Blind Faith: How Deregulation and Enron's Influence Over Government Looted Billions from Americans

 

Sen. Gramm, White House Must Be Investigated for Role in Enron's Fraud of Consumers and Shareholders December 2001 Public Citizen's Critical Mass Energy & Environment Program Summary of Findings The combination of unregulated state wholesale electricity markets and federal deregulation of commodity exchanges has removed accountability and transparency from the energy sector, allowing corporations to manipulate price and supply of electricity and natural gas through the exercise of significant market power. California's recent energy crisis and Enron's bankruptcy would have been impossible under a regulated system. Enron developed mutually beneficial relationships with federal regulators and lawmakers to support policies that significantly curtailed government oversight of their operations. Enron's business model was built entirely on the premise that it could make more money speculating on electricity contracts than it could by actually producing electricity at a power plant. Central to Enron's strategy of turning electricity into a speculative commodity was removing government oversight of its trading practices and exploiting market deficiencies to allow it to manipulate prices and supply. Dr. Wendy Gramm, in her capacity as chairwoman of the Commodity Futures Trading Commission (CFTC), exempted Enron's trading of futures contracts in response to a request for such an action by Enron in 1992. At the time, Enron was a significant source of campaign financing for Wendy Gramm's husband, U.S. Senator Phil Gramm. Six days after she provided Enron the exemption it wanted, Wendy Gramm resigned her position at the CFTC. Five weeks after her resignation, Enron appointed her to its Board of Directors, where she served on the Board's Audit Committee. Her service on the Audit Committee made her responsible for verifying Enron's accounting procedures and other detailed financial information not available to outside analysts or shareholders. Following Wendy Gramm's appointment to Enron's board, the company became a significant source of personal income for the Gramms. Enron paid her between $915,000 and $1.85 million in salary, attendance fees, stock option sales and dividends from 1993 to 2001. The value of Wendy Gramm's Enron stock options swelled from no more than $15,000 in 1995 to as much as $500,000 by 2000. Phil Gramm is the second largest recipient in Congress of Enron campaign contributions, receiving $97,350 since 1989. Days before her attorneys informed Enron in December 1998 that Wendy Gramm's control of Enron stock might pose a conflict of interest with her husband's work, she sold $276,912 worth of Enron stock. Enron spent $3.45 million in lobbying expenses in 1999 and 2000 to deregulate the trading of energy futures, among other issues. In December 2000, Phil Gramm helped muscle a bill through Congress without a committee hearing that deregulated energy commodity trading. This act allowed Enron to operate an unregulated power auction -- EnronOnline -- that quickly gained control over a significant share of California's electricity and natural gas market.   http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/Enron/articles.cfm?ID=7104