Tuesday, July 29, 2003

Oh, and while I'm taking care of old business, remember my former bête noir, who made a big splash in the blogsphere by claiming that there couldn't possibly be major fraud at Enron?

One piece of "evidence" which he trotted out again and again was that:

For the "fraud" hypothesis to be correct, hundreds -- if not thousands -- of employees and professionals at many levels of society had to be in the conspiracy and had to keep quiet for years, notwithstanding the constant threat of exposure to the Securities and Exchange Commission, Citibank and JP Morgan -- the latter two of which had extensive contractual rights to audit and investigate Enron.

And of course major banks would never get involved in anything untoward.

Cut to today's news:

After more than a year of criminal and regulatory investigations, the nation's two largest banks agreed yesterday to pay almost $300 million in fines and penalties to settle accusations that they aided Enron in misrepresenting its true financial condition for years before the company collapsed.

The settlements, with J. P. Morgan Chase and Citigroup, are the broadest to date reached with advisers that played roles in the financing and structuring of the off-the-books partnerships and transactions that contributed significantly to the collapse of Enron in December 2001.

But of course, that appears in the New York Times -- and my bête noir had plenty to say about them as well; their overheated, "quasi-tabloid" accounts of supposed shenanigans at Enron were always, always, always based on misunderstandings of basic finance (why, his own colleagues had a complete understanding of Enron's deals based solely on the company's public statements!). Perhaps this, too, is just another mistake. I look forward to his elucidation of the matter. I've missed his brand of comedy...

Update: He does not disappoint! To most people, the $300 million payment would be a sign that the banks knew they were in hot water, and the lack of a formal guilty plea would be a technicality. To this guy, it's the reverse; the banks have, for some strange reason, agreed to pay $300 million to regulators who "have nothing, nothing at all, and know it" (his boldface), and their failure to extract a guilty plea is positive proof. Note particularly the rhetorical pirouette in which "the banks neither admitted nor denied any wrongdoing" somehow becomes a protest of innocence. Aside from that, he largely repeats arguments I've already dealt with elsewhere. If you like that sort of thing, then those posts are the sort of thing you like, though it doesn't provide nearly the amusement value of simply reading his original screed straight up in the light of subsequent events.

Update: And he's at it again. More comments here.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home