Banks fall as Congress probes Enron ties

Financial Times ^ | July 23 2002 19:26 | By Gary Silverman in New York and Lydia Adetunji and Peter Spiegel in Washington

[unixfox]

Start watching for strange accidents, deaths, suicides and disappearances.

This has the making of a bad horror movie.

[lewislynn]

It is almost over and soon the democrats will get indicted for this giant mess. They have caused and planted thru out the Clinton years.

LOL!...You forgot to close your tag < /sarcasm >

[Galtoid]

Even if Ruben were to testify, he'd adopt the tried and true: "I don't recall" crap. Dirty as they come? You bet.

[demkicker]

"It is almost over and soon the democrats will get indicted for this giant mess. They have caused and planted thru out the Clinton years.

Gimme some of dat you're smokin'.

[Betty Jo]

Perhaps all this $$$$$$$$ stuff is part of Bin Ladens master plan?

Maybe the Islamic Fundamentalist Terrorists have some PH.D's in economics, not just the biotech area!

[TennesseeProfessor]

Can someone tell me what a prepay transaction is? Sorry for my ignorance

Pretty simple actually. Citibank gives Enron $500 million, and has a signed agreement that in a year Enron will give them $650 million worth of oil and natural gas. Enron then tells everyone "Look! We've sold $500 million of oil and are making lots of profit!". That's a prepay transaction.

Unfortunately for Citibank, it is not only blinding obvious that there is no oil pipline from Enron to Citibank, but there is also a memo in which an executive lets the cat out of the bag -- Enron will pay cash rather than oil. So this "Income" is actually a loan.

[Ahban]

My god. Are we about to go over the edge?

I believe much of America is about to enter into a period of judgement. There is a blessing-judgement cycle recorded in the Bible as regards to Israel, that applies to some extent to all nations. When they live moral, honest, reverent, and respectable lives, the nation is blessed. They get to feeling all proud and complacent. Respect for righteousness and God errodes. Soon the people who proclaim truth go from being respected to being ridiculed.

The bible teaches that when ridicule of the people of God turns to emnity and hostility, a "Day of the Lord" (period of judgement) comes. At that point the people go through great trials, are humbled, and repent. Only in Revelation, at the LAST Day of the Lord, are people so hardened that even when judgement falls they do not repent, but rather curse God and persecute His people all the more.

[NormsRevenge]

A Twist on Nero ..

While Rome Burned, The Senate Fiddled ..

[Don Myers]

"HELP ,, I'm falling ,, & I can't get it up ,, HA Haaaaaaaaaaaa !!!!"

This thing might not be too funny in the near future. When our banks start going under, we are in trouble.

[Don Myers]

"This has the making of a bad horror movie."

You ain't just whistling Dixie.

[Don Myers]

"Gimme some of dat you're smokin'."

demkicker, I have to agree with you. The leftist media will make sure the blame goes to the "right people."

[Don Myers]

It is amazing what means little to people means much to God. He places great store on things like morality and obedience to His ways. For both of these things, we have an a..-kicking coming our way.

[Guillermo]

Simply, Enron was loaned money, but it wasn't called a loan, it was "prepay" for energy to be delivered in the future.

The reason this is a scam on Enrons end is that the interest payments aren't shown as an expense.

Imagine if you were a carpenter, and I gave you $10,000 for work you were going to do on my house in the future. But, both you and I know that you're not going to do any work, but instead pay it back. On your balance sheet it is shown as revenue and not an expense.

I think I got it correct ;)

[OldFriend]

Why do you think Greenspan is still in power. TO PROTECT THE BANKS.........He knew this ship was going to hit the fan......and is ready. Damn them all!

[Don Myers]

Yeah, tough times might be ahead.

[OldFriend]

He bailed out Long Term Capital....also a Goldman Sachs connection. The reason some people never learn is that NO ONE ever goes to jail. IT'S TIME!!!

[Ken H]

That was a very clear explanation. I finally understand the Enron/Citicorp prepay scheme.

Are the figures of $500 million and $650 million the actual figures, or were you using them as an example to illustrate your point?

If those are the figures, that's a 30% interest charge for one year!

[okie01]

"look for the financials to take a hit because of these latest revelations...hope I'm wrong!"

Nothing makes a mess quite like a gravy train, brought to a sudden stop...

[Mike K]

Capital One is a sub prime consumer lender, while JPM and Citi are top of the food chain derivative players. In the end, they will all suffer badly in stock price. Going short on these guys is money in the ... hand.
JPM may too big to prevent failing. They are leveraged at 42 to 1 (I believe) in derivatives. There must be serious action behind the curtain right now to stave off disaster.

[jackbill]

Who do we contact to make them get Rubin to testify?

Lieberman. Good luck. He ain't calling Rubin to testify, no way, no how.