Remora

A story in the Biz section of the NYT about the conflicted interests of the banks that are presiding over the anatomy lesson taking place over Enron's corpse:


"In a Manhattan bankruptcy court, where hundreds of lawyers are trying to carve up what remains of Enron, the first order of business is finger-pointing � and many of the fingers are pointing at J. P. Morgan Chase and Citigroup.With billions of dollars at stake, many creditors question whether the two Wall Street giants can represent their interests when, they contend, the banks helped cause many of Enron's financial problems in the first place. Some are even asking that the banks be thrown off the 15-member committee responsible for determining what is owed to Enron shareholders, lenders, employees and thousands of others left in the lurch by Enron's collapse. The banks are the subject of government investigations and private lawsuits over their role in structuring off-balance-sheet partnerships that helped sink Enron. Some creditors say the banks are in hopeless conflict, and the Securities and Exchange Commission has expressed concern, as well."


Greider has a nice piece on the suit against the banks that kept investor money flowing into Enron. This is manna -- poisoned manna, granted, but what else does a critic of the corporate culture live for, nowadays?

"Win or lose, the lawsuit poses numerous embarrassments for Washington politics, and Congressional reformers should study it for a summary of the corrupted laws that need to be re-examined. Perhaps the most important one is this: The merger of commercial banks and Wall Street investment houses, ratified by Congress in 1999 and legalizing the new financial conglomerates like Citigroup and J.P. Morgan Chase, has already reproduced the very scandals of self-dealing and swindled investors that led to the legal separation of these two realms seventy years ago in the Glass-Steagall Act. Morgan and Citigroup senior executives, for example, consulted Enron's top executives almost daily on how to solve the company's deepening financial problems, but that knowledge was never shared with investors to whom the banks sold Enron shares and debt securities or, for that matter, with other banks who took a share of syndicated loans. The banks' stockbrokers maintained "strong buy" recommendations even as Enron entered its "death spiral," as the lawsuit calls it. "

Lose is probably the way that coin is going to come up. But remember, way back, when the banking regulatory "reforms" were enacted -- remember the ardent opposition of Ralph Nader and his ilk? And the bipartisan, smily support of the Clintonites and the Repubs, all just getting along, for once?
Thank God for the impeachment. More bipartisanship would have sunk us all.

Here's an other graf from Greider's piece explaining the workings of the Enron partnerships:

"E nron's "partnerships" essentially allowed the company to sell assets to itself--a Brazilian utility, commodity trading contracts, broadband capacity--and to rig the prices and profits on both sides of the transaction, then book the sale as rising revenues for Enron and thus send the share price higher. "In order for Enron's accounting scheme to work, the parties involved had to be controlled by Enron," the lawsuit explains. "But this control and affiliation had to be concealed." The selected private investors, who received lucrative rewards for putting up front money for Jedi or Chewco or the others, understood this reality because they were assured by Enron execs managing the schemes of exclusive access to the company's charmed opportunities. If they knew, the bankers who arranged the SPEs must also have known."

Greider reaches back to Ponzi to explain this kind of scheme. But a much more relevant reference is to the daisychains of beloved memory perpetrated by Texas S & L's in the 80s. It would surprise LI if Ken Lay didn't know various of the participants in that scandal. The Enron partnerships look like the old "flips" so beloved of the consortium of S&L pirates and crafty realestatesmen in the good old days.

There's a story in D Magazine about one of the jailed in that scandal, which also, come to think of it, involved some Bush nearest and dearest. Those Bushes.

The story is authored by the fishily named Shad Rowe, and it rains down sympathy on one Wayne Pickering, who 'flipped' some land for an international "loan facilitator", an Indian named Asomull Mukesh. The S &L scandal actually puts LI in a difficult position, cliche wise, since we'd like to use the old, first time is tragedy, second time is farce phrase, but ... what about when the first time around was farce?

Well, upshot of the D story is that Wayne went to jail, yes he did, while Mukesh, incredibly, became a protected witness type. Mr. Rowe is very sympathetic to Wayne's plight, and mentions that "despite 400 letters on his behalf", our man had to go to the hoosegow. Once in prison, Wayne discovered that he was in... prison. There is a truly heartfelt graf in the piece -- don't cry after you read this, I beg you, reader. This is Wayne on what he learned in prison:

"Pickering says that in prison, if you mind your own business and keep your head down, people leave you alone. �For example,� he says, �I would not sit in the rec room with 100 guys�most of whom are minority�and try to change the TV channel from the NBA game to the Golf Channel. I would use a little common sense." Common sense kicks in when you are with minority guys, We suppose.

And so the middle class meets its prize construction. Imagine! The article is full of compassion for a guy like Wayne in meshes like that. Ah, perhaps if there were more Waynes checking out the dark side, there'd be less prisons.