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To: H James Morris who wrote (138419)	2/3/2002 7:29:39 AM
From: craig crawford	Respond to of 164684

Enron probe may give Wall Street another black eye biz.yahoo.com Wednesday January 30, 5:42 pm Eastern Time .......................................................................... These investments probably went up in smoke, and federal probes into Enron's dealings may give investment banks yet another black eye. Research analysts failed to alert investors to Enron's spectacular collapse late last year, and the fallout already has caused major losses at banks across the nation. Enron's methods of accounting for the partnerships is under federal scrutiny of factors leading to the largest bankruptcy in U.S. history. Companies including Merrill Lynch & Co. Inc.(NYSE:MER - news), General Electric Co.'s(NYSE:GE - news) GE Capital unit and Credit Suisse First Boston invested in Enron's LJM2 Co-Investment LP, one of the partnerships under investigation. .......................................................................................... HEAVY LOSSES LJM2 and other partnerships were key factors in Enron's collapse, as their books carried debt that was kept off Enron's balance sheets and ultimately caused a $1.2 billion reduction in shareholder equity. ``The Chase-Morgan and the Citigroup involvement is much more extensive with far more conflicts of interest than Merrill or Goldman have,'' said Smith, referring to J.P. Morgan Chase & Co. Inc.(NYSE:JPM - news) and Citigroup Inc.(NYSE:C - news) J.P. Morgan and Citigroup are battling to recoup major losses on loans to Enron, as both banks were major creditors. J.P. Morgan posted a fourth-quarter loss of $247 million, in part due to its Enron exposure. Citigroup's quarterly results took a $228 million hit when it wrote down half of its Enron debt. Both companies also served as Enron's financial advisors, counseling the Houston-based company on its failed sale to rival Dynegy Inc.(NYSE:DYN - news) That deal would have netted the two banks millions of dollars in fees, and the lender-advisor relationship represents a conflict, Smith said. It's even worse for J.P. Morgan. The bank could be on the hook for an additional $1 billion in Enron-related losses in energy trades, although it's fighting in court to have its insurers pick up the tab. Bank of America Corp.(NYSE:BAC - news), which took $231 million in losses to pay for bad Enron loans in the fourth quarter, said late Wednesday three Texas-based associates and the head of its natural resources group are leaving the bank