reagan’s Task Force on Regulatory Relief. (Yeah, I know, it has all the appeal of Ex-Lax or a barium enema.) But wait, our little overachiever was not done: she also chaired the US Commodity Futures Trading Commission during Reagan’s last term and through most of Clinton’s first term. This is when she reached her crowning glory: the commission exempted many energy futures contracts from regulation.

What was, I’m sure, a coincidence, a month after she resigned from her commission position, Wendy was appointed to Enron’s board of directors! Woohoo, Wendy!!! At least, that was what Phil was saying. From 1993 to 2001, Wendy must have felt like she’d hit the jackpot. Enron paid her between  $915,000 and $1.85 million in salary, attendance fees, stock options sales, and dividends.

(Let’s not forget Phil’s bud, Tom DeLay. He was a player in this as well. But we’ll save Tom for another day.)

Now, back to the present.

Part of that deregulation involved rulings of the US Commodity Futures Trading Commission, then chaired by Wendy Gramm, who upon retiring from that post became a highly compensated member of the Enron board of directors, serving for eight years. She even was on the board’s audit committee during the time of the corporation’s despicable financial shenanigans. While on the Enron board, Wendy Gramm also chaired an anti-regulatory think tank that received funding from Enron and other corporations that benefited directly from the policies her institute espoused.

My point here is not to expose the dubious ethics of the Gramms’ various business ventures but rather to question why Senator John McCain turned to Phil Gramm for leadership in his presidential campaign. Indeed, until his verbal gaffe, Gramm was highly visible and rumored to be the choice for Secretary of the Treasury should McCain win.

People, it is not going to get any better. As a matter of fact, it’s going to get worse. Much worse.

While the Securities and Exchange Commission was swatting flies, Chairman Bernanke turned up on Capitol Hill today to tell Congress that he was one confused man. That was the gist of a presentation in which he was able to do little more than point out the dangers of a collapsing economy and growing inflation.

The American economy has not been in such serious trouble in seventy-five years. You cannot expect government officials to say that, however. Commerce, like religion, depends on faith. That Paulson would present a plan that contradicts everything he has stood for as a businessman and a Republican demonstrates what he actually thinks.

…Panic, fear and worry about jobs, savings, debts and bills are on the minds of millions. Unemployment will grow, incomes will continue to shrink and prices grow higher as more companies head for bankruptcy court.

Tell the gents on the left of the page "thank you".

Enron & Keating  Oops! My bad. Mr. Phil Gramm & Mr. John McCain

Enron & Keating Oops! My bad. Mr. Phil Gramm & Mr. John McCain



  1. Your point is well taken about Mrs. Gramm, but she did not serve for long during the Clinton administration. She resigned on 1/22/93, two days after President Clinton took office. You also might be interested in this entry from the CFTC History page:
    “January 22, 1993—Using new exemptive authority granted in the Futures Trading Practices Act, the CFTC exempts certain swap agreements and hybrid instruments from regulation under the Commodity Exchange Act.”

    That exemption was passed on the last day of Mrs. Gramm’s tenure.

  2. Jim, thanks for the clarification on Wendy Gramm’s end date.

    I hope you come back because I have a question for you. Admittedly, I am a novice at financial matters other than my own paltry checking and savings accounts. That being the case, am I understanding correctly that this exemption of hybrid instruments was a huge benefit to Enron in their selective accounting practices and financial reportings?

  3. […] still are. I’m oversimplifying here, but the high prices that we’re paying at the pump? Go back to Enron was just the beginning.  The deregulation of the banking industry – the Gramm sponsored Commodities Futures Trading […]

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