The Fall of Enron: A Feeling of Disbelief and
Betrayal in a City Known for Boom and Bust Enron:
All over Houston, they're saying the company's
euphoric years were a facade, lies, a house of cards.
January 26, 2002
Los Angeles Times
E-mail story
By MEGAN K. STACK, TIMES STAFF WRITER
HOUSTON -- The woman in high heels and dark glasses stood on the
brink of the road, chin thrust high, cardboard hoisted aloft for all of rush
hour to read: "Ex-Enron employee. Will work for fair salary and
benefits. Seeking a company with integrity."
This parkway twists from the marble and ivy of the well-heeled River
Oaks enclave down to the shadows of downtown's skyscrapers. A few
hours after sunrise, it stood thick with the sedans of energy barons,
receptionists and lawyers.
When they read
Sonia Garcia's sign,
the white-collar
parade broke into
grins, slapped
staccato toots from
their horns, thrust
their thumbs skyward. The 38-year-old single
mother was a hit. But then, it isn't hard to win
over a Houston audience these days--just
grumble about Enron Corp. The energy
company's financial meltdown has left an entire
town angry, cuckolded and saddened. The
apparent suicide of Enron executive J. Clifford
Baxter falls in a winter already heavy with
empty pockets, evictions and jobless
afternoons.
"These people's lives are coming unraveled all over the place," Rice University sociologist Stephen
Klineberg said. "This was a horrible betrayal of the workers, and a horrible betrayal of the city."
Gone are the euphoric years of handshakes and hype, of baseball at dusk and black ties by night.
Enron has proved just one more spectacular boom and bust in a city long defined by dizzy rise and
devastating collapse.
"Everybody wanted to work there. I was so proud when I got the job," Garcia said. The graphic
artist hasn't worked in weeks, not since Enron gave her half an hour to abandon her desk. Now,
she's wondering how she'll make mortgage payments on her two-story house.
"It was all a facade," she said.
Facade. Lies. House of cards. Those words are sounding all over Houston. People who had no
connection to the company say they are ashamed of its behavior. Former workers fret over whether
to list Enron on their resumes. A sense that the city's reputation has been bruised hangs over a town
already struggling with ugly-duckling syndrome.
"Unfortunately, it tarnishes the entire city, it plays on the psyche," said George Fleming, a lawyer
who represents hundreds of shareholders and former employees in a suit against Enron. "They were
so connected. People go, 'Oh, yeah, Enron, that's Houston."'
In real numbers, Enron was never crucial--far from it. It was 7,500 jobs in a city of 4 million people.
Fewer than half of this town's workers have so much as a glancing relation to the energy industry.
But psychologically, symbolically, Enron had no equal. Its name graced the polished trestles of the
new baseball stadium. Cash from the company laced the fine and performing arts, and kept charities
afloat. It was no secret that Kenneth L. Lay was one of George W. Bush's most lavish benefactors,
and a longtime supporter of the elder George Bush.
Enron sold energy, but represented power. It was a floor crowded with traders, a new way to get
rich, a skyscraper full of ideas nobody else had dreamed up. Enron told this infant metropolis it was
the center of a new economy, and eagerly Houston believed.
Then the story changed. The lies started rolling. The no-can-lose stock got sick and withered. Enron
declared bankruptcy on a Sunday. On Monday, bosses rode the elevators down with grim news,
and massive layoffs swept Enron's offices. Furious workers stumbled from the building with laptops
and ergonomic chairs in tow. That was nearly two months ago, and the sting has barely faded.
"Even as the weeks go by, there is still a sense of disbelief and betrayal," said Sue Cruver, a
spokeswoman for the WorkSource, an employment firm that's trolling for jobs for more than 1,000
displaced Enron workers. "There's a feeling that those responsible should, and will, pay."
Day by Day, Spirits Sink
Every day, it seems, the treachery deepens. As newspapers hit the stoop each morning splashed
with new scrap of scandal, spirits sink a little lower.
"It starts to get next to you," said JoAnn Matson, a 40-year-old Enron worker laid off in December.
"Every time you think it can't get any worse, there's some new document shredding or criminal
activity. It makes you want to wash your hands."
This last week began with tales of destroyed documents, and ended with the discovery of Baxter's
body. His Mercedes was parked up the street from his suburban home. A suicide note and a
revolver were dropped at his side.
"It was tragic in the first place. This is just another tragedy," Terry Slater said. The owner of a
Houston marketing firm, Slater bought the Baxter family's two-story house when the clan moved
across town to a tonier neighborhood. "It's an indication of how bad it is."
Few Houstonians are able to articulate just what Enron was up to. Still, there was vague confidence
in the enterprise. Inside its looming downtown offices, it was generally understood, Lay and his
squad of wheelers, dreamers and weathermen were outsmarting the rest of the country.
It was odd, really--the company hadn't been around too long. Enron was born in 1985, when
Houston Natural Gas merged with a Nebraska natural gas company. But suddenly, in the 1990s,
the name was all over town.
Enron meant a lot to a town that spent more than 20 years swelling and suffering at the caprices of
the oil market. It meant that the demise of the old oil business didn't necessarily sound a death knell
for a metropolis baptized in crude. It was a symbol that this city could smooth out, grow up--and
remain an energy capital.
Reliant, Dynegy, El Paso. They call them the Louisiana Street Mafia, call this strip of concrete
Energy Alley. Commuters can watch the price of power run in rivers of red light on a market ticker.
Enron presided to the south, envied and awesome. At dusk the young traders burst into the city
from a day spent peddling industrial lifeblood across the country.
In 2000, Enron Field rose up, a hunk of gleaming glass and steel dividing downtown from the patch
of refineries to the east. The season opener was the most popular event that spring: Houston came
out in droves to watch Lay throw out the first pitch to the warm applause of the elder and younger
Bushes. Months passed. George W. Bush made good in the national elections, Enron stock prices
climbed ever higher and Houston felt itself at the axis of something rich and sturdy.
"The word on the street was it was the best company to work for," Matson said. "I mean,
people--any time I went somewhere it was, 'Oh, God, you work for Enron? Can I give you my
resume?' People admired us, they envied us."
A divorced mother of two, Matson walked out of a permanent position with
PricewaterhouseCoopers when Enron offered her a temporary job in the human resources
department. That gave way to a permanent spot, and after a year Matson had made up her mind:
She'd retire from Enron or win the lottery, whichever came first. She figures she lost $85,000 to her
once-beloved company.
Going broke on a bad--but bold--roll is still an act of grace in a city streaked with gambler's ethos.
It isn't the financial fall that galls Houston. It's the humiliation of being fooled by a benefactor.
"This thing with Enron makes me furious," Jim McIngvale said. Better known as "Mattress Mac,"
McIngvale is emblematic of old-time Houston business: He rolled into town 20 years ago with
empty pockets and built a furniture empire from Texas pine and oil boom cash. "They've
hoodwinked the entire city. They ought to be ashamed of themselves."
Enron's swan dive is a wallop to a town that stakes its faith in industry, free enterprise and
entrepreneurship. "If you can't make it in Houston," people here sometimes quip, "you're not trying."
They call it Boomtown, USA, for one simple, slick reason: Texas crude. Back in 1981, oil sucked
more than 1,000 newcomers to town every week. They came from Michigan, Pennsylvania, Illinois,
lured by warm climes and the promise of a steady paycheck. Every day, 230 more cars and trucks
rolled onto Harris County's roadways.
When the frenzy bottomed out, it happened fast. In 1982, the price of crude tumbled--and took
Houston along for the fall. By 1987, this landscape of bayous and billboards had sunk into the
nation's worst regional recession since World War II.
Enron Was Emblematic of the New Houston
It is this history that haunts Houston--and grounds it. No downfall, conventional wisdom dictates,
will ever compare to what this town has already suffered.
"The 1982 collapse was so profound, so devastating, so world-changing," Klineberg said, "that
nothing like this means as much anymore."
It's not the end of the world, everybody says. We've seen worse. But therein lies the rub: Enron was
emblematic of the new Houston, a city that would profit from energy in the abstract. The industry
that would stand sturdy in the face of progress. "It was the brave new world," said Rice University
social sciences dean Robert M. Stein. "They were dealing in intangibles."
Now, the Enron sitting rooms and conference tables are ghostly. The company can't pay for the
40-story tower it was erecting across the street from the original offices. Once a monument to
Enron's rocketing status, the shell of a building is a sore reminder of the company's fall from grace.
Spring is coming, but nobody can be sure how much longer the Astros' home will bear the Enron
name.
"If they leave Enron Field named Enron Field this year, I'm not going to a single game," McIngvale
said. "I don't care if they're paid up or not.
"They ought to call it Texas Field or Houston Field or anything else after the way they treated their
employees."
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