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The Whistleblower #3 - Feb 19, 2002
Thank you for calling the Enron Irony Division. If you'd like to purchase bankruptcy insurance, please press or say one. In the "there's-a-market-for-everything" days of Enron, the company sold, and, according to www.enroncredit.com (click on "credit risk mitigation"), still sells bankruptcy insurance. This product provides companies with what Enron calls a "digital Bankruptcy Swap," in which the buyer receives cash from Enron in the event of another company's bankruptcy. The selling points of this product would have been written by Saturday Night Live if it hadn't already been written by Enron itself:
Features that make the digital Bankruptcy Swap unique include: Minimal documentation…No lengthy investigations…Confidentiality…Flexibility…
Big Business already planning to deep six 401(k) and accounting reforms. Dedicated to ensuring that absolutely no real reform comes out of the Enron debacle, corporate America is already fighting retirement plan reform and new accounting standards in DC. The big businesses that have been getting away with financial behavior that might be just as bad as Enron are joining together to protect the lax oversight and self-policing standards that have become the hallmark of corporate governance in recent years. According to the Los Angeles Times, big companies have already formed a lobbying organization with an innocuous-sounding name -- "The Committee on Employee Retirement Benefits" -- to fight 401(k) reform. The special interests want to ensure that, after the Enron dust settles, it's back to business as usual.
The way to the California consumer's pocketbook is through the regulator's stomach. Years before the average Californian knew anything about energy deregulation, Enron was setting the table for the energy disaster that cost California $71 billion, as described in detail in our recent report (available at www.consumerwatchdog.org). On two occasions in 1994, Enron wined and dined then-Public Utilities Commission president Patricia Eckert, according to records on file at the California State Archives. First Enron took the regulator to dinner, then it feasted on the ratepayers.
Some people never learn. California Assembly GOP leader Dave Cox, in a discussion of the state's electricity problems, recently told the Contra Costa Times that "we ought to in fact have deregulation and let the marketplace work." Isn't there some gene that tells you that if you place your hand on a stove and you get badly burned, you're supposed to keep your hands off the stove? Some politicians are so enamored of the free market theory that they can't acknowledge the failure of energy deregulation. And fail it did. While energy companies don't want the rest of America to believe it, California did deregulate. Just ask the residents of San Diego what they think of deregulation. In that city the local utility was fully deregulated and charged "market prices" for electricity during the summer of 2000 and monthly bills shot up by 300%. Whenever a politician or economist or energy exec says that California didn't deregulate and that the rest of the country still should, just remind them of San Diego.
Whistleblower correction: Dr. Linda Peeno testified before Congress in 1996, not 1987 (WB#2).
The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit, non-partisan advocacy organization. For over a decade FTCR and its advocates have exposed and challenged injustices that betray the public trust. The Whistleblower newsletter addresses core issues of the corporate and governmental crises of today and blows the whistle on the brewing fiascos of tomorrow. FTCR does not take a position on candidates for any elected office.
For more information about FTCR's work, to DONATE, to join the fight, or to comment, visit our web site at www.consumerwatchdog.org. 310-392-0522 xt.309.
© 2002 FTCR
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