Enron and the Gramms
January 17, 2002
By BOB HERBERT
The New York Times
When Senator Phil Gramm
and his wife Wendy
danced, it was most often to
Enron's tune.
Mr. Gramm, a Texas Republican,
is one of the top recipients of
Enron largess in the Senate. And
he is a demon for deregulation. In December 2000 Mr.
Gramm was one of the ringleaders who engineered the
stealthlike approval of a bill that exempted energy
commodity trading from government regulation and public
disclosure. It was a gift tied with a bright ribbon for Enron.
Wendy Gramm has been influential in her own right. She,
too, is a demon for deregulation. She headed the
presidential Task Force on Regulatory Relief in the
Reagan administration. And she was chairwoman of the
U.S. Commodity Futures Trading Commission from 1988
until 1993.
In her final days with the commission she helped push
through a ruling that exempted many energy futures
contracts from regulation, a move that had been sought by
Enron. Five weeks later, after resigning from the
commission, Wendy Gramm was appointed to Enron's
board of directors.
According to a report by Public Citizen, a watchdog group
in Washington, "Enron paid her between $915,000 and
$1.85 million in salary, attendance fees, stock options and
dividends from 1993 to 2001."
As a board member, Ms. Gramm has served on Enron's
audit committee, but her eyesight wasn't any better than
that of the folks at Arthur Andersen. The one thing Enron
did not pay big bucks for was vigilance.
There's a lot more you can say about the Gramms and
Enron, and not much of it good. But Phil and Wendy
Gramm are just convenient symptoms of the problem that
has contributed so mightily to the Enron debacle and
other major scandals of our time, from the savings and
loan disaster to the Firestone tires fiasco. That problem is
the obsession with deregulation that has had such a hold
on the Republican Party and corporate America.
An article in yesterday's Times noted the extensive links
between Enron and the powerful Texas congressman Tom
DeLay. Mr. DeLay became unhappy when Enron wooed a
Democrat - a senior treasury official in the Clinton
administration - to run its Washington office. "Still," the
article said, "whatever the tensions last year, Mr. DeLay
and Enron had a natural alliance. In his days in the Texas
Capitol, Mr. DeLay was called Dereg by some because of
his support of business. And in Congress he has been a
longtime proponent of energy deregulation, an issue dear
to Enron."
Enron exploited the deregulation mania to the max, and
the result has been economic ruin for thousands upon
thousands of hard-working families. As Public Citizen put
it, "Enron developed mutually beneficial relationships
with federal regulators and lawmakers to support policies
that significantly curtailed government oversight of [its]
operations."
The kind of madness that went on at Enron could only
have flourished in the dark. Arthur Andersen was
supposed to have been looking at the books, but the vast
shadows cast by the ideology of deregulation allowed that
company to escape effective scrutiny as well. So you have
revolving-door abuses and pernicious financial
arrangements between companies like Enron and
auditors like Andersen that are similar to those between
private companies and government agencies.
Who's left to look out for the small fry?
If the deregulation zealots had their way, we'd be left with
tainted food, unsafe cars, bridges collapsing into rivers,
children's pajamas bursting into flames and a host of
corporations far more rapacious and unscrupulous than
they are now.
Enron manipulated the energy markets and cooked its
own books in ways that would not have been possible if its
operations had had a reasonable degree of transparency.
But Enron operated in what has been widely
characterized as a "black hole" that left competitors and
others asking such basic questions as how the company
made its money.
How long will it take? How many decades and how many
scandals have to come and go before we catch on? We're
human. We're self-interested. And when left to our own
devices, some of us will do the wrong thing.
Some perspective is needed. Unchecked deregulation is
an express route to chaos and tragedy. Where the public
interest is involved, a certain amount of oversight -
effective oversight - is essential.
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