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Incest and Corruption, Texas Style

by Gene Lyons / Bartcop.com Wednesday, Dec. 12, 2001 at 12:53 AM

Think of it this way: The Whitewater real estate deal involved a total investment of about 0,000…. Whitewater itself never cost the taxpayers a dime, but the demise of Jim McDougal's Madison Guaranty S&L reportedly cost the taxpayers maybe million. Now Republicans are reminding us what a real financial scandal looks like. With the value of its stock plunging from a share to 26 cents, the cost of the Enron implosion is roughly ONE THOUSAND TIMES greater than McDougal's finagling. It'll be interesting to see if it receives ten percent of the attention.

INCEST AND CORRUPTION, TEXAS STYLE

by Gene Lyons December 5, 2001

If Senate Democrats wanted to spend all their time investigating their opponents like another political party I could name, the Bush administration provides a growing list of suspects. The spectacular collapse of the Houston-based Enron Corp., whose stock was valued as high as billion last spring when California officials accused it of rigging a phony "energy crisis" to drain hundreds of millions from that state's electrical ratepayers, could keep an infinite number of congressional committees busy indefinitely.

Think of it this way: The Whitewater real estate deal involved a total investment of about 0,000, roughly the cost of modest Hillcrest fixer-upper. The Clintons lost ,000, not quite enough to buy a new SUV with all the trimmings. Whitewater itself never cost the taxpayers a dime, but the demise of Jim McDougal's Madison Guaranty S&L reportedly cost the taxpayers maybe million. Probing this fathomless mystery required months of House and Senate hearings, and kept Kenneth Starr and his sleuths busy for six years, at the end of which poor, sick McDougal had died in prison, and all Starr had to show for his trouble was a stained dress and a ruined reputation.

Now Republicans are reminding us what a real financial scandal looks like. With the value of its stock plunging from a share to 26 cents, the cost of the Enron implosion is roughly ONE THOUSAND TIMES greater than McDougal's finagling. It'll be interesting to see if it receives ten percent of the attention. Once the seventh largest firm in the Fortune 500, the self-styled "World's Greatest Company" controlled about 25% of the nation's natural gas and electrical generating capacity. It's now filed the largest bankruptcy in U.S. history. As they love to remind us, they do things big in Texas.

Enron was also George W. Bush's single largest campaign contributor, ponying up million to the Texas Republican over the years. Bush and Enron CEO Ken Lay were tight, attending many a fundraisier and ballgame together. Lay and his wife, who cashed in stock options worth 0 million at the peak of the market, have given 3,110 to the GOP since Daddy Bush was president. Both Presidents Bush, father and son, turned up for the gala opening of the Houston Astros' Enron Field last spring. A reader suggests they re-name the joint "Stock Fraud Park."

That kind of money buys more than access. It also buys power. Back in 1993 when the Washington press turned McDougal into Public Enemy #1, he was living in a mobile home on Social Security payments. Not so the Enron crowd. As Salon's Andrew Leonard points out, the Bush administration is packed with Enron connections. Top White House economic advisor Lawrence Lindsey was an Enron consultant. Secretary of the Army Thomas White and U.S. Trade representative Robert Zoellick worked for the company. White House political guru Karl Rove and Vice President Cheney's chief of staff Lewis Libby owned huge chunks of the now worthless stock.

James Baker, who masterminded Bush's post-election operations in Florida, joined Enron after the first Bush administration. So did Commerce Secretary Robert Mosbacher. It was a key 1992 regulatory ruling by Wendy Gramm, wife of Texas Sen. Phil Gramm and currently a member of the company's see-no-evil, hear-no-evil board of directors, that exempted Enron from federal scrutiny, making it easier for executives to cook the books, hiding huge speculative debt behind nonexistent profits-crony capitalism at its worst.

Facing a sure deluge of class action lawsuits from investors and employees- 21,000 retirement pensions have also vanished--Enron has fired its Chief Financial Officer, its Treasurer and its top lawyer. Arthur Anderson, the accountancy firm which signed off on the bookeeping will have much to answer for. Critics tell the Washington Post that Enron executives confronted skeptics with a combination of Texas arrogance and incomprehensible jargon of the kind taught in the nation's finest business schools. Anybody who suspected funny business simply didn't understand "derivative instruments which eliminate the contingent nature of existing restricted forward contracts."

Meanwhile, President Bush can thank two people that the whole steaming pile isn't resting on the White House doorstep: Osama bin Laden and California Gov. Gray Davis. The Enron collapse makes nonsense of GOP cant about deregulation and unfettered markets. But it won't get much attention during war time. Davis's threatened probe of Enron's California price-gouging apparently prevented Bush from naming Enron CEO Ken Lay to the cabinet, widely predicted at the time. Persuading Californians to conserve electricity also seems to have precipitated the whole collapse. On a provincial note, many Arkansans may recall that during the Clinton years, Texans enjoyed mocking our uniquely corrupt and incestuous political culture almost as much as certain Washington know-it-alls. So here's my suggestion: How about if y'all do your country cousins a great big favor and just shut up for a while?

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