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Its become an article

It's become an article of faith among Democrats that Enron is a political scandal. For Republicans, quite the same certainty that it's only an financial scandal. By and large, I think the Democrats have, and will increasingly have, the better part of this argument. But my God if there isn't enough scandal to go around.

We still don't know if there are any political bigwigs and fat-cats who got cut in those debt-concealing outside partnerships at Enron. But what we do now know is that many -- perhaps most -- of the big Wall Street investment houses were actively involved in marketing investments in these partnerships.

If these partnerships perpetrated a fraud on the investing public then almost everyone's hands seem to be dirty.

Will someone stop Howard

Will someone stop Howard Fineman before he writes yet another risible George W. Bush puff-piece?

He’s the Texas Ranger of the World, and wants everyone to know it. He’s the guy with the silver badge, issuing warnings to the cattle rustlers. He will cut deals when necessary — his history shows that — but, as a matter of inclination and strategy, he’s the toughest talker on his team.

Do the folks at Newsweek need to plan the journalistic equivalent of an intervention?

Get me Jon Alter's phone number!

Maybe as part of

Maybe as part of the eagerly-awaited Talking Points relaunch on Friday we need to set up a new feature called the Dick Cheney Own Worst Enemy Watch.

Look at this astonishing scoop from Bob Novak on CNN yesterday ...

WOODRUFF: Unusual plans for Dick Cheney, going to the Middle East soon?

NOVAK: Vice presidential trips have turned into circuses because very little business is down. Remember Lyndon Johnson's -- well, you are too young for that.

WOODRUFF: Much too young.

NOVAK: But he has very spectacular -- I remember it well. And you do remember the Spiro Agnew and the Dan Quayle trips were circuses.

Dick Cheney is going on 10-day trip to the Middle East. And his staff is considering whether they really want to take any press along, no members of the media whatsoever, to avoid all these made-up stories. They are very serious about it. No decision has been made, but they may say, hey, this is a business trip and we don't need the media. After all, he goes to undisclosed locations without the media.

WOODRUFF: That would be almost unprecedented.

NOVAK: Without precedent, absolutely.

I don't like to toss around the word 'Nixonian' loosely. But this is Nixonian. I had already half suspected that Cheney's trip to the Middle East might have more to do with events taking shape at the other end of Pennsylvania Avenue than stuff going on in the Middle East. But this speaks volumes about the direction the Vice President is going in and his views about the place of the press.

Barring any media coverage will "avoid all these made-up stories." Is it too much to say that this sounds like something out of the Generalissimo Franco handbook, or something from Robert Mugabe? Media coverage apparently is only necessary or required when trips or events are only for show. But this is a "business trip [so] we don't need the media."

It's certainly worth noting that these words are Novak's, not those of the Vice President or his staff. But he's a good reporter. And I doubt he's not conveying the gist of their thinking.

But don't get caught up with the arrogance. This is the sort of thing White Houses pull before they get into big trouble.

Heres more interesting back-n-forth

Here's more interesting back-n-forth from today's Senate hearing about just who the investors were in those debt-concealing outside partnerships ...

SEN. DORGAN: And let me go back to one more point, if I might, on LJM, one of the partnerships. In your report, on page 73, you said LJM had -- excuse me -- quote, "We understand that LJM-II ultimately had approximately 50 limited partners," and then you mentioned some of them -- Home Assurance, Arkansas Teachers Retirement, MacArthur Foundation, Merrill Lynch, J.P. Morgan, Citicorp, First Union, Deutsche Bank, GE Capital, and Dresdner (sp), Kleinwort (sp), Bensen (sp). This 50 limited partners, is that a population that you're certain of? Did you see the names of the 50 limited partners, or is that what you were simply told by someone?

[Dorgan then discusses the identity of the partners with Enron board member William Powers. Powers describes how much difficulty they had prying the partner list out of Andersen. Then Powers agrees to turn the document over to the committee.]

SEN. DORGAN: All right. Well, that's a very small start. We have been, as you know, for a month and a half on this committee asking the corporation and asking all who are relevant to receive these requests that we need to understand what is the matrix of the investors -- friends, businesses and others who were brought into this web, this complex web of partnerships -- who are they? How much did they invest? Did they always make money on these investments? It looks to me like the corporation was backstopping everything with respect to these investments. So, we need to get that information, and at least today, at 1:30 in the afternoon, we will get the first 50 names, and we appreciate our ability to do that. And that comes courtesy of your copying a piece of information given by Arthur Andersen but then substantially -- then subsequently taken back by them. So, we will hope that the rest of the names will not be quite so hard to receive or to achieve. And we'll see.

So Dorgan and his staffers are clearly on to the mystery of the partners.

But let's not miss the big story here. The MacArthur Foundation?!?!!? The sugar daddy of every good liberal activist and pressure group had a slice of LJM2? Does this mean the Economic Policy Institute and the American Prospect have to give back their fat grants? Where will it end?

Theres still more information

There's still more information on the investors in Enron's debt-concealing outside partnerships.

As we've noted before, all of Enron's outside partnerships were not created alike, and not everyone came in on the same terms. Some offered investors a windfall with no risks. Others promised conventional enough returns that potential investors had to be sold on the plans.

Despite his claims last week that he knew little or nothing about the outside partnerships, in December 1997 former Enron CEO Jeff Skilling appeared personally at a meeting of the board of directors of the California state-employee pension fund (CalPERS) to sell them on an investment in JEDI II.

It looks like we

It looks like we were on to something last week when we pointed out the importance of revealing who invested in Enron's outside partnerships. This article at SmartMoney.com publishes some of the first documentary evidence on the investors in LJM2.

(Hint: they're big Wall Street firms, though it's not immediately clear whose money they were investing.)

But on CNN's Capital Gang last night Senator Kent Conrad implied that the search for the partners might get more explosive still. Asked by Mark Shields whether Enron was a political scandal, the Senator replied...

CONRAD: I don't think we know yet. I think in fairness, what we know is this is corporate scandal of enormous dimension. It may become a full blown political scandal. Goodness knows there's tremendous amounts of money that Bush -- the administration got the greatest level of financial support from Enron people.

We see an involvement of Enron and the replacement of the FERC chairman. I think that's going to lead to a lot of serious questioning. But I'll tell you the real bottom line. The thing that I think is going to turn this into a scandal of even greater dimension is when the partners are revealed. Who was at the trough? Who had the advantage of these partnership agreements that enriched themselves at the expense, its shareholders and its creditors?

SHIELDS: Do we know any major figures you think were partners or?

CONRAD: Those names have not yet been revealed, but I've been told by those who are hot on the trail, that there's going to be some very, very embarrassed major figures in the days ahead.

So what's going on here? I think that what Conrad is saying is likely absolutely true. He doesn't know who the investors are. But he's hearing that the lists include some very high-profile names. Believe me, a lot of people are hearing that.

There are investigators on the Hill, ones working in private lawsuits against Enron, and presumably many in the Justice Department who are piecing together this information. And given that investments in one of Fastow's particularly lucrative sweetheart deals would likely be politically fatal and perhaps even worse, the rumor mill is bubbling with names. Names high up the political ladder. Really high up the political ladder.

A good bit of this is probably just wishful thinking on the part of Democratic politicos in Washington. But not all of it, I'd bet. In any case, we'll know soon enough.

Special thanks to TPM reader A. for the Kent Conrad catch.

Enron may not have

Enron may not have been so hot at devising innovative mechanisms for allocating and trading energy and other commodities. But, as this article explains, they were fonts of innovation when it came to gaming Washington.

This included a specially-designed computer program which precisely calculated the costs various regulations would create for Enron. The numbers generated out of this influence-peddlotron were then used to determine when the big-money lobbying machine should be kicked into gear. It all amounted to what the management consultant types might call total quality corruption.

Then there was Ken Lay's idea of "gathering up pundits, journalists and politicians and placing them on lucrative retainers." At least one anonymous Enron exec says the pundits ended up being PFBNBs (see post below). But you wonder.

Then there are some choice gems like this...

"The ingrained philosophy was, me first, money counts and the government should eliminate my taxes," said another former manager. "That's all they cared about -- what impacted them personally."
The theme of the article is that the Enronians ended up being too clever by half. Their titanic arrogance did them in.

1998 was the year

1998 was the year of Monica and Impeachment. 2002 is turning out to be the year of PFBNB.

What's that? Paid For But Not bought -- the excuse, explanation and defense of choice for politicians high and low.

Like the Bush administration. Yes, Enron gave us tons of money for access and favors. But when they came calling, we dropped 'em cold, left 'em in the lurch! We were paid for, but not bought.

Same with Billy Tauzin. Same with the other folks on the House committee. Same with the Senators. Paid for, they say, but not bought.

I was so busy

I was so busy yesterday that I forsook my normal routine of coffee at Starbucks poring over the daily papers. And I missed this fun, complimentary review of Talking Points Memo in the Washington Post. (Note to self: no criticisms of Post -- i.e., Bob Woodward -- for rest of February, if possible.)

P.S. Excitement for the TPM relaunch continues to build. Even George Argyros is apparently getting into the spirit.

Actually, it's time for another Argyros update. Back on January 28th we noted that Argyros, US Ambassador to Spain, had used the Embassy website to post a list of comically self-promoting awards he had gotten, or bought, over the years. (You know, like his induction into the "Horatio Alger Association of Distinguished Americans, perhaps the single most coveted award given in American (sic) to non-military, non-show business individuals...") Then Tuesday we noted that our mockery had gotten picked up in Argyros' hometown paper and he'd had the good sense to take it down, or maybe Colin Powerll made him take it down. Then later Tuesday we revealed that he was still show-boating among the locals since he hadn't taken down the Spanish language version of the list. Now it's gone too.

Note to Ambassador Argyros: if you're visiting TPM so often, maybe it's time to support the site with an easy online contribution?

Yesterdays testimony from various

Yesterday's testimony from various current and former Enron executives confirms, I think, the importance of the questions we raised here a few days ago.

That is, who else got to sign on to one of Andy Fastow's outside partnerships, in which investors incurred no risk yet made windfall profits? We now know that many non-Enron employees got into these deals. Fastow apparently used them as chits on occasion when dealing with investment banks who did other business with Enron, though sometimes the Enron business was the plum he used to leverage folks into the partnerships.

One thing that's clear is that all the partnerships were not alike. Or at least not everyone came in on the same terms. Some were the uber-sweetheart deals that made millions. Others only got investors who had to be coaxed into the deal.

What is important to know, however, is just who all the partners were. Why? Because if there was financial or political corruption going on which reached outside of Enron, this almost has to be where you'd find it.

There's even apparently an example of a partnership deal being used in this fashion with an Enron employee. Soon after quasi-whistleblower Jeffrey McMahon got reassigned for questioning Fastow's partnership deals, his replacement got cut in on a piece of the action. Says today's Times ...

A short time later, Mr. McMahon was replaced as treasurer by Ben F. Glisan Jr. According to an investigation by Enron's board, Mr. Glisan put $5,800 in one of the partnerships organized by Mr. Fastow and two months later was given $1 million.
More to come later on conflicts of interest and ingenious ways to hedge your bets against business losses.