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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (2591)	1/3/2003 6:37:26 AM
From: Glenn Petersen	Read Replies (3) \| Respond to of 3602

Rubin Cleared by Senate Investigators By Peter Behr Washington Post Staff Writer Friday, January 3, 2003; Page E01 washingtonpost.com Former Treasury secretary Robert E. Rubin did not violate federal laws or regulations in 2001 when he called a senior Treasury official seeking help for Enron Corp. as the Houston company struggled desperately to avoid bankruptcy, a Senate staff investigation has concluded. Rubin, who joined Citigroup Inc. in 1999 as chairman of its executive committee after leaving the Clinton administration, made a previously disclosed call to Treasury Undersecretary Peter R. Fisher on Nov. 8, 2001. The contact was part of a barrage of calls early that month by top officials of Enron and its leading banks, Citigroup and J.P. Morgan Chase & Co. Credit agencies were about to downgrade Enron's investment rating, a move that was likely to doom Enron's attempt to merge with Houston neighbor Dynegy Inc., leaving bankruptcy as the only option. Rubin's call to Fisher was investigated by the bipartisan staff of the Senate Committee on Governmental Affairs at the demand of Republican congressional leaders, after Democratic criticism of high-level contacts between Enron and the Bush administration. The independence of credit-rating agencies is considered a key safeguard for investors. The report was made public on the committee's Web site yesterday, a day ahead of its planned release. On Nov. 8, 2001, Rubin was asked by Citigroup banking chief Michael A. Carpenter to let Treasury and Federal Reserve officials know that a downgrade of Enron's credit rating by Moody's Investors Service was imminent and that a resulting Enron bankruptcy could damage energy markets, according to the committee's account. Rubin told the Senate panel that in the call to Fisher, he mentioned that bankers were considering giving more funding to Enron. Rubin suggested that Fisher might call Moody's and ask the agency to delay its action until the banks had made their decision. Rubin prefaced that suggestion by saying it was "probably a bad idea." Fisher told Rubin it was indeed a bad idea and Rubin agreed with him, according to the report. Fisher did not contact Moody's, but he did write a memo to Treasury's general counsel describing the contact. Rubin told the committee that the call to Fisher was "not only proper, but I would do it again," to advise Treasury of a potential threat to energy markets. The committee staff, supported by Congressional Research Service experts, concluded that Rubin had not breached federal rules on contacts between ex-government officials and their former departments. Moody's did delay its downgrade but the Dynegy merger soon fell through, and Enron filed for bankruptcy on Dec. 2, 2001. © 2003 The Washington Post Company