Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (50386)	4/23/2002 3:11:11 AM
From: stockman_scott	Respond to of 65232

Enron Estimates $14 Billion Write-Down By C. Bryson Hull Monday April 22, 8:39 pm Eastern Time HOUSTON (Reuters) - Enron Corp. on Monday said that up to $24 billion in assets and derivative values could be erased from its books, potentially shaving 38 percent off the total assets the energy trader listed when it filed its record bankruptcy last year. The Houston-based firm said the $14 billion in potential asset write-downs may have resulted from ``possible accounting errors or irregularities'' that overstated their value, pointing a clear finger at former auditor Andersen and prior management. Enron also warned of a possible reduction of between $8 billion to $10 billion related to the unwinding of some of its myriad derivatives contracts. Several observers have said Enron's derivative book was hiding several nasty surprises that would surface when its underlying contracts were unwound. The asset write-downs, Enron said, were not presented to the board of directors's audit committee. Some of the loss in value is related to the discount that a bankruptcy filing nearly always places on a debtor's assets. The potential write-downs were disclosed in a bankruptcy document filed with the U.S. Securities and Exchange Commission, and represented a further setback for disappointed Enron creditors. Analyst John Olson of Houston investment bank Sanders Morris Harris said the erasure of $14 billion from the roughly $61.5 billion in assets Enron claimed when it filed bankruptcy was ``staggering.'' Enron listed liabilities of $49 billion at the time of its filing, but has since said that its liabilities could reach $100 billion. ``No matter how cynical you would have been about Enron, it's defied all of them in terms of being worse than imagined,'' Olson said. ``They were making it up as they were going along apparently, but $14 billion is real dollars. This thing is just a staggering number to me.'' Olson, an early critic of Enron and one of the first to sound the derivatives alarm, said the reduction would erase about half of the $18.7 billion in paper derivative value Enron said it had when it filed its record bankruptcy on Dec. 2. ``It's like building a bird's nest. You take away a twig and the bird's nest goes kaput,'' Olson said. ``Enron had a lot of paper value. When the stress test came along, a lot of the paper blew away.'' As for the asset write-downs, Enron said it believed many would have occurred as a result of the Chapter 11 filing since most of the assets are not going to be part of the reconstituted Enron. Enron also added it does not plan to conduct a review of accounting adjustments and has not prepared a balance sheet for fiscal 2001, saying its resources are too limited to make such a review feasible. It also said that, as expected, the most recent quarterly filing on Nov. 19, 2001, must not be relied on. Since Andersen was Enron's auditor, the last quarterly filing has remained unaudited as the two parties have become mired in litigation.

To: T L Comiskey who wrote (50386)	4/23/2002 4:54:53 AM
From: stockman_scott	Respond to of 65232

Sins of Enron will be hard to overcome BY SUSAN TOMPOR DETROIT FREE PRESS COLUMNIST April 23, 2002 The one thing that makes stock markets work is trust. Trust that the powers in place -- Wall Street analysts, accountants, corporate management, boards of directors, government regulators -- can somehow ferret out companies that are bad apples. The system fell apart, big time, with Enron Corp. And now we're worried that we could be looking at a whole orchard gone bad. Enron's collapse "has raised troubling questions about our sense of economic security," U.S. Sen. Carl Levin, D-Mich., said Monday. "People want to know how it happened. They want to know how so many Enron executives could walk away from the disaster they created with tens of millions of dollars in their pockets," Levin said in a speech to the Economic Club of Detroit. Levin, who leads the Senate permanent subcommittee on investigations, is part of the team in Congress dissecting the Enron debacle. Monday, he unveiled a Shareholders Bill of Rights a proposal designed to protect shareholders and workers from manipulation and deception involving investors. Enron board members are to testify May 7. Enron, the world's largest energy trader with 20,000 employees, tumbled into the biggest corporate bankruptcy in U.S. history Dec. 2. Enron owes more than $100 billion. Workers lost their jobs, and retirement money that was invested in now basically worthless Enron stock. While Enron's downfall has features unique to Enron, its bookkeeping tricks have raised questions about the accounting practices at other corporations. Changing stock options The fallout, Levin said, demands some government action. Levin already has introduced a bill that would make stock options less attractive. It would strip companies of generous tax breaks they receive when stock options are exercised unless the companies deduct the cost of options on their income statements. Levin's plans include: A change that could pave the way for some shareholders to call for the removal of wayward directors on corporate boards. The Securities and Exchange Commission now allows companies to stop shareholder activists. Levin is proposing that the SEC not stand in the way of proposals that call for removing or replacing a director if a state's law permits such proposals. Requiring companies to immediately disclose company loans to directors and officers. Requiring shareholders to approve any stock option compensation plan that will not be shown on financial statements as an expense. Strengthening the SEC, "so that this critical watchdog agency isn't hopelessly out-gunned by those companies it oversees." It is a tricky path. Corporate managers won't easily give up freedoms or stock options. Wisely, Levin admitted that more new laws will never provide the full answer. "That's because what happened at Enron wasn't just a failure of regulations and laws," Levin said. "It was a failure of corporate culture, a failure of values, a failure of heart." And that's what is most unsettling to investors. Whom can you trust? Contact SUSAN TOMPOR at 313-222-8876 or tompor@freepress.com freep.com

To: T L Comiskey who wrote (50386)	4/23/2002 11:37:58 PM
From: stockman_scott	Respond to of 65232

Enron Debacle Spurs Bankruptcy Compromise Apr 23 2002 8:35PM WASHINGTON (Reuters) - An overhaul of the nation's bankruptcy law moved closer to passage on Tuesday as concern over Enron executives shielding their wealth in luxury homes helped resolve a key disagreement between lawmakers. The extent to which a debtor's home is shielded from creditors had been a major obstacle to reconciling House and Senate versions of legislation that would make it harder for people in financial straits to walk away from their debts. But the possibility that executives of failed energy trader Enron Corp. might take advantage of exemptions under state homestead laws untied the knot. "The Enron collapse raises new concerns," said Wisconsin Democratic Sen. Herbert Kohl. Some states, including Florida and Texas, have unlimited homestead exemptions. Under the agreement, homestead exemptions would be limited to $125,000 where debts arise from a crime or misdeed or when the debtor has resided in the dwelling less than 40 months. "The pressures of Enron forced a compromise on the homestead provision because it was no longer politically possible to have that sort of a benefit," said Ken Guenther, president of the Independent Community Bankers Association. Former Enron Chairman Kenneth Lay has sold an Aspen, Colorado house for $10 million. His wife Linda has said the family will sell all their real estate interest outside of Texas because of financial difficulties but will keep their home in Houston, a $7 million high-rise apartment. Lawmakers left for later debate over another contentious issue: whether people convicted of violence against abortion clinics can use bankruptcy to avoid paying court judgements against them. But members of Congress and banking industry representatives said coming to terms on home protections suggests the final obstacle is surmountable. "This compromise is a significant step forward," Kohl said at a meeting of the House and Senate negotiators. "Clinic violence should not be as big an obstacle if there is good will on both sides," Guenther said. The bankruptcy measure would be the most sweeping overhaul of U.S. bankruptcy laws in almost a quarter century. Congress has been wrestling with the legislation since 1997. The measure is strongly supported by U.S. banks, retailers, credit card companies and auto lenders, who argue the system is being abused by people who can afford to pay back some of their debts. Opponents, including academics, labor unions and consumer groups, say lenders should shoulder some of the blame for fostering bankruptcies through lax lending standards. While both houses of Congress passed different versions of bankruptcy changes in March 2001, the U.S. economic slump that began that month undermined support for the measure among Democrats, who said the timing was poor to crack down on people whose financial troubles may have been caused by the downturn. "It is ridiculous to reopen loopholes for wealthy deadbeats at the same time making the bill harsher for middle class debtors who most often file through no fault of their own," Minnesota Democratic Sen. Paul Wellstone said in a statement. 04/23/02 20:33 ET

To: T L Comiskey who wrote (50386)	4/24/2002 1:13:45 PM
From: stockman_scott	Read Replies (2) \| Respond to of 65232

A Ken Lay protection act? From the Journal Sentinel Last Updated: April 21, 2002 Enron is the poster boy for so many things these days that invoking its corporate name in association with bankruptcy seems uncreative and almost pedestrian., But consider this: If one piece of a bankruptcy bill now in a Washington conference committee passes the way House members want, some Enron executives could file for bankruptcy protection and still shield a considerable fortune. There is an opportunity to stop this robbery, but only if Sen. Herb Kohl (D-Wis.) prevails in a critical vote on Tuesday. The wrinkle here is something called the homestead exemption. Because America places a high value on home ownership, special protections have been given in personal bankruptcies to the petitioner's primary residence. In Wisconsin, for example, creditors cannot touch an individual's equity in a house, up to a cap of $40,000. But five states, including Texas, where Enron is headquartered, do not have a cap on their homestead exemption. In Texas, the house need not even be the primary residence: The owner could rent the dwelling and live somewhere else. If former Enron CEO Kenneth Lay were to file for bankruptcy - and his wife has suggested the possibility - he could protect from creditors the 13,000-square-foot penthouse he maintains in Houston. Estimated value: $7.1 million. In the Senate version of bankruptcy legislation, Kohl pushed through an amendment that would cap the homestead exemption at $125,000 of equity. He has since said that he would raise the ceiling to $175,000 if that's what it took to sway opponents. The House, in contrast, would establish a cap of $100,000 - but only on homes purchased within 30 months of a bankruptcy filing. Rep. F. James Sensenbrenner (R-Wis.), who happens to be the chairman of the conference committee, favors the House version. But the House proposal would leave Lay's Houston penthouse outside the reach of creditors, and it might even be an incentive for those considering personal bankruptcy to string out creditors until the 30-month restriction elapses. Article 1 of the U.S. Constitution establishes Congress' right to enact "uniform laws on the subject of bankruptcies throughout the United States. . . . " It is now up to the current Congress to enact not only a uniform law on a homestead exemption, but to enact one that does not permit the kinds of abuses that have occurred in Texas, Florida and other states with no caps. Wisconsin's junior senator, Democrat Russ Feingold, who also serves on the conference committee, understands this and backs Kohl's position. Sensenbrenner should, too. You can contact Sensenbrenner by e-mail at sensen09@mail.house.gov or by phone at (202) 225-5101. Appeared in the Milwaukee Journal Sentinel on April 22, jsonline.com.