Eighth anniversaries are “Bronze Anniversaries,” and there few events more brazen than the collapse of the Enron Corporation. It happened eight years ago, and this groundbreaking cataclysm would not have been possible without the assistance of Wendy Gramm, PhD.
As Chairman of the Commodity Futures Trading Commission (CFTC), Dr. Gramm ended governmental oversight of energy derivatives traded by Enron and other companies. Six days after leaving government, she was named to the Enron board of directors, where she headed the Audit Committee and was paid a million or two by the rogue corporation.
Dr. Gramm’s husband, Senator Phil Gramm, sponsored the Commodity Futures Modernization Act, which contained a clause making his wife’s regulatory decision law and deregulating new financial instruments such as credit swaps. This undermined the financial system and enabled oil and energy speculation. Though he says he did not add the “Enron Loophole” himself, Enron had contributed $97,000 to Senator Gramm’s political campaigns.
Enron’s leadership manipulated the market, looted the corporation, and misrepresented company assets, with the complicity of its outside accountants. Results: Collapse of the huge corporation and the accounting firm, billions in losses to investors and consumers, 30,000 Enron employees out of work with worthless retirement accounts. The resulting litigation lasted until this month.
Wendy Gramm continues to teach doctrinaire deregulation at a Virginia university; her husband works for a Swiss bank.
Happy anniversary, Dr. Gramm.
More details here, here, and here.
Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com
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