Allow me to simplify. Citicorp and maybe JP Morgan invented a plan (a product). They sold that product to Enron.
They showed Enron how they could borrow upwards of 15 billion dollars without showing it as a loan on the balance sheet buy securing it with the stock of Enron. The reason this works is that the stock of a particular company is not an "asset" of that particular company.
What Levin's committee has not yet explored is the other side of the story.
Glass Stegall was revoked by Congress. Glass Stegall was an act after the last DEPRESSION in this country to prevent banks from loaning government (taxpayer) insured funds to them selves.
It did this by preventing banks from being in the stock (or any business).
The reason that they did this is that Citicorp could now own Smith Barney, and Solomon, and others, etc.
They were not only allowing Enron to mislead, but by doing so they were simutaniously pumping the stock to their own depositors life savings. Didn't Jack Grubman work for Citicorp, er I mean SmithBarney?
The better Enron looked, the more stock they could sell, the more loans they could make.
The day word leaked out, and before the discovery could be made, while still pumping the stock, they dumped 14 Billion dollars, screwing their own depositors. They got caught with a billion somehow.
I have also heard they shorted the stock on the way down, after all they were the only ones that knew the stock was about to be diluted by some 30%.
Unless Carl Levin can connect the dots on the other side of the story, Citicorp will walk. (meaning they get away "scott free")
This of course is only MY OPINION. If I had to, I could dig up the facts, and I am now only speculating on what those facts would show. |
