Posted on 07/22/2002 10:36:21 PM PDT by kattracks
Yep. And, without a doubt, it is considered "too big to fail," meaning preventing that would be considered a matter of national security.
Does the SEC have any say in this? Harvey Pitt is pretty gutsy; he might push some people out...especially after the way the democrats like Lieberman dumped on him.
Sure. If it comes to that (and I'm not at all sure that it will), the government intervention would have to be negotiated. The Administration could impose any terms, including management change, that it wanted.
Of course, the government is constrained by the fact that if Citigroup refused, and the bank failed, it would take down the entire banking industry, and presumably most of the world, with it. The Administration isn't going to let that happen.
Those certainly would be interesting negotiations to hear.
Possible I guess .. If true this may explain why they are all screaming for Pitt to resign
I've been too busy this morning to look up the answer to a big question: who's the auditor? Could it be Arthur Andersen?
I also wonder if one of the Enron people can assist the investigators by relating other 'oral agreements'. IMHO, the focus on shredding was a red herring to keep investigators from looking at the other issues w/r/t Enron. The Citibank tie is a perfect example.
From what I understand! He's not new, he has been with the company for a while
-PJ
Tue Jul 23, 1:07 AM ET
Citigroup Inc. (NYSE: C - News) and J.P. Morgan (NYSE: JPM - News) Chase & Co . , already facing scrutiny for devising allegedly deceptive transactions for Enron Corp., marketed similarly structured deals to a slew of other companies, Tuesday's Wall Street Journal reported, citing testimony that a senior congressional investigator will give at hearings that start today.
The names of the other companies weren't disclosed.
The hearings, part of a Senate investigation into the role banks played in Enron's troubled finances, are the latest in a series of investigations into the two banks regarding their ties to Enron, which filed for bankruptcy-court protection late last year. The investigations include separate probes conducted by the Securities and Exchange Commission ( news - web sites) and the office of Manhattan District Attorney Robert Morgenthau.
Now, a person familiar with the matter says, the Justice Department ( news - web sites)'s Enron Task Force also is looking into the roles that financial institutions, including Citigroup, J.P. Morgan , Merrill Lynch & Co . and National Westminster Bank, now a unit of Royal Bank of Scotland PLC, may have played in Enron's demise.
Citigroup and J.P. Morgan declined to comment on the hearings or the investigations. Merrill and Royal Bank of Scotland couldn't be reached for a comment.
The deals under congressional scrutiny include arrangements known as Yosemite, devised by Citigroup, and Mahonia, devised by J.P. Morgan , both of which were designed to make Enron's public disclosures more appealing to investors, according to the testimony.
An official familiar with the investigation will testify at today's hearings before that panel that Yosemite, Mahonia and other deals allowed Enron to understate its debt by 40% while overstating cash flow by as much as 50%, according to a draft of his statement. Cash flow is a crucial measure of financial health for energy companies such as Enron.
"The evidence indicates that Enron would not have been able to engage in the extent of the accounting deception it did, involving billions of dollars, were it not for the active participation of major financial institutions," says a copy of the testimony.
Banks such as J.P. Morgan and Citigroup were "willing to go along with and even expand upon Enron's activities."
J.P. Morgan , in fact, had a "pitch book" to sell other companies on similar financing vehicles, according to a copy of the testimony. J.P. Morgan entered into similar transactions with seven other companies, while Citigroup shopped such deals around to as many as 14, with at least three entering into such relationships, the testimony says.
The hearings will focus on a commodity-trading vehicle known as a prepay, in which a financier gives money in exchange for future delivery of a commodity such as gas, gold or oil. Such arrangements are common, but in the hands of Citigroup and J.P. Morgan , they became the building blocks for extremely complex transactions that Enron used to disguise debt as trades and create the appearance the company was generating cash, people familiar with the matter said.
Wall Street Journal Staff Reporters Jathon Sapsford and Paul Beckett contributed to this report.
On the Today show this morning, Katie Couric was interviewing "average" people who lost big-time money in the stock market (e.g., a college professor who saw his investment go from $750,000 to $40,000, a retired grandmother who saw here grandchildren's college fund go from $100,000 to $4,500). I wanted to see the stories about the people who turned $100,000 into $18,000,000. I suspect that this is where much of the grandmother's & professor's investment loss went.
-PJ
Who forced those morons to stay in the market? This didn't happen overnight.
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