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Copyright {(c} 2001 American Banker, Inc.
All Rights Reserved.

00600000000088


INTEREST YSE ALL IN ES
ATIONS TO WER C NIES

Background

Prior to the 1990's, the electricity and gas industries in most foreign countnes were either
state owned or regulated. However, in recent years, man, foreign countries have begun
to privatize and deregulate these industries. This phenomenon has created opportunities
for U.S.-based utilities and energy companies to pursue foreign power and pipeline
infrastructure projects

A typical foreign power or pipeline project involves hundreds of millions of dollars of
capital outlay and large project specific bank borrowings. The foreign project is usually
subject to significant local country income tax.

The foreign power and pipeline infrastructure industry is highly competitive. U.S.-based
companies face stiff competition from foreign-based companies. Currently, due to the
application of the U.S. tax system, foreign-based companies have a competitive
advantage over U.S,.-based companies. To compete effectively for these projects, it 1s
crucial that U.S.-based companies avoid significant U.S. double taxation related to these
projects. If there is double tax, the U.S,-based company will most likely lose the project

US. Fo: it (FT!

AUS. company is subject to U.S. tax on dividends paid by its foreign subsidianes. in
addition, the U.S. has an elaborate set of rules that can cause the earnings of a foreign
subsidiary to be currently taxed to a U.S. shareholder on an accelerated basis regardless
of whether an actual dividend has been paid (i.¢., the “Subpart i’ rules).

In theory, the U.S. tax on actual or deemed Subpart F dividends should be reduced by a
foreign tax credit (FTC) for income taxes paid by the foreign subsidiary. If the FTC
worked properly, the U.S. shareholder would only be subject to U.S. tax to the extent that
the U.S. tax rate exceeds the foreign tax rate of the country where the foreign subsidiary
operates. (In practice, the FTC does not work properly. See next section relative to the
application of the FTC rules to the power industry.)

In order to prevent foreign taxes from offsetting the U.S, tax on domestic source income.
the FTC is limited to foreign source taxable income multiplied by the U.S. tax rate (i.c..
FTC limitation). To determine foreign source taxable income, the U.S. taxpayer is
required to annually allocate a portion of its U.S. interest expense to foreign source
income based on a ratio of foreign assets to total assets. If there is a net overall foreign
loss (OFL) for a year (i,e., allocated interest expense exceeds current year foreign source
dividends), the OFL cares forward to reduce the FTC limitation in future years.

0900000000363


FW: Agenda Items Thought Dead Revived by Enron's Fall

Smith, Amy

Page | of 3

From: Richard, Gregg (Gregg. Richard@mail house.gov)
Sent: Monday, December 10, 2001 9:58 AM
Subject: FW: Agenda Items Thought Dead Revived by Enron's Fall

~—---Original Message--——-
From: Steel, Aimee

Sent: Monday, December 10, 2001 9:49 AM

To: Wild, Brian; Richard, Gregg; Mark Dion; patjtoomey@aol.com; Toomey,
Patrick

Subject: Agenda Items Thought Dead Revived by Enron's Fall

‘The American Banker

December 10, 2001, Monday

HEADLINE: Agenda Items Thought Dead Revived by Enron's Fall
BYLINE: BY ROB GARVER and MICHELE HELLER

BODY:

Several congressional and regulatory issues that were shelved after the Sept.
11 terrorist attacks -- ranging from the technicalities of bankruptcy law to
high-profile questions about the integrity of financial professionals-- have
been thrust back onto the agenda by the collapse of Enron Inc.

‘The need for a multitude of counterparties to safely and quickly unwind their
derivatives contracts with the multibilliondollar energy conglomerate has
sparked interest in the so-called "netting" legislation, initially sponsored by
Rep. Jim Leach, R-lowa, that has languished in Congress since last year.

‘The bill would give creditors the authority to "net out" their losses with a
major counterparty that has filed for bankruptcy, to prevent a financially
harmful domino effect. Currently a judge's permission is required to do 30 --
and often difficult to get.

In the aftermath of the Enron collapse, Rep. Leach said, the need for the
legislation “should become rather self-evident."

The revelation that equity analysts at major securities firms were still
advising clients to buy Enron's stock after its share price had plummeted to
less than SI spurred Rep. Richard Baker, R-La., the chairman of the House
Financial Services capital markets subcommittee, to renew his assault on the
industry.

01/16/2002

00600000000052


Enron Contacted 2 Cabinet Officers Before Collapsing Page Sof 5

Vice President Dick Cheney's energy task force.

The second visit, the records show, was on April 17, the day Mr. Lay and
other Enron officials met with Mr. Cheney for about a half-hour, Enron
Officials freely discussed the mecting last year with reporters, providing a
copy of the memorandum on electricity issues the company presented to Mr.
Cheney.

One month later, Mr. Cheney's energy policy task force issued its final
report, In the section on deregulation of the electricity markets, the report's
recommendations resembled much of what Enron had advocated, They also
tracked with policies advocated by Mr. Bush during the 2000 presidential
campaign.

Mr. Cheney, in an interview last year, denied that Enron had improperly
influenced the task force's deliberations, saying the task force would "make
decisions based on what we think makes sound public policy,” not what
"Enron thinks."

‘Copyright 2002 The New York Times Company | Privacy Information

hitp:!/www.nytimes.com/2002/01/1 I /business/1 1LENRO.html?pagewanted=print VL 1/02

01000000000066


Enron's President Said to Have Asked Treasury Official for Help Page 6 of 6

ilone | Back to Business | Search | Help Hack tor bog

Copyright 2002 The New York Times Company | Privacy information

hitp://\www.nytimes.com/2002/01/1 /business'] 1CND-ENRON. html?pagewanted=print Wio2

01000000000061


according to the Center for Public Integrity.

An attomey for Enron welcomed Ashcroft’ inquiry, the latest in a series of governmental probes into the
company’s demise, saying the investigation would "bring light to the facts."

~ We want to get to the bottom of this too," said Robert Bennett, a Washington attorney representing the
Houston-based company. *’ A lot of decent and honorable people work at Enron and we should wait until the
facts are out.”

Bush ordered a separate review Thursday of pension and corporate disclosure rules that could jeopardize
workers' savings. ' "There has been a wave of bankruptcies that have caused many workers to lose their pensions
and that is deeply troubling to me,” Bush said,

The Justice Department is forming a national task force to look into the company’s dealings. The group will be
headed by lawyers at the department's criminal division and include prosecutors in Houston, San Francisco,
New York and several other cities, said a Justice Department official, speaking on condition of anonymity.

The official declined to say when the investigation began. Enron faces civil investigations by the Lubor
Department and subpoenas from congressional committees.

All are looking into the energy trading company's collapse, the largest bankruptcy filing in U.S. history,

The failure hit employees and investors hard. Workers were prohibited from selling company stock trom their
Enron-heavy 401(k} retirement accounts as the company's stock plummeted, Many lost their life's savings.

Enron executives cashed out more than $1 billion in stock when it was near its peak.

Former Enron chief executive Jeffrey Skilling, who left the helm nearly two months before the company’s sw ift
descent, welcomes the investigation, said spokeswoman Judy Leon, Skilling has said he had no idea, despite
Enron's falling stock values, that the company was on the brink of failure.

Formed in 1985, Enron had 20,000 employees and was once the world’s top buyer and seller of natural gas and
the largest electricity marketer in the United States, It also marketed coal, pulp, paper, plastics, metals and
fiber-optic bandwidth,

One likely focus of the Justice Department investigation is possible fraud based on Enron's heavy reliance on
off-balance-shect partnerships which took on Enron debt. The partnerships masked Enron's financial problems
and left its credit ratings healthy so it could obtain the cash and credit crucial to running its trading business,

The Houston-based company went bankrupt after its credit collapsed and its main rival, Dynegy Inc., backed
out of an $8.4 billion buyout plan late last year.

Just a year ago, stock of Enron, the nation’s largest buyer and seller of natural gas, traded at $85 per share.
Today it is less than $1.

Lay has close ties to Bush and his father, the former president, Lay was a top contributor to the younger Bush's
2000 presidential campaign.

The company played a key role earlier this year when a White House task force met with business executives
and other interests to fashion a national energy policy. The task force was headed by Vice President Dick
Cheney.

00100000000003


High Vol: Electricity

Industry Problem:

Many countries in South America, Europe and elsewhere are opening their electncity
markets to competition, including privatizing assets and opening access to high voltage
transmission systems, Much of the growth in these systems involves the linkage of high
voltage transmission systems across national borders to create regional electricity 2 4ds
However, in order to foster the development of competitive electricity markets, the
regulations being adopted generally prohibit vertical integration. Thus, electricity
generation companies are often prohibited from directly owning the high voltage
transmission and low voltage distribution systems.

U.S. companies participating in the development of these generation and transmission
projects almost always co-venture with other investors. This may help to reduce the level
of common ownership sufficiently to allow a U.S. investor to own imerests in both
generation and transmission companies while complying with the vertical integration
restrictions under foreign law. Nonetheless, the separate project entities may still be
treated as related under Subpart F.

The Subpart F rules which accelerate US taxation of foreign base company services
income (“FBCSI") include a CFC’s income from performance of services on behalf of a
related person outside the CFC’s country of incorporation. The definition of services is
sufficiently broad to potentially cover the transmission of electricity generated by a
related person, although the issue is not certain. See the example on the attached map
which is representative of a high voltage transmission project under development that
would encounter this issue.

If the income from such services were treated as FBCSI under Subpart F, such incon.
would be taxed currently to the U.S. shareholders of the CFCs. Such current taxatic
would adversely impact the project economics, making it difficult for U.S. based
multinationals to compete for these projects in the intemmational marketplace.

Proposed Solution:

The proposed change would add a clause to the definition of FBCSI to clanfy that it
excludes income from the transmission of high voltage electricity.

Proposed Statutory Language Changes:

Subsection (¢) of Section 954 would be amended by adding clause (3) “Exception for
Income from Transmission of High Voltage Electricity” to read as follows:

(3) EXCEPTION FOR INCOME FROM TRANSMISSION OF HIGH
VOLTAGE ELECTRICITY. - The term “foreign base company services income’

00900000000359


million owed for the interest rate swap. Under HR 3211 the two $1 million debts
could offset each other, so that A would not be faced with a loss on B's
default

HR 3211 has broad bipartisan support Its passage has been urged by the
President's Working Group on Financial Markets, the Board of Governors of the
Federal Reserve System, the Treasury Department, the Securities and Exchange
Commission, the Federal Deposit Insurance Corp., the Commodity Futures Trading
Commission, the Comptroller of the Currency, the Office of Thrift Supervision,
the Foreign Exchange Committee, the Investment Company Institute, the New York
Clearing House, and the Securities Industry Association, among others.

In addition, the Financial Services Roundtable, a national association
representing 100 of the largest integrated financial services companies in the
country, strongly supports immediate congressional approval.

We cannot afford another Enron. Congress needs to pass HR 3211 before it
adjourns, regardless of the disposition of larger bankruptcy reform issues.
There is no good reason not to approve this bill immediately

Copyright c 2001 Thomson Financial. All Rights Reserved.
chit. americanbanker com>

LOAD-DATE: December 14, 2001

00600000000097


Enron Contacted 2 Cabinet Officers Before Collapsing

defeated her in 1994.

"And she named him the head of the Governor's Business Council,” Mr.
Bush said. "And I decided to leave him in place, just for the sake of
continuity. And that's when I first got to know Ken and worked with Ken."

Mr. Bush said that he had never discussed the financial problems of Enron
with Mr. Lay and that he had last seen him in the spring, at a fund- raising
event in Houston. Mr. Fleischer said Mr, Bush had not talked to Mr. Lay
since the spring.

It was Mr. Fleischer who first told reporters this morning, almost as an
afterthought at a sparscly attended early news briefing, that Mr. Lay had
called both Mr. O'Neill and Mr. Evans last fall to alert them about the
company’s financial straits,

Officials at the Treasury and Commerce Departments said Mr. Lay had
spoken to Mr. O'Neill about Enron's condition on Oct. 28 and Nov. 8 and had
spoken to Mr. Evans on Oct. 29. Although Mr. Lay had maintained until late
October an optimistic public face about Enron's future, on Oct. 16 the
company reported a third- quarter net loss of $618 million. On the same day,
Moody's Investors Service announced that Enron's long-term debt obligations
were on review,

The dates of the calls and the announcements of the bad financial news about
the company are significant. If Mr. Lay had made the calls carlier in October,
before the state of the company was widely known, the Bush administration
would have been aware of the true condition of Enron while Mr. Lay was
promoting a different story on Wall Street,

In an interview on CNBC tonight, Mr, O'Neil! said Mr. Lay had not asked for
a government bailout or other intervention to save the company.

“He called me to advise me that Enron's problems were mounting and to
offer access for our technical people to talk with his technical people about
the contracts that they had that were causing them problems," Mr. O'Neill
said. "I subsequently asked the undersecretary of the Treasury to speak with
the Enron people, which he did, so that we could satisfy ourselves that the
Enron affairs were not going to have a negative impact on U.S. capital
markets."

Asked whether Mr. Lay asked for government assistance, Mr, O'Neill said
“Absolutely not.”

On the same CNBC program, Mr. Evans said Mr, Lay had told him that
Moody's Investors Service was likely downgrade its rating of the company’s
debt.

Mr. Lay then said that if there was anything Mr. Evans could do to help the
company deal with Moody's (news/quote) "we would welcome that." But,

http://www.nytimes.com/’2002/01/1 l/business/1 1ENRO.htm!?pagewanted=print

Page 3 of 5

W102

01000000000064


12/05/01 15:47 FAX 202 646 5199

igozaras5

“WSJ.com Page 2 of 5

operations in Houston, where Enro)t currently employs approximately 7,500 people. in addition, the
company will continue its acceleraisd program to divest or wind down non-core assets and operations.
Details of the units to be affected yjill be communicated shortly.

The Dynegy Lawsuit

In its lawsuit filed today in U.S. Bankruptcy Court in New York, Enron alleges, among other things, that
Dynegy breached its Merger Agrecment with Enron by terminating the agreement when it had no
contractual right to do so; and that Dynegy has no right to exercise its option to acquire the entity that
indirectly owns the Northern Natwal Gas pipeline because that option can only be triggered by a valid
termination of the Merger Agreem nt.

‘The Chapter 11 Filings

In conjunction with teday's petitions for Chapter 11 reorganization, Enron will ask the Bankruptcy Court
to consider a variety of "first day nuotions" to support its employees, vendors, trading counterparties,
customers and other constituents. "hese include motions seeking court permission to continue payments
for employee payroll and health be nefits; obtain interim financing authority and maintain cash
management programs; and retain legal, financial and other professionals to support the company's
reorganization actions. In accordance with applicable law and court orders, vendors and suppliers who
provided goods or services to Enron Corp. or the subsidiaries that have filed for Chapter 11 protection
before today’s filing may have pre petition claims, which will be frozen pending court authorization of
payment or consummation of a plin of reorganization.

The Wholesale Energy Trading Business

‘The discussions currently underwiy with various leading financial institutions are aimed at obtaining
credit support for, recapitalizing aid revitalizing Enron's North American wholesale energy trading
operations under a new ownership structure in which Enron would continue to have a significant
ownership interest.

"Tf these discussions are successfu‘, they could result in the creation of a new trading entity with a strong
and unencumbered balance sheet, the industry's finest trading team, and its leading technology platform,
all backed by one or more of the world’s leading financial institutions,” said Greg Whalley, Enron
president and chief operating officer. "We understand that it may take time for counterparties to resume
normal trading Jevels with this eni:ty, but we are confident that this business can be put back on a solid
footing. Obviously, our potential j-artners share our confidence or they would not be at the table with us.
We intend to take steps to retain employees who are key to the future success of our wholesale energy
trading business and to regain the support and confidence of its trading counterparties."

Comment by Ken Lay

“From an operational standpoint, our energy businesses-including our pipelines and utilities-are
conducting normal operations anc will continue to do so," said Kenneth L. Lay, chairman and CEO of
Enron. "While uncertainty during the past few weeks has severely impacted the market's confidence in
Enron and its trading operations, (ve are taking the steps announced today to help preserve capital,
stabilize our businesses, restore thle confidence of our trading counterparties, and enhance our ability to
pay our creditors." Enron's princijal legal advisor with regard to the proposed merger with Dynegy,
Enron's Chapter 11 Gilings, the Dynegy lawsuit, and related matters is Weil, Gotshal & Manges LLP.
Enron's principal financial adviso} with regard to its financial restructuring is The Blackstone Group

|

hitp://interactive.wsj.com/archive ‘retrieve.cgi?id=DI-CO-2001 1202-000436.djmidctemplateny.... 12/3/01

00700000000032



, Enron Broadband Services, Inc. - Collocation Page | of 2

erromcet bandwidth sokutions

Collocation

[search] Enron Broadband Services offer Collocation services to CLEC’s, ePowered
ISP's, and [XC’s that deliver services for EBS, or participate in Bandwidth
euro Trading. This gives our customers the advantage of a physical location
Products and alternative to building their own network and Points of Presence. EBS’s
eahianans collocation facilities are located along our own longhaul fiber builds and
Bandeisth Soktions within every major city throughout the United States. Collocation within
Collocation Servicas EBS's POP’s (Point of Presence) provide customers with a cost-effective
DesFeer means of establishing a physical presence in a city. In addition, our services
provide a secure, controlled environment and casy connectivity to EBS’s
a fiber optic network and cPowered Application Services.
ther Our Target Customers
etseubare in « Local Exchange Carriers (LECs)
ere net cattgorn « Internet Service Providers that are cPowered Distributors or that buy
Network and sell bandwidth with EBS
Powered
Application Services Cabinets
bah meet Enron Broadband Services provides customers with solid front, lockable
Ind Servicns cabinets. Each cabinet or cage is in a secure, conditioned room designated
Solutions for ISPs for collocation, with ventilation, air conditioning, and fire suppression
Sokions for Content systems. The conditioned space is accessed via a key coded card. Customers
Providers have 24-hour, 7 day a week access to their equipment.
fe the
Erte The cabinets are 23" internal width by 24" internal depth by 84" internal
pPowerOnine height.
Resources
more SPECIFICATIONS
Coane Roan << —_
Contac Ue EBS Provides | Carrier Provides
EBS will Provide: Carrier will provide
« Cabinets (internal dimensions of ] » Extension ears to make the in
23"x24"x84") rack in the cabinet accommo
Shelves and fans in the cabinets for intemal width equipment
the Carrier « Jumper cables for connectivit
« DSX-1, DSX-3, FDP panels in the cross connection cabinet
collocation room « Plenum rated innerduct in clo
« Raceway, risers, or innerduct tray to connect fiber to cabin
between the Carrier, s cabinet space outside of ECI suite
and the cross connect cabinet point
in the collocation room i]
EBS will provide cable between the cross T carer is responsible for cabling be
http://www.ec.enron.com/bandwidth/colo. html 07/31/2000

00400000000018


44> Ncw bork Avenue, NY Headquarters

Washington, DC 20005.2158 40 Broad Street
Telephone 202.434.8400 New York, NY 10004-2373
Fax 202.434.8456 Telephone 212.440.9400
yew. bondmarkets com Fax 212.440.5260
March 14, 2000

Norman K. Carleton

Policy Director

Office of Federal Finance

U.S. Department of the Treasury
Room 2034

Washington, DC 29220
“
Dear Mr. Caffeton: ou

The Bond Market Assogiation very much appreciates the important work of the
U.S. Department of the Treasury and the President's Working Group regarding cross-
product netting and asset-backed securitization reforms.

I would like to clarify the Association's position regarding a memo sent to you by
Enron on March I. The characterization of our Association's position concerning
changes favored by Enron is inaccurate. Specifically, the memo states that “we expect
ISDA and The Bond Market Association to agree to these provisions, as they had
approved the earlier draft.” As my staff communicated to you last fall when we were
asked to review an earlier version of these proposals, the Association does not support the
Enron proposals and Enron has no reason to imply or anticipate our approval of their
proposed changes. We deferred entirely to the President's Working Group on these
Provisions and endorsed only the weather-derivatives amendment once it was accepted
by the Working Group. We continue to defer to the President's Working Group on these

proposals, j

Enron did not discuss their March | memo with us Prior to sending it to you, nor
have they responded to numerous inquiries my staff has made with them since they sent
it. Unfortunately, | therefore find it necessary to burden you with this clarification.

Thank you again for your leadership and support.

Sincerely,

R. Vogt
Executive Vice President

01000000001387


Canter, Virginia

From: Schmaizbach, Kenneth
Sent: Wednesday, November 28, 2001 5:26 PM
To: Canter, Virginia
Subject: WATCH OFFICE
w

RETA doe

Ginny: Note the Enron story.

01000000000040


Enron's President Said to Have Asked Treasury Official for Help Page 2 of 6

Today, the House Energy and Commerce Committee asked for the files of six
Andersen partners involved in the audit. And the Senate's Permanent
Subcommittee on Investigations subpoenaed documents from both Enron and
Andersen.

Also today, Enron said it had selected the investment bank UBS Warburg as the
winning bidder for its wholesale energy trading business after a private auction
overseen by a federal bankruptcy court. The deal, which must be approved by
the court, is aimed at helping Enron reorganize under Chapter |] bankruptcy
protection, Details of the terms of the deal are to be disclosed on Monday in
bankruptcy court.

The Justice Department said on Wednesday that it had created a nationwide task
force to conduct a criminal investigation into the collapse of Enron, an energy
trading company with close ties to Mr. Bush and many top administration
officials,

On Thursday, the entire United States Attorney's office in Houston recused itself’
from the investigation, saying many of its approximately 100 lawyers, including
the chief prosecutor, Michael T. Shelby, had family or other relationships with
people affected by Enron's filing on Dec. 2 for reorganization under Chapter 11
of the bankruptcy law.

The White House moved quickly to contain the damage. The White House
spokesman said Mr. Bush was made aware of the phone calls to the cabinet
members only Thursday moming during an Oval Office meeting.

“What you have here is a case where a contributor called up and asked for
something but did not get it," said Ari Fleischer, the White House press
secretary.

Yet the two cabinet secretaries who received calls from Mr. Lay described
somewhat different conversations. Commerce Secretary Donald L. Evans said
that Mr. Lay had indicated he would welcome any government help with its
bond ratings, while Treasury Secretary Paul H. O'Neill said the Enron chairman
requested no assistance at all.

Before the disclosure today of Mr. Whalley’s calls to Mr, Fisher at Treasury,
Enron officials disputed the White House version of events about Mr, Lay's calls
and said Mr. Lay was not asking for assistance from the Bush administration in
calling Mr. O'Neill and Mr, Evans, Mr. Bush's presidential campaign chairman
and chief fund-raiser. Enron officials also said Mr. Lay had called Alan
Greenspan, the chairman of the Federal Reserve, to alert him to the company's
problems.

Mr. Lay was simply informing the government about the possible bankruptcy
filing of the nation's seventh largest company, Enron officials said, as has been

the practice of executives of other large companies whose collapse could affect
worldwide financial markets.

http://www.nytimes.com/2002/01/1 L/business/1 1CND-ENRON_html?pagewanted=print W1L/02

01000000000046


derivative contracts could be further complicated by the market's lack of understanding of just how much value
is left in Enron's assets. That's an issue that will permeate the proceedings with all of Enron's stunned creditors.
On top of its derivative exposure, Enron is on the hook for roughly $13 billion in debt.

As part of its energy trading operations, Enron was a party to billions of dollars of derivative contracts designed
to enable the company and its trading partners to hedge, among other things, against rapidly fluctuating energy
prices and foreign exchange volatility - stabilizing otherwise uncertain markets. By its own account,as of
December 2000, Enron was involved in roughly $20 billion of derivative contracts on which it owed its
counterparties. More recent numbers aren't available.

Thoughts of an Enron bankruptcy jogged memories of past filings, such as the case of Drysdale Government
Securities Inc., which involved public entities being left on the hook for millions of dollars in uncollateralized
government repurchase agreements,

But bankruptcy laws have evolved significantly since the 1982 collapse of Drysdale sent shockwaves through
the financial community and forced banks to pay out tens of millions of dollars to cover Drysdale's obligations
to other government securities firms.

More recently, Orange County's 1994 bankruptcy following its derivatives debacle and the bitter dispute
surrounding German's Metallgesellschaft Ag for breach of forward petroleum contracts suggests that
acrimonious and lengthy litigations might be in the offing. In the latter case, many counterparties settled out of
court and took "haircuts" after a judge ruled that independent petroleum marketers who entered into long-term
hedging contracts as protection against escalating fuel prices could sue the metals and engineering conglomerate
for breach of contract.

But the extent to which those cases provide any lessons for Enron and its derivative counterparties remains to
be seen, experts said, depending on what sticky and complex issues might arise in potential court actions.

Meanwhile, although Enron has yet to file for bankruptcy, most of its derivative counterparties are likely
already scrambling to exit their trades.

That's because Dynegy Inc.'s (DYN) decision Wednesday to abandon its plan to rescue Enron all but sealed the
fate of the ailing Houston energy trader which has been hobbled by accounting irregularities and unquantified
off-balance-shect liabilities. Enron shares plummeted from about $90 a share last summer to 36 cents Thursday.

Derivative contracts are built around master agreements developed by the International Swaps and Derivatives
Association. As far as its power purchase deals go, Enron is said to have favored master agreements drafted by
the Edison Electric Institute, which draws heavily on ISDA's blueprint.

Those master agreements include certain events under which a counterparty can terminate a transaction. Among
those are failure to pay, failure to deliver and, of course, bankruptcy.

Whether counterparties will be able to claim exemption from the automatic stay that prevents anyone from
terminating contracts with a company that filed for bankruptcy will hinge on the type of deals they're a party to
and whether they meet certain statutory requirements. Although Enron and its lawyers are likely to nitpick the
unwinding of each and every contract involving the company, legal experts noted that Enron's fondness for EEL
agreements should help those entangled in power purchase agreements to liquidate their positions since these
contracts treat all participants as forward contracts merchants. Such merchants are exempt from the stay
stipulated by section 362A of the bankruptcy code.

Key to how well or poorly counterparties will make out now that Enron's busincss has been all but dried out, is
how much if any collateral protects their transactions.

So far, it's unclear how much of Enron's derivative transactions were collateralized. But lawyers familiar with

2

01000000000942


12/05/0) 1$:48 FAX 202 646 5109 Bor7033 ny
* WSkeom | Page 1 of 2

\
-@ awecer SAVIN
DOCUMENT OUTPUT
‘SOLUTIONS
ner.sevie.com
| December 2, 2001

Dow Jones Newswires
Chronology Of Enron Corp.'s History

- . °
HOUSTON (AP)--A look at the history of Enron Corp. (ENE):
July 1985 -Houston Natural Gas merges with InterNorth, a natural gas company based in Omaha, Neb.,
to form the modern-day Enron, an interstate and intrastate natural gas pipeline company with
approximately 37,000 miles of pipe.

1989 -Enron begins trading nature gas commodities. Over the years, the company becomes the largest
natural gas merchant in North America and the United Kingdom.

June 1994 -Enron North America |rades its first electron. Enron goes on to become the largest marketer
of electricity in the U.S.

August 1997 -Enron announces it: first commodity transaction using weather derivative products, Enron
goes on to market coal, pulp, paper, plastics, metals and bandwidth,

April 1999 -Enron agrees to pay $100 million over 30 years for the naming rights to Houston's new

ballpark, Enron Field, The Astros also sign a 30-year facilities management contract Enron Energy .
Services.

November 1999 -Enron launches |inronOnline, the first global Web-based commodity trading site.

December 2000 -Enron announce: that president and chief operating officer Jeffrey Skilling will take
over as chief executive in Februar, Kenneth Lay will remain as chairman. Shares hit 52-week high of
$84.87 on Dec. 28.

August 2001 -Skilling resigns after running the company for just six months; Lay becomes CEO again.

October 16, 2001 -Enron reports ¢. $638 million third-quarter loss and discloses a $1.2 billion reduction
in shareholder equity, partly related to partnerships run by chief financial officer Andrew Fastow.

Oct. 22, 2001 -Enron acknowledgs Securities and Exchange Commission inquiry into a possible
conflict of interest related to the o»mpany's dealings with those partnerships.

Oct. 24, 2001 -Enron ousts Fastovi'.
Oct, 31, 2001 -Enron announces t\e SEC inquiry has been upgraded (o a formal investigation. Enron

creates special committee headed |xy University of Texas law school dean William Powers to respond to
the investigation.

http://interactive.ws}.com/archive retrieve.cgi7id=BT-~CO-2001 1202-000301 djml&templates... 12/3/01

01000000000846


42/05/01 18:48 FAX zoy Sib sisy |

_ —— WVLo veo
|
WSI.com Page | of 2

November 30, 2001

Major Business Nows

U.S. Attorneys Inform Regulators
They Want to Monitor Enron Probe

By MICHAEL SCHROEDER
Staff Reporter of THE Wat Stuget Joursat,

WASHINGTON -- Federal prosecutors in two states have told the Securities and Exchange Commission
that they are interested in monitoring the agency's investigation into possible accounting fraud at Enron
Corp.,.as 2 possible precursor to a separate criminal probe, according to a person with knowledge of the
situation.

Meanwhile, members of Congress announced new inquiries into the company's activities.

Enron stock's spectacular plunge t/i¢ past few weeks has attracted the interest of officials in New York
and Texas, including the U.S. atto neys’ offices in Manhattan and Houston, this person said. Spokesmen
for the U.S. attorneys’ offices decl.ned to comment.

In late October, Enron disclosed tI.at the SEC had undertaken a formal investigation into the Houston
energy company's financial dealinis with partnerships headed by its former chief financial officer,
Andrew Fastow.

A formal investigation involves this SEC's enforcement branch going to the five-member commission
and obtaining formal subpoena po'wer to pursue its inquiry. A person familiar with the SEC probe said
the agency felt it needed subpoens power to compel the release of information by parties that have done
business with Enron.

Enron's stock price has collapsed rom about $60 a share early in the year to under $1 amid financial
restatements due to improper accclunting and a failed merger with crosstown rival Dynegy Inc.
Shareholder and Enron employce ‘ctirement account values have been devastated by the meltdown.
Criminal authorities are interested to learn if the SEC finds that malfeasance contributed to the share-
price declines.

In 4 p.m. composite trading Thurs'iay on the New York Stock Exchange, Enron was at 36 cents, down
25 cents, or 41%,

If a criminal probe were undertakin, it would be handled by onc office, mostly likely in Houston,
Enron's hometown. But federal prisecutors in Manhattan, who have experience in securities-fraud cases,
could assert jurisdiction because Furon's stock trades on the New York Stock Exchange.

Early this year, Enron came under

attack from Californig politicians and regulators for profiting from
spiking energy prices in that state, .

One reason authorities haven't bes un their own investigations is the fear that a criminal probe might
cause witnesses "to clam up.” sai) the person with knowledge of the situation.

bntp://interactive.ws).com/archive retrieve.cgi?id~SB 1007087266825656840.djmértemplate.... 11/30/01

00700000000027


Smith, Amy

From: Upchurch, Carol

Sont: Tuesday, January 22, 2002 7:33 AM

To: Eichner, Matthew, Hunt, Betty Ann; LIBRARY, REFERENCE; Smith, Amy
Subject: FW. Dally Briefing for Tuesday, January 22, 2002

core Original Message-----

From: AmericanBanker.com [mailto:dailybriefing@AMERICANBANKER. COM]
Sent: Tuesday, January 22, 2002 5:20 AM

To: AMERICANBANKER®LISTS.AMERICANBANKER. COM

Subject: Daily Briefing for Tuesday, January 22, 2002

AmericanBanker.com
http://www. americanbanker.com

DAILY BRIEFING

Tuesday, January 22, 2002

Place your advertisement on CareerZone Online, the online employment site
available through AmericanBanker.com, and reach qualified financial service
professionals. CareerZone Online allows companies to run ada in both our print
and online products. Position your ad in front of the 130,000 professionals who
read American Banker daily.

http: //www.bankjobs,com/American Banker CareerZone.asp
Set et = sss
NATIONAL/ GLOBAL

In Mexico, Citi Shows Its Emerging Optimism
Citigroup Inc.'s announcement Friday that it plans to add to
its holdings in Mexico should come as no surprise to anyone
who was paying attention the day before, when the New York
financial services giant reported fourth-quarter earnings,

http: //www.americanoanker.com/cgi-bin/read tagstory?20020122NATL6O04

WASHINGTON

Lessons of Enron: Did GLB Contribute to the Losses?
The Enron case has been spectacular by many measures - as
mass-market scandal, as cautionary tale for businesspeople,
and as catalyst for accounting changes. But despite all that
has been written, scant light has been shed on the larger
lessons Enron holds for financial services companies. In 3
Series beginning taday, American Banker tackles three
questions confronting the industry in Enron's wake: Did
passage of the Gramm-Leach-Bliley Act spur institutions to
take on too much risk in courting the complex company's
business? In view of lencers' exposures, what lesson dees the
collapse hold for risk managers? Finally, as Washington
scrutinizes Enron's pension system, what lies ahead for
policies governing retirement savings?

http://www. americanbanker.com/cgi-bin/read tagstory?20020122WASHSB?

CARDS

00600000000061


Reform of Subpart F Treatment of Commodities Income

Energy Risk Management and Similar Industry Problem:

As the energy (and other commodity) markets in the US and in other countnes
deregulate, both producers and consumers of energy, such as natural gas and electricity,
are exposed to market price volatility, supply and other risks. Most of these nsks can be
managed through vanous forms of contractual agreement, ‘ncluding contracts for
physical delivery as well as financial contracts such as swaps, forwards and notional
principal contracts.

Many US and foreign energy companies seek to offer risk management solutions 10 these
producers and consumers. US based companies are currently among the most innovative
competitors in offering new and unique forms of risk management products, However,
large foreign based energy companies are becoming much more competitive as they gain
expenence with deregulation in their own countries.

One factor that is also helping foreign based energy companies become more competitive
is the US taxation of their US based competitors. Under the Subpart F rules which
accelerate the US taxation of certain types of income earned through controlled foreign
corporations (“CFC”), a CFC’s income from these energy risk management products can
be taxed currently to the US shareholder of the CFC under several provisions. For
example. the physical delivery of natural gas can be taxed currently as Foreign Personal
Holding Company Income (“FPHCI"}, Foreign Base Company Sales Income and Foreign
Base Company Oi] Related Income. It js often the case that changing the terms of such a
transaction to meet an exception for one of these Subpart F provisions will cause it to fall
within one of the other Subpart F provisions

While there are conventional structures 10 mitigate the impact of so.ne of these Subpart F

rules, such techniques are cumbersome and add complexity. In addition, recent ‘
developments with respect to non-tax issues, such as counter-party credit risk and

regulatory capital requirements, make some of these techniques financially costly or even

impractical from a commercial standpoint. Thus, the combination of the Subpart F anti-

deferral rules and non-tax commercial considerations place US based energy companies

at a competitive disadvantage relative to their foreign competitors.

Proposed Solution:

The first suggested solution would be to amend the definition of FPHCI to better
coordinate the “commodity exception” for active physical commodity transactions with
the “dealer exception” for active financial commodity transactions as both are descnbed
in Section 954(c). The second, preferred suggested solution would be to amend the
definition of FPHCI as above, but also to make clear that qualifying commodity receipts
would be excluded from all other Foreign Base Company Income definitions under
Section 954.

0090000000343



4Q Earnings: Loss for Key; Comerica, SouthTrust Surge
KeyCorp, like many big banks, had a tough fourth quarter to
end a tough year. Unlike most of its
competitors, however, Key's top management may be running out
of time to show a significant improvement - whether or not the
economy cooperates.

http: //wew. americanbanker.com/cgi-bin/read_tagstory?200201] 7NATLS39

MARKETS

Citigroup May Break Silence Today on Exposure to Enron
What is currently the biggest mystery on Wall Street may be
solved teday, when Citigroup Inc. holds its fourth-quarter
meeting with analysts. Then again, it may not.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020117MMONS41

WASHINGTON

Treasury Official Renews Call for Better Disclosure
WASHINGTON = Peter R. Fisher, the under secretary for
domestic finance at the Treasury Department, spoke publicly
Wednesday for the first time since his name was Gragged into
the Enron Corp. scandal last week.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020117WASHS521

Place your advertisement on CareerZone Online, the online employment site
available through AmericanBanker.com, and reach qualified financial service
professionals, CareerZone Online allows companies to rum ads in both our print
and online products. Position your ad in front of the 130,000 professionals who
read American Banker daily.

http://www. bankjobs.com/American Banker CareerZone.asp

NetBank Builds Origination Engine with Pair of Deals
With its two acquisition deals last year, NetBank Inc.
quietly but quickly vaulted itself into a top=20 mortgage
lender and a major player in beth online and offline home loan
banking.

http://www. americanbankxer.com/cgi~bin/read_tagatory?20020117MORGS25

TECHNOLOGY

State St. Stake In Tech Firm May Spur Aggregation
State Street Corp.'s agreement to take a minority stake in
ByAllAccounts Inc. and offer the Woburn, Mass., company's
account aggregation services to State Street's investment
advisers is a boost for the technology, which has yet to make
much headway in the consumer market.

http: //www.americanbanker.com/cgi-bin/read_tagstory?20020117TECHS13

COMMUNITY /REGIONAL

Farm Credit National Charter Plan Deed
a

00600000000068


FOXNews.com Page $ of 11

Your reaction?

O'NEILL: My reaction is, you know, it's ust amazing to me to have this
kind of comment. What we knew, what | knew, | think what those of us in
the administration knew was public property, Everyone knew from
Enron's disclosures that they were struggling. We didn’t know mere than
that,

The company had a duty to inform its shareholders and its employees
about things that were going on inside the company. That's not a federal
government responsibility.

And again, we didn't have any knowledge that wasn't general public
Property. You ail in the television world and in print media were reporting
on kind of a day-to-day basis what was going on in Enron, | didn't know
anything more than you did.

SNOW: So when Ken Lay e-mailed employees in August saying he
thinks the best times are ahead, do you think he was being straight with
his employees?

O'NEILL: Weil, | don't know. You know, that's something you need to
ask Ken Lay. | don't know. | didn’t have inside knowledge of what the
company’s prospects were. You know, having been a CEO, | often —!
always communicated with my people what | thought was going cn. And
you need to ask Ken Lay what he had in his mind when he sent that e-
mail.

SNOW: Do you think the federal government or Congress ought to do
anything to try to make whole some of the shareholders, especially
people who worked for Enron who've lost their life savings, or is that just
the breaks?

O'NEILL: Well, again the second group the president asked me lo lead
is to look and see whether the laws and rules and regulations about
disclosure are appropriate and whether something's been missing in the
requirements for disclosure, especially in these areas that are so
complicated.

1 don't know whether you've ever spent any time trying to understand the
derivatives business. | did, because when | was at Alcoa we ran 2 billion-
dollar, multi-billion-dollar derivatives process in the 36 countries we were
involved in around the world. And it's an enormously complicated
subject.

The president's asked me to look at the rules and regulations and see
whether we need to modify them in some way to essure that
shareholders and employees are not disadvantaged because the
disclosure rules are not strong enough,

SNOW: Mr. Secretary, final question. f'm going to read a Fox News
Opinion Dynamics Poll question. We asked people about their optimism
about the economy, whether they think things are going to get better or
worse in the next year. And 74 percent said better, only 14 percent said
worse.

Are they realistic or guilty of irrational exuberance?

file://C:AWINDOWS\Temporary Intemet Files\OLK5141\FOX 05 O 1 9 01/16/2002

010000000000390


consider

the nominations of Vickers Meadows and Diane Tomb ta Assistant Secretary
for

Administration and Assistant Secretary for Public Affairs, respectively, at
the Department of Housing and Urban Develepment.

HEARING ON ENRON BANKRUPTCY

This morning, the Senate Commerce, Science and Transportation Committee
will
hold a hearing on the Enron bankruptcy.

HEARING ON AFTER HOURS STOCK-TRADING NETWORKS

Tomorrow, the Commerce, Trade and Consumer Protection Subcommittee of the
House Energy and Commerce Committee will hold a hearing on how Electronic
Communications Networks (after hours stock=trading networks} have been
affected by the September 11th attacks.

Abe eebeeeedeenennne

Kerry Barly, Managing Associate Director, Washington Information
202-663-5316, or kearlyBaba.com

Tom McElligott, Program Manager, Washington Information
202-663-5352, or tmcelligdaba.com

Office of Grassroots Programs and Washington Information
American Bankers Association

World-Class Solutions, Leadership and Advocacy

Since 1975

1-800-BANKERS

The information contained in this message may be privileged and
confidential and protected from disclosure. If the reader of this message
ig not the intended recipient, or an employee or agent responsible for
delivering this message to the intended recipient, you are hereby notified
that any dissemination, distribution or copying of this communication is
strictly prohibited. If you have received this communication in error,
please notify us immediately by replying to the message and deleting it
from your computer. Thank you. Ernst & Young LLF

00600000000093


SEP 38'S9 17:43 FR CWT 1333 262 S62 2482 TO 487663G8i6220S74 P.Bivea

CADWALADER, WICKERSHAM & TAFT
1333 New Hampshire Avenue, NW
Washington, DC 20036
(202) 862-2200
Fax number: (202) 862-2400

From: Ellen Levinson No. of pages: Date: September 10, 1999
FOR IMMEDIATE DELIVERY TO:

1) | Name: Norman Carleton Fax No.: 202-622-0974
Department of the Treasury Phn No.: 202-622-1855
| 2) = Name: Oliver Ireland Fax No.: 202-452-3101
| | Federal Reserve Board Phn No.: 202-452-3625
cc) |Name: Jeff Keeler 202-828-3372
| ENRON 202-466-9157

! ew
cc) | Name: David Mitchell 212-504-5641
CWT - New York 212-504-6285
cc) | Name: Lech Kalembka 212-504-6666

CWT - New York 212-504-6918 _}

Dear Messrs. Carleton and Ireland:

T have attached, for your information and review, the latest versions of the amendments proposed by
Enron to Section 901 of $.625 (the Bankruptcy Reform Bill). These amendments are supported by
ISDA. Enron has submitted these amendments to the Senate Judiciary Committee staff for
consideration. We would like the opportunity to discuss these provisions with you at your earliest
convenience.

"Dy. Avena)

Ellen S. Levinson

‘Teas communication & confidential and tmeeaded only for tne addresct. Aoy distribution or duplicating of this cemenunication is stricily prebibited. Lf you
Teotived thes telecopy in error, please call us unmediately,

$7683.001
FACSIMILE_0005)10_0e18/95

01000000001450


Enron's President Said to Have Asked Treasury Official for Help Page 5 of 6

Mr. Fleischer said the president expressed no surprise, regret or annoyance that
he had not been informed of the calls from Mr, Lay until more than two months
after they occurred.

“Bankruptcies happen in our economy,” Mr. Fleischer said. "And it's not
uncommon for people who are in the community, business community or in the
labor community, to talk to a cabinet secretary to tell them about the financial
status of their business and it ends there.”

Democrats on Capitol Hill moved immediately to question the White House
statements. "It is now clear the White House had knowledge that Enron was
likely to collapse but did nothing to try to protect innocent employees and
shareholders who ultimately lost their life savings," said Representative Henry
A. Waxman, the California Democrat who is his party's senior member on the
House Government Reform Committee.

Mr. Fleischer said that he hoped that any Congressional inquiry would be even-
handed and that if it became "a one-party witch hunt, I think the Congress is
going again to remind the country on why people soured and tired of those types
of partisan investigations.”

Mr, Lay and Enron executives have given more than $550,000 to Mr. Bush's
various campaigns, and Mr. Lay also gave $100,000 to Mr. Bush's inaugural
committee.

But Mr. Lay does not appear to have been a frequent recent visitor to the White
House, based on publicly available records, He visited the White House only
twice during the first five months of Mr. Bush's presidency, according to Secret
Service access control records obtained by The New York Times (news/quote)
under the Freedom of Information Act. The first visit occurred on Feb. 22, 2001,
the day Enron officials met with the staff of Vice President Dick Cheney's
energy task force.

The second visit, the records show, was on April 17, the day Mr. Lay and other
Enron officials met with Mr. Cheney for about a half-hour. Enron officials freely
discussed the meeting last year with reporters, providing a copy of the
memorandum on electricity issues the company presented to Mr. Cheney.

One month later, Mr. Cheney's energy policy task force issued its final report. In
the section on deregulation of the electricity markets, the report's
recommendations resembled much of what Enron had advocated, They also
tracked with policies advocated by Mr. Bush during the 2000 presidential
campaign.

Mr. Cheney, in an interview last year, denied that Enron had improperly
influenced the task force's deliberations, saying the task force would "make

decisions based on what we think makes sound public policy,” not what "Enron
thinks,”

http://www. nytimes,com/2002/01/11/business/1 1CND-ENRON, html?pagewanted=print Vio2

01000000000060


From: Upchurch, Carot

Sent: Sunday, January 20, 2002 8:30 PM

To: Eichner, Matthew, Hunt, Betty Ann; LIBRARY, REFERENCE; Smith, Amy
Subject: FW: Daily Briefing for Friday, January 18, 2002

-----Original Message-----

From: AmericanBanker.com [mailte:dailybriefing@AMZRICANBANKER.COM]
Sent: Friday January 18, 2002 5:20 AM

To: AMERICANBANKERGLISTS.AMERICANBANKER.COM

Subject: Oaily Briefing for Friday, January 18, 2002

AmericanBanker.com
http: //waw. americanbanker.com

DAILY BRIEFING

Friday, January 14, 2002

Entire loan origination process now handled through one source.

TransUnion simplifies the loan origination process by handling everything from
start to finish: credit approval, flood determination, property valuations,
title searches, closing services and more.

For more information, call TransUnion at 1-888-299-8787 or visit
http: //www.transunionssi.com/checkthisout_AB.ht=

NATIONAL/GLOBAL

In Focus: In This Storm, the Umbrella Worked
When Citigroup Inc. completes the spinoff of its Travelers
Property Casualty business two years from now, chairman and
chief executive Sanford I. Weill will keep one trophy:
Travelers’ red-urbrella logo.

http://www. americanbanker.com/cgi-bin/read_tagstory?2002011BNATLS54

4Q Earnings: Double-Digit Increases In Nine Business Lines
Citigroup Inc., powered by strong growth in its global
consumer business, overcame $698 million of charges related to
Enron's bankruptcy and the turmoil in Argentina to put up
solid fourth-quarter profits, capping another record year.

http: //www.americanbanker.com/cgi-bin/read_tagstory?200201 18NATLS52

MORTGAGES

Mold Crisis Puts Insurers, Lenders in Tight Corner
in the weeks and months after the Sept. 11 attacks, concern
was widespread in the financial services industry that
commercial real estate lending might go into a freeze without
a comprehensive answer to the question of terrorism inaurance.

http://www. americanbanker.com/cgi~bin/read tagstory?20020118MORGSS?

WASHINGTON

00600000000064


Smith, Amy

From: Richard, Gi ite] Richard: mai house

Sent: Friday, December 14-2001 10: om

To: Hampton, F Frank; | aeidcleget com; Sarah h_ Dumont@bank king senate, gov, Stacy
Carey; struj coy G Jpmorgan.com, Thomas J. Rosenkoetter, msolomon@fsround.org;
amy.si \do.treas.gov; amie.cohen@ots.

Subject: Netting Bill Would Prevent Domino Effect from mm Colopses Like Enr on’s

The American Banker

December 14, 2001, Friday

HEADLINE: Netting Bill Would Prevent Domino Effect from Collapses Like Enron's.
BYLINE: BY STEVE BARTLETT

BODY:

The failure of Enron Corp. is just one of the numerous business collapses
that the financial community and the U.S. economy could face in the coming
months,

However, by acting fast Congress can help avert similar crises.

In financial services, “netting” refers to looking at the net amount of
financial obligations in multiple contracts between two parties. By clarifying
the enforceability of netting provisions in financial contracts, the Financial
Contracts Bankruptcy Reform Act of 2001 (HR 3211) — sponsored by Rep. Pat
Toomey, R-Pa. — would reduce legal uncertainty and enhance the liquidity of
global financial markets.

Most importantly, the bill would reduce systemic risk by making it less
likely that a large default by a single financial institution would have a
domino effect. There is a broad consensus among financial institutions and their
regulators that legislation to ensure the legal validity of netting is needed —
and needed now.

HR 3211 would be a much needed improvement, modemization, and harmonization
of the payment risk reduction and netting provisions of the bankruptcy code and
bank insolvency laws, The proposal has already been passed without opposition
several times by the House and the Senate. on its own and as part of broader
bankruptcy reform legislation.

if a party to multiple contracts with a financial institution declares
bankruptcy, HR 3211 would permit that institution to offset its exposures from
the various contracts, as the parties have agreed, and thus reduce the financial
institution's overall exposure to the bankrupt party

‘Suppose, for instance, that institution A is party to two transactions with
institution B. One is an interest rate swap, under which A owes B a settlement
payment of $1 million when B files for bankruptcy and A terminates the swap. The
other is & repurchase transaction, for which B owes A $1 million,

Without netting, A would have to pay B the $1 million owed for the repurchase
transaction, but because of B’s bankruptcy, A may not be able to collect the $1

51

00600000000096


the matter said it was likely that a large amount of those contracts were not collateralized.

That's likely to be bad news for some counterparties. Because if they're owed money by Enron on their netted
derivative exposure, they'll have to join other unsecured creditors, likely receiving little of their claims. The
bonds and bank debt of Enron took a nose dive after Dynegy rescinded its merger offer, with trading levels
indicating that those mostly unsecured creditors thought they would recoup only 20% to 25% of the money
loaned to Enron.

-By Carol S. Remond, 201-938-2074; Dow Jones Newswires; carol.remond@dowjones.com
(Phyllis Plitch contributed to this column.)

01000000000943


WS].com — From the Archives Page 3 of 3

feet eens coe cause eee neeeeesmennennewane eeppoes coe see eee cee rte
markets, We're basically waiting for the new Secretary's policy speech
before we make any assessments about his abilities," said Joe
Lavorgna, economist at Deutsche Bank in New York.

But others say that Bush may have already signaled that his
administration, while not advocating outright protectionism for U.S.
markets, might be more focussed on domestic policy and stimulus at
the expense of a strong dollar.

Bush's appointee for White House Chief of Staff, Andrew Card, was
the former head of the lobby group American Automobile
Manufacturers Association, a now-defunct group which had lobbied
hard to maintain a more moderate dollar stance to maintain U.S. auto
exports,

"An appointment of someone from outside Wall Street would tend to
signal to the markets, as well as foreign countries, a renewed emphasis
on domestic policy. The Treasury Secretary is only part of that
picture,” said Mare Chandler, chief currency strategist at Mellon Bank
in New York.

Regardless of the Treasury Secretary's policy, however, some market
watchers say the fate of the dollar versus other currencies is in the
hands of the markets.

“With dollar policy, there is action and there is rhetoric. It's almost
certain that the new Secretary is going to be advocating a strong dollar
in rhetorical terms - that's just a way of saying that they favor low
inflation and a currency that holds its value,” said Kevin Logan, senior
economist at Dresdner Kleinwort Benson.

“Rubin repeated constantly that the strong dollar was in the best
interest of the economy, so when he intervened to help the yen, it
wasn't seen as a huge change of sentiment,” added Logan.

Steven Vames; Dow Jones Newswires; 201-938-2206;
steven.vames@dowjones.com

The bad news is you can't beat the market.
—

Return to top of page | Format for printing

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.
Copyright and reprint information,

01/23/2002
01000000001209


Proposed Statutory Language:

Partial solution: Subsection (c) of Section 954 would be amended by revising sub-
clause (ii) of existing clause (1)(C) to read as follows:

“(ii) are active business gains or losses from the sale of commodities, but only if
substantially all of the controlled foreign corporation's business is as an active
producer, processor, merchant or handler of commodities or as a regular dealer in
instruments referenced to commodities (as described in subsection (cK2C) of
this section).”

Preferred solution: Subsection (c) of Section 954 would be amended by deleting sub-
clause (ii) of existing clause (1)(C) and re-numbering ‘sub-clause (iii) as sub-clause (ii)
A new sentence would be added to the end of clause (1)(C) to read as follows

“This section 954 shall not apply to gains or losses which are active business
gains or losses from the sale of commodities, but only if substantially all of the
controlled foreign corporation's business is as an active producer, processor.
merchant or handler of commodities or as a regular dealer in instruments
referenced to commodities (as described in subsection (c)(2)(C} of this section).”

Analysis. Tax Policy and Revenue Impact:

There are two significamt Subpart F problems relative to risk management products
offered by CFC’s. First, under the exrsting Subpart F rules applicable 10 FPHCT. a seller
of energy risk management products could qualify for the financial dealer exception or
the physical commodity exception but not both. The seller could qualify for the dealer
exception by eaming income as a dealer in financial instruments referenced to
commodities, such as swaps, forwards, futures, options and nouonal pnncipal contracts.
Alhtematively, the seller could qualify for the commodity exception by eaming’
substantially all of its receipts from entering into transactions with respect to physical gas
and electricity, However, the term “substantially all” requires 85% of gross receipts to be
camed from transactions in the physical commodities. If this same seller eamed 16% of
its gross receipts from financial transactions that would otherwise qualify it for the dealer
exception, the 84% of gross income from physical transactions would generate FPHC].

Thus, foreign affiliates of US energy companies must offer physical and financial
products in separate companies in order to qualify the two types of products for the
separate exceptions. This segregation in separate entities causes numerous commercial
and back-office difficulties such as 1) booking physical and financial positions in separate
entives complicates managing counter-party credit risk due to difficulty in offsetting
positions in case of bankruptcy; ti} segregating physical and financial positions makes it
difficult to adapt 10 market developments (c.g. the New Energy Trading Arrangements in
the UK); and iit) a significant Subpart F inclusion could be inadvertently tnggered by
failure to record a single matenal transaction in the correct legal entity.

00900000000344


POANews.com

Bob Rubin, who was President Clinton's Cabinet secretary, call up on
their behalf. And we don’t know all those answers yat.

What we do know so far is we found no indication that the
administration, in any way, did anything improper or answered any calls
that might have come forward.

HUME: But you are, as the head of the Nationa! Republican
Congressional Committee, in the process of returning campaign
contributions.

DAVIS: Absolutely.

HUME: Wel, if there's nothing improper here, why return the money?

DAVIS: Well, 't tell you why, because they gave $100,000 in corporate
dollars, it couki go back and help those employees, help fund their
pension plans, And, frankly, | think that is a better use of $100,000 at
this point.

SNOW: Representative Dingell, you alsa got some money over the years
from Enron, Did anybody at Enron try to contact you?

DINGELL: Well, Enron talks to everybody. And I've told them no at
almost everything they've said...

(LAUGHTER)

.-- and that includes Geregulation of electrical utility sales and things of
that kind.

‘SNOW: But during this period when Enron officials were contacting the
easury secretary, the commerce secretary and the undersecretary of

treasury, did anybody call you and say, we want you to take a look into
rating services or we want you to give us sore help?

DINGELL: Ne, they did not, and | would not have done so.

And by the way, Tony, hey gave me $10,500, and weve going to give
that money — I've already instructed my campaign treasurer — to the
funds that have been set up to help the employees, and | urge
everybody to do the same thing.

HUME: Well, just to follow that up for a second, Tony's questions, when
did they contact you, how often and about what?

DINGELL: Well, they were usually contacting me about deregulating
electrical utility sales, and we always told them no-

HUME: When was the last time? When did that happen last?
DINGELL; Oh, over a period of some time, and we told them no.
HUME: What? Last year, last six months, last month, when?

DINGELL: Oh, over 8 long period of time. They contacted us about thal.
We told them no. | opposed the proposal. | think it was the night thing to

Page 8 of II

file//C:\WINDOWS\Temporary Internet Files\OLKS141\FOXNew: r@) 5 0 2 2 1/16/2002

01000000000093


estimate that these entities each cost $5,000 to $10,000 per year im administrative and
compliance costs.

Solution:

Specifically exclude preliminary non-binding agreements such as MOUs, LOIs, HOAs.
and JDAs from the definition of “intangibles” for purposes of Sections 367 and 482.

ie :

The Section 963(h)(3)(B) definition of an intangible could be modified to exclude
MOUs, LOIs, HOAs, JDAs and similar preliminary non-binding agreements from the
definition of a “contract” by adding at the end a new sentence to read as follows:

“Such term shall not include any preliminary agreement which is not legally
enforceable.”

The legislative history to this change should indicate that the change is intended to also
apply for the cross-referenced purposes of Sections 367 and 482.

(Similar language was included as Section 306 of the International Tax Simplification for
American Competitiveness Act of 1998 (S. 2231, H.R. 4173).)

Analysis, Tax Policy and Reve! :

| There are two key non-tax reasons for supporting this proposal, First, the
proposal would reduce the administrative, legal, accounting, tax compliance and other
out-of-pocket costs of forming, maintaining, liquidating, etc, foreign corporations for
foreign business opportunities that do not progress beyond a preliminary stage

Secona, Se current tax rules inhibit the ability of U.S. multinationals to react
quickly and efficiently to foreign business opportunities. For example, in the early stages
of a development project, a potential foreign customer (¢.g., a governmental entity) may
not want to execute preliminary agreements with a newly formed foreign affiliate of a
U.S. multinational. This puts U.S. multinationals at competitive disadvantage vis-d-vis
foreign competitors.

2. The proposed change ts best viewed as a technical correction (or clarification of
existing law), not a substantive change to Section 367. The proposal is consistent with
USS. tax policy for the following reasons:

a, Preliminary non-binding agreements are the result of investigatory costs, not

valuable intangible property that should be subject to the super-royalty provisions
of Section 367(d), :

00900000000366


If you have any questions or would like to unsubscribe, please feel free
to contact our Customer Service Department at custservéamericanbanker.com
or call (800) 221-1809, 8:30 am - 5:30 pm {EST}.

AmericanBanker,.com
http: //waw. americanbanker.com/

Copyright (c) 2001 American Banker, Inc.
All Rights Reserved.

00600000000074


Gwt

Enron Corp.

PO. Box 1188

Houston. TX T725t-1189
ty,

January 14, 1998

Mr. Philip R. West
International Tax Counsel

US. Treasury Department
1500 Pennsylvania Avenue, N.W.

Washington, D.C. 20220

Dear Mr. West,

Thank you for taking the time last week to meet with Cullen Duke, Mike Pate, Shannon Ratliff
and me to discuss various international tax competitiveness and simplification proposals. In
particular, these proposals impact U.S. multinational companies involved in foreign infrastructure
projects, We appreciate your diligent review of our proposals and your insightful comments. We
will be glad to provide you with any additional information that you may ‘heed to perform your
analysis of our proposals

In response to your concerns with our suggested amendment to the Subpart F high-tax exception,
we offer the following illustration of the current inequities of the high-tax exception and a
modified proposed solution

ILLU MPUTATIONAL PROBLEMS

The House Committee Report to the Tax Reform Act of 1986 stated that the high-tax exception
should provide the taxpayer with certainty and should be applied broadly where there is no tax
avoidance As we discussed, the computational methodology adopted in the final high-tax
regulations does not achieve these Congressional objectives due primanly to the following: (i) the
high-tax exception is based on U S_ earnings and profits which often causes an artificial dilution of
the foreign effective tax rate, (ii) the test is computed on a post-'86 pool basis as opposed to the
general current year focus of Subpart F, (iii) the utilization of foreign tax loss carryovers is
effectively treated as tax avoidance, and (iv) the test must be computed in U.S. dollars which
places the U.S. shareholder at the mercy of unpredictable currency exchange rate fluctuations

To illustrate the unintended results of the current high-tax exception test, we considered whether
a U S. company doing business in the U.S. could meet this exception. Attached as Exhibit A is an
example of how the high-tax exception would apply to a U.S. company owned by a Dutch
subsidiary of a UK. multinational assuming that the U K. had a U.S. style Subpart F regime with
the same high-tax exception test as described in Reg §1.954-1(d). In this example, we assumed

Natural gas. Electricity. Endless possibilities.

00900000000320


Servetnick, Dale

From: Michael J. Wade [mwade@eclipse.net)
Sent: Sunday, January 13, 2002 5:19 PM
To: OPCMail@do.treas.gov

Subject: Sec O'Neil

Sir:

{ just wanted to let you know that I saw you today on This Week with Sam
Donaldson, and thought you did an excellent job of explaining the role

the administration took in the Enron matter, and if fending off Sam's
leading and argumentative questions.

Keep up the good work!

Michael Wade
mwade@eclipse.net

00100000000046


Lakritz, Robb

From: Hunt, Betty Ann

Sent: Wednesday, January 09, 2002 6:59 PM
To: Lakritz, Robb; McCardell, Dan
Subject: RE;

Right now Sheila is available at 1:45 (45 min) or 4:30 pm (1 hour). Please let me know what works for you

--—-Original Message-—-

From: Bair, Shere

Sent: Wednesday, Jeruary 09, 2002 6:56 PM
To: Lakritz, Robb; Munt, Betty Ann
Subject: RE:

yep-- | wall try fo make time. Tomorrow is tough. Betly - please try to work in

m-Original Messaga-=-=

From: — Lakritz, Rabb

Sent: Tuesday, January 08, 2002 2:45 PM

To: Bair, Shela

Ce: McCardell, Dan; Adams, Tim; Dam, Ken; Gross, Jared; Kupfer, Jeffrey
Subject:

Sheila,

Do you have time tomorrow to meet with Dan McCardell and me to discusa an internal
policy roundtable we are hoping put together on issues related to the Enron
situation and ancillary developments?

Thanks.

Robb Lakritz

00100000000008


Enron Contacted 2 Cabinet Officers Before Collapsing

The New York imes

owe whe

January 11, 2002

Enron Contacted 2 Cabinet Officers Before
Collapsing

By ELISABETH BUMILLER

ASHINGTON, Jan, 10 — The White House disclosed today that

Kenneth L. Lay, the chairman of the Enron Corporation (news/quote)
and one of President Bush's biggest political contributors, telephoned two
cabinet officers last fall, and one of them said Mr. Lay had sought
government help with its dire financial condition,

Both said they declined to offer government aid.

In a day of rapid-fire developments, Attorney General John Ashcroft excused
himself ftom all matters involving Enron because of campaign contributions
he received from it.

In addition, Enron's auditors said they had destroyed numerous company
documents and electronic communications.

The Justice Department said on Wednesday that it had created a nationwide
task foree to conduct a criminal investigation into the collapse of Enron, an
energy trading company with close ties to Mr. Bush and many top
administration officials.

Today, the entire United States Attorney's office in Houston recused itself
from the investigation, saying many of its approximately 100 lawyers,
including the chief prosecutor, Michael T. Shelby, had family or other
relationships with people affected by Enron's filing on Dec. 2 for
reorganization under Chaptet 11 of the bankruptcy law.

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The White House moved quickly to contain the damage. The White House
spokesman said Mr. Bush was made aware of the phone calls to the cabinet
members only this morning during an Oval Office meeting.

"What you have here is a case where a contributor called up and asked for
something but did not get it," said Ari Fleischer, the White House press
secretary,

Yet the two cabinet secretaries who received calls from Mr, Lay described
somewhat different conversations. Commerce Secretary Donald L. Evans
said that Mr. Lay had indicated he would welcome any government help with
its bond ratings, while Treasury Secretary Paul H. O'Neill said the Enron

https//www.nytimes.com/2002/01/1 L/business/1 1ENRO.html?pagewanted=print

W1o2

01000000000062


From: uU , Carol

Sent: , januay 09, 2002 7:39 AM.

To: Ejichner, lew, Hunt, Betty Ann; LIBRARY, REFERENCE; Smith, Amy
Subject: FW. Daily for Wednesday, January 9, 2002

Original Message----~

Prom: AmericanBanker.com [mailto:dailybriefing@AMERICANBANKER, COM)
Sent: Wednesday, January 09, 2002 5:20 AM

To: AMERICANBANKER@LISTS . AMERICANBANKER COM

Subject: Daily Briefing for Wednesday, January 9, 2002

AmericanBanker.com
http://www, americanbanker.com
DAILY BRIEFING

Wednesday, January 9, 2002

FREE WEBCAST: Authentication & Authorization in the Financial Industry

Join Steve Ellis, Executive Vice President, Wholesale Internet Sclutions for
Wells Fargo, along with Netegrity and BioNetrix, for a free webcast. Learn
the trends and directions for increased security through authentication and
authorization within financial institutions.

Wed., Jan. 16 - http://www.bionetrix.com/webinar

INVESTMENT PRODUCTS

Mellon Pays a Price with Pa. for Exit From Retail
Mellon Financial Corp. felt some backlash from its home
state's government for getting cut of consumer banking when
the Pittsburgh banking company was passed over for a contract
to run the state's tax-free college investment plan.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020109I°RD319

WASKINGTON

Sarbanes: Yield Spread Issue on My Agenda
WASHINGTON - In a signal that fai ending issues will remain
a staple of the Senate Banking Committee agenda this year,
Chairman Paul Sarbanes hauled industry representatives up to
Capitol Hill on Tuesday to defend the payment of yield-spread
premiums to mortgage brokers.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020109CARD326

TECHNOLOGY

The Tech Scene: Can the Web Expand Wealth Management?
The Internet has clearly made it easier and more affordable
to reach “mass-affluent” customers, whe in previous years
would not have been considered attractive prospects for wealth
management services.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020109TECH323
v7

00600000000071


FOXNews.com Page 2 of 11

SNOW: Now, in October you received the first of three phone calls from
Ken Lay, the chaimman of Enron. in his first phone call to you, what did

he say?

O'NEILL: He called to tell me that he thought it would be useful for our
technical people to talk with his technical people to understand the
complex derivative contracts they had, to assure ourselves that their
problems were nol going to get translated into larger problems for the
U.S. and the world capital markets,

SNOW: So he did not seek direct help? He didn't ask for, at least at that
juncture, any intervention with rating services or anything?

O'NEILL: Absolutely not. No, he just called me to alert me that he
thought we ought to pay attention to the technical details.

SNOW: All right. And when you got that request from him, did any alarm
belis go off? Did you say, this is an unusual request?

O'NEILL: No, | didn’t think it was unusual at all. | get dozens of calls
from people every day, and his call wasn't unusual

SNOW: So you mean corporate executives will often call and ask for
your advice about technical details of their derivatives trades?

O'NEILL: Well, they — well, you know, this is a very unusual case in the
sense that Enron's the biggest energy — or was the biggest energy = Fox News Ch
trader in the world. And so, in that sense, | didn’t think it was unusual.

es

You know, | think one thing that's been missing through a lot of the
conversation about this is a lack of understanding of what goes on in the
world.

As the treasury secretary at the time that | had this call, | was working on
the economic stimulus bill with the leadership of Congress. | was trying
to get the Congress to pay attention to and pass 2 terrorist risk insurance
proposal, which, unfortunately, they failed to do. | was working on
pursuing terrorist financing all over the world.

So, you know, this is three, four-minute conversation in the midst of a
sea of things going on in the workd, and | didn’t think it was unusual at
all

SNOW: So it wasn't a big deal. The following day he calls. What did he
ask for then?

O'NEILL: You know, | guess | don't remember two conversations back to
back. You're telling me something new.

| think what our records show is that | had two conversations with Ken,
and | think the dates are the 28th of October and another one on the 6th
of Sth of November.

And, you know, the second call that | had from Ken was to tell me that
they were being looked at by the rating agencies. It was just a heads-up,
and that was It.

file://C\WINDOWS\Temporary Intemet FilesoLKsianrc =Q5016 01/16/2002

01000000000087


goody AdiAS FAL 202 Bas Sid9 Mula vss

WSl].com | Page | of ]
i ——_——_____
-@ © Ramen tr Savin
vorgoumens
wewseds.cem

November 30, 2001

Dow Jones Nowswires:

White House: No Objection To Congress Probe Of Enron
Dow Jones Newswires

WASHINGTON — The Bash adr inistration Friday said it had no objection to calls in Congress to
launch hearings into the collapse «if Enron and said such a move is well within Congress's jurisdiction in
providing oversight.

"The president understands that at all times Congress should exercise its proper oversight role and that
includes anything, in a case like this...an investigation into the collapse of a company," White House
spokesman Ari Fleischer said.

Fleischer said that other parts of Ue federal yovernment have already launched their own investigations
and the Treasury Department is mnitoring these.

-By Alex Keto, Dow Jones Newsy ires; 202-862-9256; Alex.Keto@dowjones.com

URL for this Article:
htte://interactive.ws)| comarchive/retn ve cgi?id=DI-CO-2001 1130-004645,djm

Copyright © [001 Dow Jones & Company, Inc. All Rights Reserved,
Printing, distribution, and use of this riaterial is governed by your Subscription Agreement and copyright laws.

For information about subscribing, go to http://wsj.com

hetp:/finteractive.wsj.com/archive 'retrieve.cgi?id=DI-CO-2001 11 30-004645.djmJdctemplates.. 11/30/01

00700000000026


2205/01 15:48 FAX 202 646 5199 @o23-/023

2WSJ.com Page 5 of S

$13 billion in debt on its balance she/:t, The Wall Street Journal reported.

Enron shares closed Friday at 26 cen|s, down 10 cents, The stock reached as high a3 $90 little over a
year ago.

Company Web site: http///www.enron.com
i}

URL for this Article: :
htt: /interactive.wsj. comvarchive/retrievi:.cgi7id=O!-CO-200 1 1202-000436 djm

Copyright © 206! Dow Jones & Company, Inc, All Rights Reserved.
Printing, distribution, and use of this matyrial is governed by your Subscription Agreement and copyright laws.

For information about subscribing, go to |etpeivs.cons

http://interactive, wsj.com/archive/re rieve.cgi?id=DI-CO-2001 1202-000436,djml&templatez,.. 12/3/01

00700000000035



LaKritz, Robb

From: McCardell, Dan

Sent: Thursday, January 10, 2002 1:26 PM
To: Lakritz, Robb

Subject: News Story

Thursday January 10 12:57 PM ET
White House: Enron Official Phoned

iy KAREN GULLO, Associated Press Weiter

WASHINGTON (AP) - Enron Chairman Kenneth L. Lay reached out to two of President Bush s Cabinet
officers when the energy company was collapsing, the White House disclosed Thursday as the Justice
Department opened a criminal investigation of Enron's bankruptcy.

Bush, who received significant campaign contributions from Lay and other Enron executives, said he himself’
has never discussed Enron's financial problems with its embattled corporate chairman. The president said he fast
saw Lay in Texas at spring fund-raiser for former first lady Barbara Bush's literacy foundation,

Lay also was among @ group of some 20 business leaders who came to the White House early in the Bush
administration to discuss the state of the economy, Bush said.

Many Enron employces lost their life savings when the company filed for bankruptcy Dee. 2.

“What anybody's going to find out is that this administration will fully investigate issues such as the Enron
bankruptcy, to make sure we can leam from the past and make sure workers are protected," Bush said.

But Lay did seck the car of other top-level administration officials last fall.

According to White House press secretary Ari Fleischer Lay telephoned Treasury Secretary Paul O'Neil! amid
Enron's collapse ‘'to advise him about his concern about the obligations of Enron and whether they would be
able to meet those obligations.”

Lay also told O'Neill that Enron “‘was heading to bankruptcy," Fleischer said,

O'Neill received calls from Lay on Oct. 28 and Nov. 8, said Treasury spokeswoman Michele Davis. It was on
Oct. 16 that Enron made its stunning disclosure of a $638 million third-quarter loss.

In a separate phone call to Commerce Secretary Don Evans, Lay similarly worried that the company might have
to default on its obligations. He brought to the secretary's attention “‘that he was having problems with his bond
rating and he was worried about its impact on the energy sector," Fleischer said,

After that conversation, Evans spoke to O'Neill ‘‘and they both agreed no action should be taken to intervene
with their bond holders,” Fleischer said

The spokesman had said Wednesday he did not know of anyone in the White House who discussed Enron's
financial situation.

Ficischer also brushed aside talk of any conflict in the Justice Department investigation and said there was no
reason to tum the probe over to a special counsel.

Lay gave $25,000 to a leadership committee headed by then-senator and now Attommey General John Ashcroft

00100000000002


income was subject to an effective rate of income tax for that year imposed by a
foreign country greater than 90% of the section 1] tax (computed in the
functional currency of the controlled foreign corporation) that would have
been due if such income were earned by a domestic corporation from U.S.
sources. The preceding sentence shall not apply to foreign base company oil-
related income described in subsection (a)(5).

1, Subpart F was intended to prevent avoidance or deferral of current U.S. taxation
of income that was readily moveable to low-tax foreign junsdictions. Foreign base
company income that is in fact subject to a “high” rate of tax in a foreign country is not
the type of income targeted by Subpart F.

Under current Regulation §1.954-1(d}, the high tax exception is applied based on
the effective rate of tax computed in U.S, dollars on a U.S, carnings and profit basis.
That is, the foreign tax paid on an item of income (translated into U.S, dollars) is divided
by the sum of the item of net foreign base income (translated into U.S. dollars) and the
tax. The existing regulations for post-1986 years require the amount of taxes paid with
respect to the item of net foreign base income to be determined using the post-1986 pool
of foreign taxes.

The computational methodology adopted in the current regulation creates a
number of distortions and inappropriate results. First, differences in the timing of when
items of gross income or expense are recogmized under foreign tax law and under the
U.S, earnings and profits rules will affect the computation and tend to artificially dilute
the foreign effective tax rate in early years. This is especially true for the U.S. earings
and profits adjustment for depreciation expense. Second, computing the effective rate in
U.S, dollars may distort the effective rate since the amount of the tax and the earnings
and profits amount may be computed using different exchange rates. (A computation in
the CFC's functional currency would be consistent with the gener, functional currency
E&P tracking rule of Section 986(b)(1).) Third, there is a severe penalty for the
uthzation of a foreign tax loss carryover because the resulting foreign effective rate is
compared to the U.S. statutory rate. Fourth, reference to the post-1986 pool of foreign
taxes is inconsistent with the general current year approach of Subpert F.

2. Since the proposed change would compare the actual foreign tax paid to the U.S.
tax that would have been paid if the activity were performed in the U.S., the tax policy
objective of discouraging avoidance of U.S. tax would be achieved. Businesses are not
motivated to artificially shift income to foreign junsdictions where the actual rate of tax
is in excess of 90% of the U.S. rate. At the same time, the proposed change would
simplify computations for taxpayers (for example, by computing the exception in the
functional currency), resulting in greater certainty. Administration of the exception
would also be simplified for the IRS.

0900000000348


1g-an/al 25:47 FAX 202 646 5199 @Qosi-sass

WSI.com : Page 3 075

Enron Corp. markets electricity anc natural gas, delivers energy end other physical commodities, and
provides financial and risk manage: nent services to customers around the world. Enron's Internet
address is www.erron.com.

Forward-looking Statements

This press release contains stateme.its that are forward-lecking within the meaning of Section 274 of
the Securities Act of 1933 and Sect on 21E of the Securities Exchange Act of 1934. Investors are
cautionsd that any such forward-lor king statements are not guaransees of future performance and that
actual results could differ matenall: as 2 result of known and unknown risks and uncertuintics,
including: various regulatory issues, the outcome of the Chapter I] process, the outcome of the
discussions referred to above, gene-al economic conditions, future trends, and other risks, uncertainties
and factors disclosed in the Compa wy's most recent repors on Forms 10-K_ 10-Q and 8-K fled with the
Securities and Exchange Commissi mn. SOURCE Enron Corp.

“CONTACT: Mark Palmez, -1-713 833-4738, or Karen Denne, +1-723-853-9757, both of Enron’

Web site: hitpy/hwww.erron.com /

(ENE DYN)

NEW YORK ~ Enron Corp, (ENE announced Sunday that it and some of its subsidiaries have filed
voluntary petitions for Chapter L1 reorganization with the U.S. Bankruptcy Court for the Southern
District of New York.

The company said that it had also fled suit against Dynegy Inc, (DYN) in the same court, alleging
breach of contract in connection wijh Dynegy’s wrongful termination of its proposed merger with Enron

and seeking damages of at least $1 billion.

Enron's lawsuit also seeks the courts declaration that Dynegy ts not entitled to exercise its option to
acquire an Enron subsidiary that incirectly owns Northern Nature! Gas Pipeline.

Enron said the proceeds from the lawsuit would benefit its creditors.

Enron said that it is in “active discu,isions” with financial institutions to recapitalize and provide credit
support for its North American ene: gy trading business under a new ownership structure.

Enron said in a statement that "it is anticipated" that the company would provide the new entity with
traders, back office capabilities and technology, The new entity would conduct counterparty transactions
through EnronOnline, the company s existing energy trading platform. Any such arrangement would be
subject to the approval of the Bank uptcy Court, Enron said in the statement.

To conserve capital, Enron will implement a comprehensive cost-saving program that will include
substantial workforce reductions. |

These cuts will primarily affect the company's operations in Houston, where Enron currently employs
approximately 7,500 people, :

hitp: Snteractive.wsi.com/archive/r trieve.egi?id=DI-CO-200 | 1202-000436.¢jml&cemptate=y... 12/3/01

01000000000850


Enron's President Said to Have Asked Treasury Official for Help

Online Medis Ki
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Page 2 of 3

Enron Stoel

Today, the House Energy and Commerce Committee asked for the files

of six Andersen partners involved in the audit. And the Senate's
Permanent Subcommittee on Investigations subpoenaed documents
from both Enron and Andersen.

Also today, Enron said it had selected the investment bank UBS
Warburg as the winning bidder for its wholesale energy trading
business after a private auction overseen by a federal bankruptcy court.
The deal, which must be approved by the court, is aimed at helping
Enron reorganize under Chapter 11 bankruptcy protection. Details of
the terms of the deal are to be disclosed on Monday in bankruptcy
court.

The Justice Department said on Wednesday that it had created a
nationwide task force to conduct a criminal investigation into the
collapse of Enron, an energy trading company with close ties to Mr.
Bush and many top administration officials.

On Thursday, the entire United States Attorney's office in Houston
recused itself from the investigation, saying many of its approximately
100 lawyers, including the chief prosecutor, Michael T. Shelby, had
family or other relationships with people affected by Enron's filing on
Dec. 2 for reorganization under Chapter 11 of the bankruptcy law,

The White House moved quickly to contain the damage. The White
House spokesman said Mr. Bush was made aware of the phone calls to
the cabinet members only Thursday moming during an Oval Office
meeting.

"What you have here is a case where a contributor called up and asked
for something but did not get it," said Ari Fleischer, the White House
press secretary.

Yet the two cabinet secretaries who received calls from Mr. Lay
described somewhat different conversations. Commerce Secretary
Donald L. Evans said that Mr. Lay had indicated he would welcome
any government help with its bond ratings, while Treasury Secretary
Paul H. O'Neill said the Enron chairman requested no assistance at all.

Before the disclosure today of Mr. Whalley's calls to Mr, Fisher at
Treasury, Enron officials disputed the White House version of events
about Mr, Lay’s calls and said Mr. Lay was not asking for assistance

from the Bush administration in calling Mr. O'Neill and Mr. Evans, Mr,

Bush's presidential campaign chairman and chief fund-raiser. Enron
officials also said Mr. Lay had called Alan Greenspan, the chairman of
the Federal Reserve, to alert him to the company’s problems.

Mr. Tay was simnly informine the covernment ahout the nnssible

http://www.nytimes.com/2002/01/1 L/business/1 1CND-ENRON, html

The Auditor: E
Admits it Dest
Documents (Jar

The Bank: Ties
Banker in an A
(January 11, 20

The Auction: E
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Several Potenti
(January £1, 20

The Pensions: |
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(January 11, 20

Floyd Norris: £
Auditors Think
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11, 2002)

For a Generous
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(May 25, 2001)

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VLVo2

01000000000043


Thornton, Sean

From: Anderson, Donna
Sent: Tuesday, January 15, 2002 11:03 AM
To; Cottrell, Sheryl; El-Hindi, Jamal; Farrell, Adwoa; Galbraith, Cari; Hammerle, Barbara; Hutner,
Susan; Monborne, Mark; Munro, Stevenson; Rosenthal, Victoria; Thornton, Sean; Tuchband,
Matthew
Subject: Transcript: O'Neill on Enron Mess
FOXews comers

This was an interesting article if you would like to read it,

05014

01000000000085


LaKritz, Robb

From: Bair, Sheila

Sent: Wednesday, January 09, 2002 6:56 PM
To: LaKritz, Robb; Hunt, Betty Ann
Subject: RE:

yep-= | will try to make time, Tomorrow is tough, Betty -- please try to work in

seem Original Messagerr==
From: Laxrkz, Robb
Sent: Tuesday, January 08, 2002 2:45 PM
Tor Bair, rela
Ce: McCardell, Dan; Adams, Tim; Dam, Ken; Gross, Jared; Kupfer, Jeffrey
Subject:
Sheila,
De you have time tomorrow to meet with Dan McCardell and me to discusa an internal
policy undtable we are hoping put together on issues related to the Enron situation
ang illary developments?

Thanks.

Robb Lakritz

00100000000007


2-03-2001

1

ed
iB

"

oasia IT]

, Enron calls
(New Delhi. i debt

tbe. US power

Enron,
Company, yesterday invoked
2 sovereign guarantee to

rf
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payment Pecase ef
earthquake, ber that be! at
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company said its deci-
slon was the " “eee
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wise the case goes to
arbitration in Landon,

Last aight a ‘foratgn
banker said: “If the govern
ment pays up it will shew
{Bat sanctity of contrace
dees mean something in

India, If not, then foreign
eeeanest flows could be a
taguaity.

Maharashtra’ 's electrictry

board says it cannot adford | -

Te, Day, Nhat We describes,
tha, Earon’a high tariffs, which |
are typically three times
Sreater than those levied by
other independent power
producers Ja India. Last
‘woik, Baron invoked a state

delayed, and now mon-pay- + Sapruniee aguinst Maharash-
Mabaraghera *.

mentaf bills by tra, which respanded by
State Electricity Board, ing RatOom. ni
owes, Re2-Sibm (g50m) bas come under

However, Enron said it
had donated tents, medical
Supplies and communica-
tens equipment to earth
hed _ any while staff

#00 a day's wages to
an earthquake

appenl.
Ecron’s sovereign guaran-
teo.allows it to demand pay-
ment trom the national gov-
eroment In the case of

pon-payment.
Enron officials sald they
expected the Indian govern.
‘Sent to honour its contrac:
tual obtignttoes, which New
Delki is expected to oftsot by

202 622 8351

Wises

P.21781
er

a

iets

TOTAL P.1

01000000001010


ING to 2.P. Morgan

INO Groep NV, the biggest Dutch Einanciel-services company,
Dutch Cinancial-services company, gaid Lt holda abeut

in unmecured joans and bonds of Enron, Canadian Iwperial Hank of
Commerce, the country's third-biggest bank, said Enron owes it
$215 million, sore than belt in unsecured loans, letters of credit
and Gerivatives,

Alsoet two dozen electricity and natural gas companies said
Enron owed them about $700 million as of Wednesday, when Dynegy
Inc. abandoned a merger, depriving aren ef cash it needs to avoid
insolvency.

Anbec Financial Group Inc., XL Capital Ltd. and other band
and property-casualty ingurera may absorb losses of mere than $2
billion sf Enron files for bankruptcy protection, said Morgan
Stanley Dean Witter & Co. analyst Alice Schroeder.

ABN Jaro ig one of the lenders behind Enron's $2 billion
Indian power plant. Baron owns 65 percent of the Dabhol Power Co.
project outside of Borbay, which haa been harpered by cont over-
una, penalty claims for undelivered power, and conflicts with ite
only client, the “aharaghtra state Electricity meard.

"Should the Enron situation escalate into # full-fledged
bankruptcy, we may need to make a previeien for 110 miblicn euros
for our direct exposure, '’ ABM Amro spakesnan Martin Winn ssid.
“"Shauld there be a need to provide for it, we will do mo in the
fourth quarter of this year.'*

Loedon-based Abbey National said St may have to set aside 95
willica pounds ($135 millien| te cover possible losses from losne
to Enron, Profit may be ““down'' in the secend half from the year-
earlier pericd because of Enron, said Finance Director Mark Pain
in an interview.

Australia to Gersany

National Australia waid it haw A$200 million ($304 million!
in secured and unsecured expamure te Enron, ““We had already
factored in provisicns for this kind of event, and it is
congistent with our had debe outleck for thin year,’* said Majelia
Allen, a spekeaweran.

Australia & Wew Zealand manking Group utd., the fourth-
Largest Australian bank, maid itm direct exposure is 969 millicn
and it has a further $51 sillion indizect expomure to the 0.3,
energy trader. ANZ said loane to Boron would not affect ite
earnings expectations. The bank hax already said it expects to put
nore anide for bad loans this fincal year
‘Their exposures are a little surprising, but then again
Enron is such a huge organization and spans the globe so it dealw
with syndicates of banks for its facilities,’* sald #111
Chatterton, head of equities at ASH Amro Morgane Ltd., the $0
percent-owned private client arm of ASM Amro Australia Led

German banks aloo are seeing fallout. Dresdner Bank AB, which
is owned by Allianz AG, said its exposure to Enren ig leas than
§100 million. HVB Group, Germany's No. 2 bank, has about $200
illics of expogure as well. Deuteche wank AG and Commerzhank AG
said their exposure to Enron awcunts te *“double-digit'’ millions
of euros.

Deutsche Bank, Europe's Largest bank, has an exposure
**gignificantly'' Below 200 millian eurom, maid Ronald Weichert, «
company

fh

Bergen Corp., af oil and natural-gas explorer and gas
diatributor, ssid it has sn $19.3 million exposure with the alvost
bankrupt Enron Corp., which may cut ite 2002 earnings by 20 cente
to 25 cents 9 share.

Pension funds will also record big losses. Calpers held 3
million shares as of Wednesday of this week when Enron shares
plunged below $1. The California State Teachers Retirement rund
owned about 2 million shares. The New York State Comsca Retirerent
Syetea said it lost as much as $60 million on Enrce.

jelow 1s @ list of some banks and their estimated exporure to
Enron)

2.P. Morgan Chane 9500 Millica
Credit Lycnosis $250 Millica
Canadian Imperial Bank $218 Millico
ING Groep $195 Millice
Abbey National $164 Millice
Australia & New Zealand Banking $120 Millica
01/18/2002

Page 2 of 3

01100000000025


3. The current regulations were promulgated to reflect the changes to the high tax
exception made by the Tax Reform Act of 1986. The high tax exception was modified in
1986 to change from the pre-1987 subjective “significant purpose” test 10 an objective
test, As noted in the House Committee Report to the Tax Reform Act of 1986, the intent
of the change to the high tax exception was to make the application of the high tax
exception more certain, especially considering that the scope of income covered by
Subpart F was substantially broadened by the 1986 Act. For reasons stated in items 1
and 2. above, the final high tax exception regulation does not meet this Congressional

objective.

4, There may be some revenue loss as a result of this change, but it should be
insignificant. First, many taxpayers in the power industry structure their projects so as to
avoid the need to rely on meeting the high tax exception. However, this structuring is
costly and adds to the complexity of U.S. tax reporting and administration. Second, this
proposal should be viewed not as a legislative change, but rather as a simplification and
rejection of the current Regulation §1,954-1(d) as going beyond the intent of Congress
when Section 954(b}(4) was amended in 1986.

February, 2001

00900000000349


Smith, Amy

From: Smith,

Sent: Thursday, November 29, 2001 6:15 PM

To: ‘Ayeag, richard @mail house.gov_

Subject: Dow Jones Newswires Column: Enron's Derivatives Could Test Courts (discusses

bankruptcy netting issues)

FYI. Have you heard anything new about moving Pat's bill?
Amy
November 29,2000 0 - |

IN THE MONEY: Enron's Derivatives Could Test Courts —

By CAROL S. REMOND and PHYLLIS PLITCH

A Dow Jones Newswires Column

NEW YORK -- Prepare for the largest test in bankruptcy history of safe harbors designed to protect the liquidity
of the nations’ financial system.

Enron Corp.'s (ENE) much-anticipated bankruptcy filing, if it indeed comes, is certain to be precedent setting.
First, in terms of sheer magnitude, we're talking about $62 billion in assets. But also because it's likely to
involve hundreds, if not thousands, of counterparties intertwined with Enron in various financial and energy
derivative transactions.

Unlike other creditors whose claims will be stayed under U.S. bankruptcy laws, those counterparties will vie to
unwind their trades, may they be "power forwards” or credit derivative contracts, in order to find more worthy
hedging partners,

Built in the bankruptcy code are exemptions for securities or commodities contracts. These safe harbors were
developed over the years as a sort of security blanket for the vital hedging functions that these transactions
provide.

"These special rules are desi; to avoid a domino effect,” said a bankruptcy lawyer, who like many contacted
for this column, declined to be identified given the likelihood that he'll end up representing one or many parties
involved in Enron's expected Chapter 11 filing.

Counterparties claiming redress through these exemptions should be able to net out their various derivative
contracts with Enron, attempting to use whatever collateral was pledged under those transactions to quantify
how much money they owe to or are owed by Enron. All of that is normally done on the side, without prior
bankruptcy court approval.

The problem is that Enron will likely question attempts to unwind those trades and take issue with the manner
in which its counterparties netted their exposure to the company, observers say.

Given the large number of parties involved and the magnitude of Enron's recent losses, the treatment of
derivative contracts could be further complicated by the market's lack of understanding of just how much value
is left in Enron’s assets. That's an issue that will permeate the proceedings with all of Enron's stunned creditors.
On top of its derivative exposure, Enron is on the hook for roughly $13 billion in debt,

As part of its energy trading operations, Enron was a party to billions of dollars of derivative contracts designed
to enable the company and its trading partners to hedge, among other things, against rapidly fluctuating energy
ices and foreign exchange volatility - stabilizing otherwise uncertain markets. By its own account,as of
ember 2000, Enron was involved in roughly $20 billion of derivative contracts on which it owed its
counterparties. More recent numbers aren't available.

Thoughts of an Enron bankruptcy jogged memories of past filings, such as the case of Drysdale Government
Securities Inc., which involved public entities being left on the hook for millions of dollars in uncollateralized
1

00600000000059


American Banker.com Page | of 1

Washington
In Brief: Senate Banking Plans Enron Hearing

Tuesday, January 15, 2002
By Michele Heller

WASHINGTON — The Senate Banking Committee has joined the growing list of government
entities looking into the fallout from the collapse of Enron Corp.

The panel has scheduled a hearing for Feb. 12 to look at the accounting and investor-protection issues
stemming from the company’s bankruptcy, as well as concerns about retirement plans at other major
corporations.

Five former Securities and Exchange Commission chairmen — Arthur Levitt, Richard Breeden,
David Ruder, Harold Williams, and Rod Hills — are scheduled to testify.

It was not clear on Monday if Sen. Phil Gramm, the ranking Republican on the panel, would recuse
himself from the inquiry. His wife, Wendy Gramm, is a member of Enron’s board and audit
committee, She was among the Enron officials to receive subpoenas for documents from the Senate
Governmental Affairs investigations subcommittee, according to the office of subcommittee
Chairman Carl Levin.

Copyright 1997-2000, American Banker, All Rights Reserved.

Printing, distribution, and use of this material is governed by your Subscription Agreement and
copyright laws.

file/‘C:\WINDOWS\Temporary Internet Files\OLK3313\0115g-htm 01/17/2002

01100000000065


Ms. Brig Pari (Senate Finance Committee)

Mr. Nick Giordano (Senate Finance Committee)
Mr. John Buckley (Ways and Means Committee)
Ms. Judy Hill (Senator Hatch’s Office)

Ms. Maria Freese (Senator Baucus’ Office)

Mr. David Pearce ( Rep. Houghton’s Office)
Mr Craig Kramer (Rep. Levin's Office)

00900000000322


MAR G1 2008 12:24 FR CWT 1333 NH AE 282 G62 2420 TO l2agaB7essawiew2 F.e2-e5

February 14,2000

AMENDMENTS TO THE FINANCIAL CONTRACT PROVISIONS
of the
BANKRUPTCY REFORM BILL, H.R. 833

Background and Summary

In 1990, amendments were made to the Bankruptcy Code to give legal certainty to the treatment
of certain financial transactions in the case of bankruptcy. The amendments particularly
addressed transactions, such as swaps and other over-the-counter derivatives, that are subject to
fluctuations because they derive their values from an underlying commodity, rate, index or other
item. The insolvency of a party to such a transaction could pose systemic risks.

Both the House and Senate Bankruptcy Reform Bills update the financial contract provisions of
the Code. Among other things, the purposes are to catch up with new developments in the
market, to anticipate continued innovation and growth of derivatives and to provide greater legal
certainty that financial transactions can be closed out, netted and settled in a timely manner in
case of bankruptcy.

The following amendments and report language to H.R. 833 are needed (1) to revise the
definition of “swap agreements” to accommodate the introduction of new swap products, (2) to
avoid any confusion regarding the netting rights for different types of transactions by providing
consistency in the statutory language, and (3) to clarify how the “cross-product” netting
provisions should be applied.

The Amendments, Report Language and Explanations

The amendments and report language below refer to Section 1007 of the House-passed bill.

1) Revise the definition of “swap agreements” in the bills to accommodate the introduction
of new swap products.

a) Amend the definition of “swap agreement” in Section 1007(a)(1)(E) by:
AS i) on page 299, line 16, deleting “or” after “agreement;” ;

ok ii) on page 299, line 18, inserting after “agreement;” the following: “or a weather swap,
weather derivative, or weather option;”;

iii) on page 299, lines 23 and 24, deleting the words “in the swap market” and inserting
instead “by swap participants”;

o iv) on page 300, line 8, inserting “or other” after the word “economic”; and
ot ¥) on page 300, line 9, inserting “or other” after the word “economic”.

CWDCLiIBi13733

01000000001389


* washingtonpost.com: Enron Asked for Help From Cabinet Officials Page 2 of 3

The White House faces increased pressure from Congress to disclose all meetings its energy policy task
force had with energy industry officials last year. Congress's General Accounting Office said it would
decide within the month whether to take the administration to court over its refusal to provide
information on who the task force met with.

Lay's name appeared on carly lists of possible Bush cabinet secretaries, and he was one of the Bush
“Pioneers” who raised at least $100,000 for the presidential campaign, According to the Center for
Public Integrity, a watchdog group, Lay contributed $44,000 to Bush's presidential campaign, part of
$220,700 in contributions to Bush's presidential efforts by top Enron executives. Between 1999 and
2001, Enron made $1.9 million in unregulated "soft money" contributions, mostly to Republicans.

The president yesterday said he "never discussed with Mr. Lay the financial problems of the company.”
Bush added that his “administration will fully investigate issues such as the Enron bankruptcy to make
sure we can learn from the past and make sure that workers are protected.”

Administration officials said Lay discussed Enron's plight with O'Neill on Oct, 28 and Nov. 8, and
Evans on Oct. 29. On Oct. 16, Enron reported a $638 million loss and the first in a series of damaging
errors in its accounting.

Fleischer said Lay called O'Neill "to advise him about his concern about the obligations of Enron.” Lay
suggested the case of Long-Term Capital Management LP could be a model. In 1998, that firm, a hedge
fund, benefited from a government-coordinated bailout by other financial institutions after losing more
than $4 billion in trading of the complex financial instruments known as derivatives.

“Long-Term Capital was unable to meet its obligations and headed to bankruptcy, and he wanted
Secretary O'Neill to be aware of that, the Long-Term Capital experience as a guide,” Fleischer said,
“Secretary O'Neill then contacted Undersecretary [Peter R.] Fisher, Undersecretary Fisher looked at that
and concluded there would be no more impact on the overall economy." Fisher had been involved in the
Long-Term Capital bailout as a Federal Reserve official.

O'Neill said he considered his conversations with Lay "business as usual." O'Neill told CNN: "I get calls
every day from the big players in the world, Enron was the biggest trader of energy in the world."

In addition, Fleischer said, Lay brought to Evans's attention "the problems with the obligations and the
bankruptcy, He was having problems with his bond rating and was worried about its impact on the
energy sector.”

Commerce Department spokesman Jim Dyke said Lay indicated "he would welcome any support the
secretary thought was appropriate" persuading Moody's Investors Service not to downgrade Enron's
debt. Evans talked to his general counsel and conferred with O'Neill over lunch on Oct. 29, then decided
not to act, Dyke said.

Evans told CNBC Lay did not specifically ask him to call Moody's: "He said, 'l want you to know that
Moody is currently reviewing it, If there’s any kind of support you could give us, we would welcome
that."

When Lay approached Evans, Moody's was considering downgrading billions of dollars in Enron debt,
an action that financial analysts said would drive Enron's stock price down further and cut deeply into its
trading business. On Nov, 28, Moody's and other rating services downgraded Enron's bonds to "junk"
status, forcing it into bankruptcy court.

httpy//www.washingtonpost,com/ac2/wp-dyn/A28350-2002Jan 10?language=printer OL/11/2002

00700000000106


Enron: ISPs Page | of 2

What is the EIN?

-——

The Enron Intelligent Network

elsewhere In
Intornet Service
Providers

Yah wo cles
Service

is Already
oPowered

What is the Enron
iniekigent Network?

Power Application

Become Powered

Find an ePowered

sp The Enron Intelligent Network is a new world
network built from the ground up using the latest
n optical technology to satisfy real business needs.
With virtually unlimited bandwidth and built-in
intelligence, the Enron Intelligent Network bridges
the chasm between very expensive dedicated
(Virtual Private) networks and the public Internet
Combining the power of Pure IPTM with embedded
network intelligence, we're enabling a whole new
breed of application services. We call them

Who We Ara

for our Customers: eredTM application service
Bandwidth Products ePoweredTM application services.

8 for ISPs The Enron Intelligent Network excels at
> Contant transporting rich media and high-bandwidth,
delay-sensitive content, including:

Sciutions for the
elie alaad « Live television content
« Videoconferencing

« Streaming video

« Distance
.
.

ePowerOnking

more information
Press Fisom

Network hosted applications
New forms of entertainment

Dowriasds

The Enron Intelligent Network is comprised of
three components: Enron’s Pure IPTM fiber
network, a One Hop community of distributed
servers, and Enron Broadband Services” powerful
patented software that enables our unique
ePoweredTM application services. The Enron
Intelligent Network allows our partner:
customers to deploy products and services that will
revolutionize the delivery of rich media and other

Pooling Points

http.//www.ec.enron.comvisp/ein 07/31/2000

00400000000015


SEP 10°99 17:44 FR CWT 1333 202 862 248@ TO 487?6898016228974 P.B3706

AMENDMENTS TO S. 625 TO UPDATE SWAPS DEFINITION AND TO CLARIFY
NETTING RIGHTS FOR CERTAIN FINANCIAL AGREEMENTS

Update to the Definition of Swap Agreement:

Section 901(a)(1) of S. 625 is amended —

a) on page 239, line 8, by deleting “or” after “agreement;”:

b) on page 239, line 11, by inserting “or (VIII) a weather swap, weather derivative, or
weather option,” after “agreement;”

¢) on page 239, line 16, by striking the words “regularly entered into in the swap
market” and inserting “entered into by swap participants”;

d) on page 240, line 1, by inserting “or other” after “cconomic”;

Clarifying Netting Rights for Certain Financial Agreements:
Section 901(d) of S. 625 is amended -

a) on page 248, line 17, by inserting “(i)” after the comma;

b) on page 248, line 19, by inserting before the semicolon, “(ii) by striking the words ‘a
margin payment’ through ‘arising out of” and inserting ‘any payment or transfer due
trom the debtor under or in connection with’, and (iii) by inserting ‘any payment due
to the debtor from a commodity broker, forward contract merchant, stockbroker,
financial institutions, or securities clearing agency under or in connection with
commodity contracts, forward contracts or securities contracts or against’ after
‘contracts against”;

c) on page 248, line 20, by inserting “(i)” after the comma: and

d) on page 248, linc 22, by inserting before the semicolon “,(ii) by striking the words ‘a
margin payment’ through ‘arising out of’ and inserting ‘any payment or transfer due
from the debtor under or in connection with’, and (iii) by inserting ‘any payment due

01000000001452


WASHINGTON

FDIC Suits Raise Fears of Thrift Fees
WASHINGTON - Several dozen large banking companies have sued
the Federal Deposit Insurance Corp. for more than $600
million, claiming the agency overcharged them five years ago
when it capitalized the thrift fund at Congress' behest.

http://www. americanbanker.com/cgi-bin/read_ tagstory?20011206WASHE02

NATIONAL/GLOBAL

Brendsel at Top of Game but Has Freddie Peaked?

Leland Brendsel loves crunching numbers, and they all add up
for the chief executive of Freddie Mac, economically and
politically. After enduring public criticism in the late '90s,
he helped defuse a threat to the federal financial support
Freddie and Fannie Mae enjoy by brokering a deal with Congreas
last fall. Now he's weeks away from closing one of Freddie's
vet years ever, with earnings set to top 2000's by more than

e.

http: //wew. americanbanker.com/cgi-bin/read_tagstory?20011206NATLSB5

American Banker Honors Killinger
Kerry Killinger, the president and chief executive of
Washington Mutual Inc., was named American Banker's Banker of
the Year at a ceremony in New York Wednesday night. Also
honored were Terrence Murray, the chairman and chief executive
of FleetBoston Financial Corp., who received the Lifetime
Achievement Award; Gordon Nixon, the CEO of Royal Bank of
Canada, who was named Innovator of the Year; and Joseph M.
Grant, the CEO of Texas Capital Bankshares Inc., who was named
Community Banker of the Year.

http://www. americanbanker.com/cgi-bin/read_tagstory?2001 1206NATLSB4

MARKETS

CEO: Bank One Chargeoffa May Exceed $600M in '02
Bank One Corp.'s credit costs next year could surpass earlier
estimates of $600 million if the recession becomes severe,
according to chief executive officer James Dimon.

http://www. americanbanker.com/cgi-bin/read tagstory?20011206MMONS99

COMMUNITY / REGIONAL

Some Low-Tech Banks Finding Room to Grow
Stockmen's Bank in Kingman, Ariz., sticks to rural towns and
avoids offering electronic services to its customers - but
that has not stopped it from becoming the largest bank
headquartered in the state.

http: //www.americanbanker.com/cgi-bin/read tagstory?20011206CORGS33

CARDS

Russian Smart Card Pioneer Finding U.S. a Tougher Sell

00600000000083


12/06/01 16:43 FAX 202 646 5190 ns @oi0/e23

WSI.com Page | of 2

November 30, 2001
Review & Outlack
Investigating Enron

You can cut the Schadenfreude with a machete these days as Enron careens toward fuilure. Like any
fast-rising, innovative business, the energy trader made enemies, some with @ fair grievance and some
not. We hope the inevitable (and neci:ssary) investigations keep in mind the difference,

Enron was a forthright advocate of competition, as every obituary of the past few days has noted. Some
see the firm's collapse as discrediting) the market economics it championed, though the opposite is closer
to the truth,

{t strikes us that Enron was pertly a victim of its own success. Its revennes quadrupled in a year, thanks
to the fillip that California's troubles provided to the wholesale power market. But profits were up much
jess - ic, Enron was eaming thinner margins in the energy-trading business it pioneered. The new
industry quickly became too compet/tive and transparent to afford any windfalls, just as deregulation

Enron does not own U.S. power plants and generally did not seem to make outsized profits on power for
resale in, say, California. But that di:tn't stop California's eccentric attorney general, Bill Lockyer, from

blaming Enron CEO Ken Lay for thit state's electricity mismanagement. Last summer he told a Wall

Street Journal) reporter that, “I woulé love to personally escort Lay to an 8x10 cell that he could share

with a tattooed dude who says, "Hi my name is Spike, honey." Consider that an unfair grievance. .

Accounting matters are more troubling. The struggle for a century has been to make sure corporate
managers don't pursue their own ageindas at the expense of owners, The emergence of special
partnerships, controlled and owned lyy Enron's own senior officers, with which the company did some of
its murkiest deals, would cause even libertarians to wonder what's been going on. Clearly Mr. Lay didn't
fully understand what former Enron CEO Jeffrey Skilling was up to, and shareholders weren't told
either.

‘At the same time, Enron officers hac! a large amount of personal wealth tied up in Enron stock, which
has fallen from $90 to 61 cents, Se tlie mere existence of these partnership deals does not automatically
indicate corrupt intent. Only a detail|:d investigation can resolve whether these deals were honestly
motivated, and whether Enron's (an«| Arthur Andersen's) interpretation of accounting rules was
defensible. In any case, trial lawyers will descend to squeeze every penny out of Enron's troubles for
themselves (and for shareholders or :mployees who held Enron stock in their 401(k)s).

As for the investigations, we hope they won't be influenced one way or another by long connections
between Mr. Lay and President Busl'. Even the hint of special ueatment would be 2 political disaster,
especially for an Administration tha| promised to clean up after Bill Clinton.

While tradition has been not to mak): criminal matters out of accounting scandals, exceptions have arisen
recently. Federal prosecutors in Nev) York have gone after Walter Forbes, who sold his company to

Cendant, giving nse to what before 'Zaron was the nation's most costly stock meltdown due to bad
accounting. San Francisco prosecutt|rs recently extracted guilty pleas from executives of Aurora Foods

http:/interective.wsj.com/archive/te trieve.cgi?id=SB 10070851 16787679680.djmé&template-... 11/30/01

01000000000839


Duke

Cullen A, Duke
Vice President
International Tax

cs Enron Corp.
% P.O. Box 1188
Houston, TX 77252-1288
723-646.6301
Fes 713-666-7151
Culler DukeBenron com

May 15, 2001

Ms. Barbara M. Angus

Acting International Tax Counsel
Department of the Treasury

1500 Pennsylvania Ave., N.W.
Washington, DC 20220

Dear Barbara:

Thank you for taking the time to meet with me yesterday to review the international tax
provisions. As promised, enclosed is a copy of the example illustrating how the US
corporate income tax on a power plant project would not meet the IRC §954(b)(4) high
tax exception under the current regulations.

Please feel free 10 call me if you or any of your staff have further questions ‘or comments
as you review these provisions in detail

Sincerely,

Che Meee

Cullen A. Duke

Endless possibilities.”

00900000000336


Fourteen Top Bush Officials Owned Stock in Enron Page 1 of 3

The Public i

An Investigative Report ot the Center for Public Integrity

[owe Nevis STORIES CENTER COMMENTARY SUBSCRIDE ]
Web posted Jan. 11, 2002

Main Page special Report
News Reports Fourteen Top Bush Officials Owned

Center Commentary
cubecrbe StOCK in Enron

From the Editor By Derrick Wetherell
Feedback
Join the Center (WASHINGTON, Jan. 11) Fourteen of the top 100 officials in the Bush
administration owned stock in embattled energy services firm Enron,

Subscribe according to a Center for Public Integrity analysis of Bush administration
_ personal financial disclosure forms, Their holdings were worth-at the time of
their filings-between $284,016 and $886,000. (See the table below.)

Hd our e-mail address Revelations about Enron's financial CENTER REPORT
snd cee Go te cin ane ting practices caused The Center for Public Integrity will

The Pubtic iardreceive the share price to plunge significantly release on Monday a report
brief overview of each issue. since the officials filed their disclosure nalyzing the trates and
os Fae forms. Some of the 14 officials have sold professional affiliations of 100 high-

their shares since they filed their nking Bi ristreli
Source Personal disclosure forms. official, rom ter President down to
cabinet undersecretaries and the
These findings are from an heads of independent agencies.
unprecedented Center analysis of the
Advanced Search finances and professional affiiations of the top 100 Bush administration

officials, from the President to cabinet undersecretaries to the heads of
independent agencies. The full report and searchable database will be
released on the Public i site Monday morning, Jan. 14

In addition to the 14 who owned stock in Enron, two officials had professional
ties to Enron. National Economic Council Director Lawrence Lindsey served
‘as a consultant to Enron when he was managing dwector of Economic
Strategies, Inc., a consulting firm. He also served on Enron's board of
advisers. U.S. Trade Representative Robert Zoellick, who owned stock in
Enron, also served on its advisory council, earning a $50,000 fee for his time.

Among the largest Enron shareholders, according the personal financial
disclosure forms, are senior adviser to the President Kar! Rove and
Undersecretary of State Charlotte Beers, who each held between $100,001
and $250,000 of stock when their forms were filed. Others include Zoellick and
Undersecretary of Commerce Grant Aldonas, who each owned between
$15,001 and $50,000 of stock when they were nominated.

Aldonas' boss, Commerce Secretary Donald Evans, and Treasury Secretary
Paul O'Neill were the two officials contacted by Enron CEO Kenneth Lay last
October. The first calls came after Enron reported a third quarter loss of $618
million and revealed that the Securities and Exchange Commission was
investigating the company

White House Press Secretary Ari Fleischer said Enron, in its contacts with
O'Neill and Evans, suggested that its dire financial situation could have broad
implications for the economy.

file://C:\WINDOWS\TEMPOR~2\OLK173\FOURTE~1-HTM 01/14/2002

01000000000862


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01000000000096


2205/0 15:45 FAA ZOE 048 S199 Vis uee
WSI.com Page 2 of 2

Enron officials have said they are }ooperating fully with the SEC, which has only been investigating
Enron for about five weeks and hajin't had enough time to assess possible liability of Enron executives.
SEC civil allegations could lead tcj fines and sanctions.

SEC Chairman Harvey Pitt, who tas taken some heat for some policies viewed being too soft on
business, has made the Enron investigation a top priority to show he will be a tough enforcer, In remarks
Thursday to the Consumer Federa ion of America, Mr. Pitt said promised a thorough and swift probe of
Enron. The SEC has a team of a hlf-dozen enforcement attorneys and accountants working the case.

Gregory Bruch, a former SEC enfi.rcement attorney who has litigated complicated accounting fraud
investigations, said Enron's involvzment with partnerships and extensive energy derivatives trading
likely would take a year for the SFC unravel. He said the SEC would have to “cut corners" to bring @
case more quickly, meaning the regulator would name fewer defendants than it might in a broader, more
time-consuming case.

On Capitol Hill, the House Energy and Commerce Committee said it would investigate Enron's

accounting practices and Senate C »mmerce Committee announced it would assess the impact on U.S.
natural gas and electricity markets

Write to Michael Schroeder at miie.schroeder(@wsj. com!

URL for this Article:
http: interactive ws} com/archive/retr 2ve.cgi7id=SB1007087256825656840.qjm

Hyperlinks in this Article;
(1) maito:mike.schroeder@ws|.com

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Printing, distribution, and use of this raterial is governed by your Subscription Agreement and copyright laws.

For information about subscribing, go to http://wsj.com

http2/finteractive.wsj.com/archive retrieve.cui7id~SB 1007087266825656840.djmétemplate=,... 11/30/01

00700000000028


D.C. Speaks: 30 Minutes with the President: Financial
Executives Press Terror Case

WASHINGTON - The chief executives of 100 of the country's
lergest financial services companies went to the White House
on Thursday to remind President Bush that they support his
efforts to stimulate the economy, and to tell him that 4 key
to doing that is to establish a federal terrorism reinsurance
system.

http: //wew, americanbanker.com/cgi~bin/read_ tagstory?20020116WASHS6S

Enron, Election Seen Directing New Session
WASHINGTON - When Congress opens for official business next
week the problems exposed by Enron Corp.'s collapse will
dominate the attention of the financial services panels but
won't steal the limelight completely.

http://www. americanbanker.com/cgi-bin/read tagstory?20020118WASHS67

ansees oom aanenseeerssneeeeenses cesses

Place your advertisement on CarserZone Online, the online employment site
available through AmericanBanker.com, and reach qualified financial service

professionals. CareerZone Online allows companies to run ads in both our print
and online products. Position your ad in front of the 130,000 professionals who

read American Banker daily.

http: //www.bankjobs.com/American Banker CareerZone.asp

Review 2001/Preview 2002
A complete set of links to American Banker's series of
articles analyzing the key themes of last year and
anticipating what's coming in the year ahead.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020119NONES77

NATIONAL/GLOBAL

4Q Earnings: Regions Up; No Surprises from PNC, Bank of N.Y.
Neither PNC Financial Service Group Inc. nor Bank of New York
Co. surprised Wall Street when they reported fourth-quarter
earnings on Thursday.

http: //waw. americanbanker.com/cgi=bin/read_tagstory?20020118NATLS75

TECHNOLOGY

Bank of Internet's Profits Buck Web Trend
Bank of Internet USA, a folksy little Web-only bank that
opened on July 4, 2000, with $14 million of venture capital,
seid this month that the fourth quarter was its first
profitable one, and that it had ended 2001 with $260 million
of assets. The San Diego company said it crossed into
the black in September, and posted a profit of $170,000 in the
fourth quarter, compared to a loss of $232,000 in the year-
earlier period.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020116TECHSSO

CARDS

Next-Generation Systems Half a Generation Away
5

00600000000065


A2-o3/01 13:47 FAX 202 846 5199 @o20-023

“WSJ.com Page 2 of 3

f curently ex approximately 7,300 people
company continue Its a 2c program to divest of wind down
Details of the units co be affected v ill be communicated shortly.

nd operations,

The Dynegy Lawsuit

In its lawsuit filed today in U.S. Benkruptcy Court in New York, Enron alleges, among other things. that
Dynegy breached its Merger Agres ment with Enron by terminating the egreement when it had no
contractual right to do so; and that Dynegy has no fight to axerciss its option to acquire the entity that
indirectly owns the Northern Nana al Gas pipeline because that option can only be triggered by = valid
termination of the Merger Agreem :n.

The Chapter 1] Filings

In conjunction with today’s petitions for Chapter 1] reorganization, Enron will ask the Bankruptcy Cour
to consider a variety of "first day riotions” to support its employees, vendors. trading counterparties,
customers and other cunstitusnts. “hese include motions seeking court permission to continus payments
for employee paytoll end health be nefits; obtain interim financing authority and maintain cash
management programs; and retain legal, financial and other professionals to support the company's
reorganization actions. In accordar.ce with applicable law and court orders, vendors and suppliers who
provided goods or services to Ensen Corp. or the subsidiaries that have filed for Chapter 11 protection
before today’s filing may have pre petition claims, which will be frozen pending court authorization of
payment or consummation of a pl:n of reorganization.

The Wholesale Energy Trading Bicsiness

The discussions currently underwiy with various jeading financial institutions are aimed at obtaining
credit support for. recapitslizing aad revitalizing Enron's North American wholesale energy trading
operations under a new ownership, structure in whieh Enron would continue to have a significant
ownership interest.

"Tf these discussions are successful, they could result in the creation of a new trading entity with a strong
and unencumbered balance sheet, the industry's finest trading team, and its leading technology platform.
all backed by one or more of the world’s leading financial institutions," said Greg Whalley, Enron
president and chief operating officer. “We understand that it may take time for counterparties to resume
normal trading levels with this eni ity, but we are confident that this business can be put back on a solid
footing. Obviously, our potential parmers share our confidence or they would not be at the table with us
We intend to take steps to retain employees who arc key to the future success of our wholesale enerzy
mading business and to regain the support and confidence of its trading counterparties.”

Comment by Ken Lay

“From an operational standpoint, ur energy businesses-including our pipelines and utilities-are
conducting normal operations anc: wil] continue to do so," said Kenneth L. Lay. chairman and CEO of
Enron, "While uncertainty during the past few weeks has severely impacted the market's confidence in
Enron and its trading operations, ‘|ve are taking the steps announced today to help preserve capital,
stabilize our businesses, restore thie confidence of our trading counterparties, and enhance our ability to
pay our creditors." Enron's princi legal advisor with regard to the proposed merger with Dynegy,
Enron's Chapter 11 filings, the Di aegy iawsuit, and related matters is Weil, Gotshal & Manges LLP
Enron's principal financial adviso - with regard to its financial restructuring is The Blackstone Group

si com/archive ‘retrieve. ogi?id~DI-CO-2001 1202-900436 djreldtemplate=y,.. 12/391

01000000000849


operations is now asking the securities industry to step into
the ring.

http://www. americanbanker.com/cgi-bin/read_tagstory?2001121L7WASHE1LS

= we reneeneeesss==:

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Copyright (c} 2001 American Banker, Inc.
All Rights Reserved.

00600000000077


Attachment A

Argentina to Brazil Pipeline Example

Subpart F Result: The income earned from the transportation through Paraguay and
Bolivia is FBCORI with no exception available. The income eared from the
transportation in Brazil may not be FBCORI only :f the country of consumption

exception can be met

NORTH
ATLANTIC
OCEAN

00900000000357


From: yu , Carol

Sent: , December 06, 2001 7:42 AM

To: Eichner, Matthew, Hunt, Betty Ann; LIBRARY, REFERENCE, Smith, Amy
Subject: FW: Daily Briefing for Thursday, December 6, 2001

-----Original Message----~

From: AmericanBanker.com [mailto:briefing@ab-hb. com]
Sent: Thursday, December 06, 2001 5:20 AM

To: Daily Briefing

Subject: Daily Briefing for Thursday, December 6, 2001

AmericanBanker.ccm
http://www. americanbanker.com

DAILY BRIEPING
Thursday, December 6, 2001

Place your advertisement on CareerZone Online, the online employment site
available through AmericanBanker.com, and reach qualified financial service
professionals. CareerZone Online allows companies to run ads in both our print
and online products. Position your ad in front of the 130,000 professionals who
read American Banker daily.

http: //wew, bankjobs.com/American_Banker_CareerZone.asp

=oomenneens:

TECHNOLOGY

Several banks that have invested in wireless technology are
scaling back expectations for consumer adoption - and at least
one is pulling back altogether.

http: //waw. americanbanker.com/cgi-bin/read_tagstory?20011206TECHS93

WASHINGTON

For Enron Banks, Wide Latitude on Commerce
WASHINGTON - At a time when regulators are repeatedly issuing
credit quality warnings, and banks are adding billions to
their loan-loss provisions, bank supervisors have been
surprisingly quiet about the collapse of Enron Corp., the
heavily indebted Houston energy conglomerate.

http: //wew, americanbanker.com/cgi-bin/read_ tagstory?20011206WASHS89

MORTGAGES

Refi Boom Shows Flaws In Servicing Hedging
With homeowners refinancing this year in record numbers,
mortgage lenders’ ability to value and hedge servicing rights
has been severely tested, raising questions about the
effectiveness of techniques used to hedge risk.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011206MORG603

TM

00600000000082


SEP :0°S9 [7:44 FR CHT 1333 202 S52 2466 TU Surcecedibcedsrd r.verud

EXPLANATION OF AMENDMENTS TO S. 625
TO UPDATE SWAPS DEFINITION AND TO CLARIFY NETTING RIGHTS FOR
CERTAIN FINANCIAL AGREEMENTS

Section 901(a)(1) - Definition of “Swap Agreement”

As reported by Committee, the definition of “swap agreement” in current law is updated by (i)
adding to the existing list of swap products, types of transactions that have been introduced since
the last time the definition was amended, and (ii) including a “catchall” phrase to cover the
potential for development of new swap products. Since this is a rapidly evolving industry, the
catchall phrase is intended to provide flexibility to avoid the need to amend the definition as the
nature and uses of swap agreements matures.

As reported, the definition of swap agreement inadvertently did not cover some legitimate
transactions, and this amendment remedies this problem. First, the list of swaps is amended to
include “weather derivatives,” an important type of transaction that allows end-users, such as
energy companies, agricultural producers and agribusinesses, to manage their weather-related
business risks. Secand, the “catchall” clause is revised to ensure that the new definition (a) is not
limited to products that address “economic” risk, which could inadvertently narrow the current
definition, and (b) is flexible enough to accommodate swaps that are not traded “regularly”
because they are new or innovative developments. The phrase “entered into in the swap market”
is changed to “entered into by swap participants” since swap transactions do not take place on
federally-regulated markets; swaps are cntered into by agreements between parties “over-the-
counter.”

Section 901(d) ~ Netting Rights in Bankruptcy

Under current law, a safe harbor from the application of the automatic stay in bankruptcy
proceedings is provided for several types of financial transactions. This safe harbor is intended
to provide legal certainty to the enforceability of netting rights in the case of bankruptcy. This
amendment rectifies an inconsistency between the safe harbor for swaps and the safe harbor for
several other types of financial transactions which, if not addressed. could undermine legal
certainty for commodities, securities and forward contracts and repurchase agreements.

For swap agreements, netting rights in connection with “any payment or transfer" arising in
connection with the transactions arc protected in current law. However, for commodity,
securiles and forward contracts and for repurchase agreements, under current law the protection
is more limited -- it only applics to netting rights related to “margin payments” and “settlement
payments.” This inconsistency in statutory language can create some confusion about the
exercise of netting rights in bankruptcy. To remedy this problem, the amendment would apply
the same protection for commodity, securities and forward contracts and repurchase agreements
thal is already provided for swap agreements.

CWRDCLIBIMITTE |

01000000001451


Enron Asked Treasury for Credit Aid

its employees had destroyed a *‘significant" number of documents
related to Enron.

The White House has ordered federal agencies that might have
had dealings with Enron to find any contacts between Enron and
government officials. White House officials say they expect
Enron made repeated requests of the government to help its
financial situation, and they want the information out as quickly
as possible to curb political fallout.

Enron President Lawrence ‘’Greg” Whalley telephoned Treasury's
undersecretary for domestic finance, Peter Fischer, six or eight
times in late October and early November, Treasury
spokeswoman Michele Davis said Friday.

“As Enron's negotiations with its bankers for an extension of
credit neared a decision point, the president of Enron asked
Undersecretary Fisher to call the banks," Davis said.

‘That is in addition to calls that Enron Chairman Kenneth L. Lay
made to Treasury Secretary Paul O'Neill and Commerce Secretary
Don Evans about the company's financial woes. Lay told Evans
that he would welcome any support in helping the company deal
with a bond-rating firm that was considering downgrading Enron,
administration officials said.

Enron said Lay also called Alan Greenspan (news - web sites),
chairman of the Federal Reserve (news - web sites).

The administration said no government action was taken in
response to the calls.

Fisher “‘inferred he was being asked to encourage the banks to
extend credit," Davis said. ‘He made no such calls.” She did not
say exactly when the calls were made.

White House spokesman Ari Fleischer (news - web sites) said
Friday the collapse of the company “needs to be fully
investigated to determine if there was any criminal wrongdoing
by Enron.”

But he disputed suggestions that the expanding inquiries could
harm the president politically. ‘This dog won't hunt. That's a
reference to the politics of it," Fleischer said.

Enron was one of Bush's biggest political contributors.
On Thursday, Enron's auditing firm, whose work is under

investigation by federal regulators, disclosed that its employees
had destroyed a significant number of documents - a

Page 2 of

Opinion & Editorials

Enron's debacle leads 10
questions of ethics - Seattle
Times (Jan 11, 2002)

White House-Enron love
affair goes blooey - The
Philadelphia Inquirer (Jan
11, 2002)

No More Enrons - Detroit
Free Press (Jan 11, 2002)

The Enron Investigations -
NY Times (registration
req'd) (an 11, 2002)
Investigating Enron. -
Baltimore Sun (Jan 11,
2002)

More...
Related Web Sites

Enron - company site.
Includes a FAQ on the
bankruptcy filing, a look at
the company’s history, and
press releases,

House Committee on
Government Reform -
Minority Office - probing
contacts between Enron
executives and the White
House energy task force.
Site inchides a fascimile of
a Jan 3 letter from VP
Cheney to Rep. Waxman, in
pdf format.

Graphic; Enron Executives’
2001 stock, option trides -
from the Houston
Chronicle.

More...
Magazine Articles

Chronology of Enron Corp.
- AP (Jan 10, 2002)

What Happened to
Collapsed Enron? - AP Wan
10, 2002)

The Russian Roots of the
Texan Mafia - The Globalist
(Dec 20, 2001)

More...
Audio

Congressional Panels Turn
Attention t Enron - NPR
(Jan 4, 2002)

Crnseare Saale Avwentnaey at

hitp://dailynews.yahoo.comv/h/ap/200201 1 1/ts‘enron_investigation_7.html

01000000000050

1/02


From: uU Carol

Sent: Monday December 10, 2001 7:46 AM

To: Eichner, Matthew, tins, Batty Ann; LIBRARY, REFERENCE; Smith, Amy
Subject: FW: Daily Briefing for jay, December 10, 2001

From: AmericanBanker.com [mailto:briefing@ab-bb. com)
Sent: Monday, December 10, 2001 5:20 AM

To: Daily Briefing

Subject: Daily Briefing for Monday, December 10, 2001

AmericanBanker.com
http://www. americanbanker.com

DAILY BRIEFING

Monday, December 10, 2001

ee rere ern ner mmm sees cessessssss sss sss5s5seenesesesessesssss5sseerseeser sesssse
Place your advertisement on CareerZone Online, the online employment site
4vailable through AmericanBanker.com, and reach qualified financial service
professionals. CareerZone Online sllows companies to run ads in both our print
and online products. Position your ad in front of the 130,000 professionals who
read American Banker daily.

http://www. bankjobs.com/American Banker CareerZone.asp

SSS eSSS Sea sea Ses Sle Ses Se cece mwewwewwenemess oss is eee eeneeeeeeee=

WASHINGTON

In Focus: Agenda Items Thought Dead Revived by Enron's Fall
WASHINGTON = Several congressional and regulatory issues that
were shelved after the Sept. 11 terrorist attacks - ranging
from the technicalities of bankruptcy law to high-profile
questions about the integrity of financial professionals -
have been thrust back onte the agenda by the collapse of Enron
Inc.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011210WASHESO

CARDS

Data Let Visa, MasterCard Boast Gains
Which of the following is true? a) MasterCard is gaining
market share on Visa; b) Visa is gaining market share on
MasterCard; or c} It depends how you're measuring things.

http://www. americanbanker.com/cgi-bin/read tagstory?20011210CARD653

WASHINGTON

Pressing Case, FDIC Says Refund May Hit $1.53
WASHINGTON - The Federal Deposit Insurance Corp. upped the
ante last week in its battle te prevent Congress from granting
a major refund to scores of banks, warning that it could end
up costing the thrift insurance fund as much as $1.5 billion -
three times its original estimate.

70

00600000000078


American Banker.com Page | of 2

Markets
Citigroup May Break Silence Today on Exposure to Enron

Thursday, January 17, 2002
By Barry Rehfeld

What is currently the biggest mystery on Wall Street may be solved today, when Citigroup Inc, holds
its fourth-quarter meeting with analysts. Then again, it may not.

Unlike rival J.P. Morgan Chase & Co. — or itself when discussing the aftermath of the Sept. 11
attacks — Citigroup has so far kept silent on the details of its exposure to Enron Corp, since news
emerged two months ago that Citi and Morgan Chase were the bankrupt energy trader's biggest
lenders.

The silence has possibly been made more deafening by the fact that Citi was so quick, and so
specific, in stepping forward on Sept. 17 to announce that the terrorist attacks on the World Trade
Center would cost it $700 million.

Morgan Chase was just as quick to speak out on its Enron problems. It identified carly on exposure of
$900 million and loan losses of over $200 million. (Additional exposure was reported later.)

At his own earnings meeting Wednesday, Morgan Chase's vice chairman, Marc Shapiro, seemed to
tweak Citi for its reticence. He said that in November, his company was the “first major bank” to
make public its exposure to Enron and it has provided the “most detailed” information of any
company since then,

Citigroup officials did not retum calls seeking comment about what Chairman Sanford I. Weill may
say about Enron when he talks to analysts today. Representatives of the banking company have
repeatedly refused to comment about its Enron exposure, despite rampant speculation.

Still, while Wall Street has been dying to solve the mystery, some observers say it is no mystery at all.

“They've never talked about their credit exposure,” says Lynn Tilton, a principal at Patriarch
Partners, a New York leveraged buyout firm that deals in distressed debt.

The history of banks and bad loans is one of silence, particularly in naming clients and fessing up to
sticky losses, which is the Enron case in spades. In saying nothing, Citi is acting strictly in banking
character.

Indeed, Ms. Tilton said that Citi’s openness about its World Trade Center losses was the exception —
and that there was good reason for its frankness. “There was no ego in those loans.”

The terrorist attacks were an unforeseen tragedy that could not be blamed on anyone, so it was easy
for Citigroup to reveal its exposure there, she said.

file://C:\WINDOWS\Temporary Intemet Files\OLK3313\0117d.htm OL/17/2002

01100000000067


Page 2 of 2

Meanwhile, although Enron has yet ta file for bankruptcy. most of its
derivative counterparties are likely already scrambling to exit their
trades.

‘That's because Dynegy Inc.*s (O¥N) decision Wednesday to abandon its plan to
feacus Enros all but sealed the fate of the ailing uouston energy trader
which has been bobbled by accounting irregularities and unquantified
off-palance-sheet liabilities. Enron shares plumseted from about $90 a share
last suemer to 36 cente Thursday.

Derivative contract are built arcund master agreements developed by the
International Swaps and Derivatives Asmociation, As far as its power
Enron is said to have favored master agreements drafted
ectric Institute, which draws heavily on [Spa's blueprint.

Those master agreements include certain events under which « counterparty
cen terminate a transaction. Awong those are failure to pay, failure to
deliver and, of course, bankruptey.

Whether counterparties will be able to claim exerption from che automatic
stay that prevents anyone from terminating contracts with s company that
filed for bankruptcy will hinge on the type of deals they're a party to and
whether they meet certain atatutory requirerents. Although Enron and its
lawyers are likely to nitpick the unwinding of each and every contract
involving the company, legal experts acted that Enron's fondness for EEL
agreenents should halp thous entangled in power purchase agreements to
liquidate their positions since theme contracts treat all participants as
forward contracts marchants. Such rerchante are exerpt from the stay
stipulated by section $624 of the bankruptcy code,

Key to how well or poorly counterparties will rake out now that Enron's
business bas beeo all but dried cut, is how much if any collateral protects
their transactions.

fo far, it's unclear how much of Rnron's derivative transactions were
collateralized. Sut lawyers fantliar with the ratter said it was likely that
@ large amount of those contracts were mot collateralized,

That's likely to be bad news for seme counterparties, Because if they're
owed money by Enron on their netted derivative exposure, they'll have to
join other unsecured creditors, likely receiving little of their claive. The
bonds and bank debt of Enrea took a noae dive after Dynegy reccinded ito
merger offer, with trading levele indicating that those mostly unsecured

creditera thought they would recoup only 20% to 250 of the money loaned to
Enron.

By Carol §. Remond, 201-938-2074; Dow Jones Newnwires:
carol. renondwdewjones.com

(Phyllis Plitch contributed to this colum.)

01/18/2002

01100000000018


American Banker.com Page 2 of 2

Citi's Enron exposure fits into a more traditional category. It involves loan losses to a controversial
and complex client.

Joan Solotar, an analyst with Credit Suisse First Boston Corp., gave Citi the benefit of the doubt and
suggested it needed time to assess the losses,

Even so, Citi's reluctance to talk about a specific client’s problems is understandable, she said. “No
one wants to be more specific than they have to be.”

Both Ms. Tilton and Ms. Solotar say there is pressure on Citi to come clean today. Ms. Tilton says the
company needs to follow Morgan Chase’s example and be more forthcoming for the sake of the
compliance issues raised by Gramm-Leach-Bliley,

Ms, Solotar added that Citigroup needs to do so out of deference to the Street.

“Investors want to know about their exposure,” she says. “I hope it comes up, but if it doesn't, they"ll
be asked about it in the Q&A.”

Copyright 1997-2000, American Banker, All Rights Reserved.
Printing, distribution, and use of this material is governed by your Subscription Agreement and
copyright laws.

file://C:\WINDOWS\Temporary Internet Files\OLK3313\0117d.htm 01/17/2002

01100000000068


L050) 9d FAA ZU Odo Odes evisevces

-WSJ.com | Page 1 of $ i

Dow Jones Newswires

Enron Files For Chapter 11 Bankruptcy

HOUSTON, Dec. 2 /PRNewswire/ -- Enron Corp. (NYSE: ENE) announced today that it along with
certain of its subsidiaries have filed > oluntary petitions for Chapter 11 reorganization with the U.S.
Bankruptcy Court for the Souther District of New York. As part of the reorganization process, Enron
also filed suit against Dynegy Inc, (}’YSE: DYN) in the same court, alleging breach of contract in
connection with Dyaegy's wrongful ‘ermination of its proposed merger with Enron and seeking damages
of at least $10 billion. Enron's lawsuit also seeks the court's declaration that Dynegy is not entitled to
exercise its option to acquire an Enrun subsidiary that indirectly owns Northem Natural Gus Pipeline. }
Proceeds from the lawsuit would berefit Enron's creditors.

In @ related devaiosment a.med at preserving value in its
North American wholesale ener jy trading business, Enron said
ehat it is in active discussions with vazious leading
financial institutions to proyide credit suppert for,
recapitalize and revitalize tiat business under @ new |
ownership structure. It is 4 jtheapated that Enron would
provide the new entity with traders, back office
ias and technology from Enron's North American
business, ani that the new entity would
azty transactions through EnronOnline, the
pany's existing energy trating platform. Any such
arrangement would be subject (a the approval of the
Sankruptey Court.

In connection with the company’s Clapter 11 filings, Enron is in active discussions with leading
financial institutions for debtor-in-pr:ssession (DIP) financing and expects to complete these discussions
shortly. Upon the completion and co,1t approval of these arrangements, the new funding will be
evailable immediately on an interim basis to supplement Enron's existing capital and help the company
fulfill obligations associated with ofsrating its business, including its employee payroll and payments to
vendors for goods and services provided on or after today's filing.

a

Filings for Chapter t] reorganization have been made for a total of 14 affiliated entities, including
Enron Corp.; Enron North America \Zorp., the company's wholesale energy trading business; Enron
Energy Services, the company’s reto'l energy marketing operations; Enron Transportation Services, the
holding company for Enron's pipelirie operations, Enron Broadband Services, the company’s bandwidth
trading operation; and Enron Metals & Commodity Corp.

Enron-related entities not included i che Chapter 11 filing are not affected by the filing. These non-
filing entities include Northern Natujal Gas Pipeline, Transwestem Pipeline, Florida Gas Transmission,
EOTT, Portland General Electric an|i numerous other Enron international entities.

To conserve capital, Enron will imp ement a comprehensive cost-saving program that will include
substantial workforce reductions. Tilese workforce reductions primarily will affect the company's

|
http://interactive.wsj.com/archive/re crieve.cgi?id=DI-CO-2001 1202-000436.djmlétemplate~p... 12/3/01

00700000000031


that the U_S. subsidiary owns and operates a relatively small power plant in the U.S. and is fully
subject to U.S. federal tax with no special tax benefits. (The example is based on an actual
foreign project.) Incredibly, the U.S, company would have to defer dividends until its
twenty-seventh year of operations in order for the Dutch holding company to meet the
high-tax exception on dividends paid by the U.S. company! Clearly this is an incongruous
result that a U.S. computational exception to Subpart F cannot be met when applied to U.S. tax
law itself, Nonetheless, this is the situation that we face in numerous foreign countries that have
tax rates around 35% and some sort of accelerated depreciation

MODIFIED PROPOSED SOLUTION

A possible solution to the four computational problems that we noted would be to amend
§954(b)(4) as follows,

“if the taxpayer establishes to the satisfaction of the Secretary that (i) such income was
subject to a statutory rate of creditable income tax for that year imposed by a foreign
country greater than 90% of the maximum rate of tax specified in §11, and (ii) the actual
foreign tax paid on such income was 90% or greater of the theoretical U.S. §11 tax
{computed in functional currency of the CFC) that would have been due if such income
were earned from sources within the US. by a US. corporation.”

Using this revised high-tax exception definition, the U.S. company in our example would meet the
high-tax exception in every year, including years when no tax is actually paid due to current year
tax losses or tax loss carryovers. See Exhibit B. We acknowledge that our proposal would
introduce additional complexity (i.e., an “as if U.S. taxable income calculation), but since the
high-tax exception is elective this complexity would be at the taxpayer's discretion, In our case,
we would welcome this complexity since it would provide us with a workable high-tax exception
that could be modeled with certainty

We appreciate your consideration of our proposals. Please do not hesitate to call Cullen at (713)
646-6063 of me at (713) 853-6491 if you have any questions or comments.
Sincerely,

rae ae

James A Ginty
General Manager - International Tax

Attachments - as stated

cc Mr William Moms (U S Treasury)
Ms. Barbara Angus (JCT)

00900000000321


CARDS

Big Is Back in a Big Way In Net Cross-Market Deals
Cross-marketing alliances between financial institutions and
big Internet properties are back, and they are bigger than
ever.

http://www, americanbanker,com/cgi~bin/read tagstory?20020109CARD312

NATIONAL / GLOBAL

Recession-Proof? Hot Texas Deal Climate Could Chill
Texas has been having its share of woes - Enron Corp.'s
failure, oil prices declining, and technology campan: and
airlines in distress - none of it good news for the banking
industry. But opinions differ on how severe the impact on
Texas" economy will be.

http://www, americanbanker.com/cgi-bin/read_tagstory?20020109NATL324

Review 2001/Preview 2002
A complete set of links to American Banker's series of
articles analyzing the key themes of last year and
anticipating what's coming in the year ahead.

http: //www.americanbanker.com/cgi-bin/read_tagstory?20020LO9NONE334

Place your advertisement on CareerZone Online, the online employment site
available through AmericanBanker.com, and reach qualified financial service
professionals. CareerZone Online allows companies to run ads in both our print
and online products. Position your ad in front of the 130,000 professionals who
read American Banker daily.

http: //www.bankjobs.com/American_Banker_CareerZone.asp

MARKETS

Capital One Downgraded On Delinquency Worries
Jordan Hymowitz an equity analyst with Robertson Stephens
Inc., the San Francisco investment banking unit of FleetSoston
Financial Corp., has downgraded the credit card specialist
Capital One Financial Corp.

http://www. americanbanker .com/cgi-bin/read_tagstory?20020109MMON322

MORTGAGES

Multifamily Seen Carrying Commercial Real Estate
Multifamily lending and development should be the bright spot
in an otherwise dim commercial real estate market this yeer,
several industry observers said.

http://www. americanbanker.com/cgi~bin/read tagstory?20020103MORG320

COMMUNITY / REGIONAL

Another Deal for Boston Bank?
6

00600000000072


WATCH OFFICE

AFTERNOON PRESS SUMMARY
WEDNESDAY, NOVEMBER 28,
2001

Fl

Enron:

Budget:

The Treasury Department is 1
monitoring the potential market impact
of Enron Corp'ssENE.N>. , financial
difficulties, according to the White
House. [Reuter]

Chicago Fed President Moskow said 2
the economy would likely pick up next
year but the exact timing of such a
rebound was unclear. (Reuter)

President Bush sought to break = 3
Partisan impasse over how to jump-
start the cconomy, mecting with
congressional leaders and demanding
that Othe Senute must pass a stimulus
package [AP]

Prospects for passage of an economic 6
stimulus package improved after the
White House said it could support a
proposed payroll tax holiday and
‘Senate Democrats offered to scale

back their demands for spending on
homeland security. [Reuter]

The House blocked a Democratic 8
effort to add billions to what President
‘Bush wants for national security and

aid to New York and moved toward
approving a bipartisan $20 billion anti-
terrorism package. [AP]

‘The federal budget is unlikely to returm 10
toa balanced state for some years,

Office of Management and Budget
Director Daniels said. [Reuter]

01000000000041


Similarly, Section 751 provides a look-through (aggregate) rule to re-charactenze
capital gain from the disposition of a partnership interest as ordinary income to
the extent of the partner's share of “tainted” ordinary income assets held by the
partnership. Subpart F should have an analogous rule for “tainted” passive assets
and income, but the rule should be likewise limited by such a look-through

b. Subpart F could be avoided if an interest in the assets of the partnership were
sold and the cash distributed to the CFC partner. However, this is frequently not
feasible due to burdensome and costly foreign coun‘ry legal requirements and
considerations.

U.S. tax policy includes the principle that two economically similar transactions
(i.e.. a sale of a partnership interest and a sale of partnership assets followed by a
cash distribution) should not result in diametrically opposite tax results. For
example, the IRS stated in the preamble to the final and temporary Section 367
regulations (T.D. 8770, June 19, 1998) that “The IRS and Treasury Department
believe that substantially similar transactions ... should not be treated in markedly
different manners.”

c. The legislative history to the existing rule of Section 954(c)(1B) does not
indicate why partnership gains were added to Subpart F. See the House
Committee Report to the Technical and Miscellaneous Revenue Act of 1988.
Presumably, this provision was directed at partnership gains realized by portfolio
investors. If so, the proposed change would address this concem by limiting
look-through treatment to 10% or greater partners.

d. With a look-through rule, gain attributable to passive Subpart F type assets
(e.g., stock investments, and securities) would continue to be subject to Subpan F.

3. Tis difficult to imagine how a look-through rule could be used by taxpayers to
obtain abusive results since the Subpart F provisions would appty .o the deemed sale of
the partnership's assets,

4. This issue was not addressed by the so-called Brown Group regulations re-issued
last fall as proposed regulations. However, we believe that a look-through rule for a
disposition of partnership interests would be completely consistent with such regulations.

5, The proposed change could result in some revenue loss to the U.S. Treasury, but
it should not be significant. As noted, gains from portfolio investments and gains from
other passive Subpart F assets would continue to be subject to Subpart F.

6. Substantially similar language was included as Section 107 of the International
Tax Simplification for American Competitiveness Act of 1999, introduced in the 1°"
session of the 106" Congress as S. 1164 by Senators Hatch and Baucus and as H.R. 2018
by Representatives Houghton and Levin.

February. 2001

00900000000353


Attachment
Argentina to Brazil Transmission Example

Subpart F Result: Income from the transmission of electricity in Brazil on behalf of a
related electricity generation company in Argentina would potentially be FBCSI

00900000000362


Page 1 of 3

Lebryk, David

From: Lebryk, David

Sent: Friday, November 30, 2001 3:48 PM

To: Hammond, Donald

Subject: FW: 1BN ) Wall Street Firms, Pension Funds Face Enron Losses
Thought you'd be interested in the Duke Power connection.

~----Original Message-----

From: Lori.Santamorena@bpd.treas.gov [mailto:Lori.Santamorena@bpd.treas.gov)
Sent: Friday, November 30, 2001 2:23 PM

To: david.lebryk@do.treas.gov

Ce: barbara.wiss@do.treas.qov
Subject: 1BN ) Wall Street Firms, Pension Funds Face Enron Losses (U

———- Forwarded by Lori Santamorena/BPD on 11/9001 02:22 PM
“PUBLIC DEST, US DEPT OF TREASURY”

<GSRSA@bloomberg ne To: LSANTAMORENAQ)BPD TREAS GOV

oo

Si I: TEN ) Wall Street Fires, Pension Funds Face Enron
1119001 02-10 PM tomp

Wall Street Fi:
2001-22-30 12

- Pension Funds Face Enron Loesen Update!
(Wew York)

Mall Street Pirmo, Penaion Funds Pace mnrcn Lompen (Updates!
(Updates with Calpers losses, |

Mew York, Gov, 30 (Bloomberg! -- Wall Street firns such ax
Beer Stesrne Cos., European banks and pension funds including the
ifornia Public Enployee's Retirement Systen disclosed losses
from investments Enran Corp. expected to top billions of dollars,

Bear Stearns Cos., the sixth-biggest securities fire by
Capital, said its exposure to Enron i# $69 million. Duke Enersy
Corp., 2.P. Mergen Chase & Co., Willians Cos. and other companies
tegether may lose more than $3.4 billion from @ collapse of Enron.
Allti Anro Molding WY. Abbey Maticnal Plc, Bational Australia Bask
ted. and other lenders disclosed potential losses.

Enron would be the biogest bankruptcy ever =» and a blew far
banka and securities firms already suffering because of an
sconceic slowdown. Enron had pore than $15 billion of debt and
leas than $2 billion of cash as of last week. It aust pay $690
nillicn to lenders by cid-Decesber,

“This im having « ripple effect across the world,'' said
Rebuzt Denelozs, « fund manager at Aberdeen Asset Management Asia
ip Singapore.

At least 24 companies have reported exposure to possible
lomwex from Enron tied to either loans or contracts with the
Mouuton-based company

ASM Anco, the largest Dutch bank, waid it may set aside 116
nillicn euree ($97.5 million} to cover
trader. Britain's Abbey Haticnal said it
million. mational Austr and other Australian lenders
their Enron exposure totals about $350 million. Prance's Credit
uyennaia SA maid it haw $250 eillica of loans to Enron.

01/18/2002

01100000000024


b. Due to the contingent, non-binding nature of MOUs, LOls, etc., these
agreements should have little or no economic value. Thus, even if there were an
actual assignment of a MOU, LOI, etc. from a U.S, company to a foreign project
‘company, any Section 367 gain should be negligible.

c. Unlike most Section 367 intangibles, non-binding agreements (LOIs, MOUs,
etc.) are usually project or country specific and do not have worldwide

application.”
d. This proposal would simplify and clanfy a provision that is currently a “trap
for the unwary”.

e. The proposal would avoid tax audit disputes that could be costly and time
consuming for both taxpayers and the IRS.

f. Bidding nights, awarded contracts and similar contracts that are executed with
customers would continue to be subject to Section 367(d).

3. There should be no revenue cost to the U.S. Treasury since there is usually no tax
paid under the current rules for a couple of reasons, First, most U.S. multinational groups
cause their foreign project companies to execute all agreements and contracts such that
any potential Section 367 taxation is avoided. Second, in the event that a preliminary
agreement is inadvertently signed by a U.S. entity and subsequently transferred to a
foreign project company, most appraisers would advise that there is little or no taxable
gain.

Additionally, there should be no revenue loss since Section 367(d) applies solely
to outbound transfers by U.S. transferors. Thus, there is no exposure that this proposal
could be used by foreign-owned U.S, companies to avoid U.S, tax

The proposal would also el’minate IRS and Treasury administrative time
associated with processing Forms 547! for inactive foreign entities that are formed to
execute the preliminary agreements.

4, The reference to Section 482 is necessary to avoid inconsistent treatment. For
example, extending the change to Section 482 would be necessary to avoid any
“whipsaw" to the U.S. Treasury by foreign investors into the U.S.

5. A similar change was included as Section 306 of the Intemational Tax
Simplification for American Competitiveness Act of 1999, introduced in the Ist session
of the 106" Congress as S. 1164 by Senators Hatch and Baucus and as H.R. 2018 by
Representatives Houghton and Levin.

February, 2001

00900000000367


Enron Contacted 2 Cabinet Officers Before Collapsing Page 2 of 5

chairman requested no assistance at all.

Enron officials disputed the White House version of events this evening and
said Mr, Lay was not asking for assistance from the Bush administration in
calling Mr. O'Neill and Mr, Evans, Mr. Bush's presidential campaign
chairman and chief fund-raiser. Enron officials also said Mr. Lay had called
Alan Greenspan, the chairman of the Federal Reserve, to alert him to the
company's problems.

Mr. Lay was simply informing the government about the possible bankruptcy
filing of the nation’s seventh largest company, Enron officials said, as has
been the practice of executives of other large companics whose collapse
could affect worldwide financial markets.

“He did not ask for anything,” said Mark Palmer, an Enron spokesman.

Enron's troubles and its numerous links to the Bush administration threatencd
to consume the president's time and attention even as he enjoys high approval
ratings for his conduct of the war on terrorism.

As morning newspapers announced the expanding Justice Department
investigation today, Mr. Bush summoned reporters to the Oval Office to
declare that he had instructed his economic advisers to develop a plan to
protect workers’ pensions from similar corporate failures. Thousands of
Enron employees lost their life savings and much of their retirement accounts
when the company’s stock became virtually worthless last November.

Enron's auditor, the giant accounting firm Arthur Andersen, then said that it
had destroyed a "significant" volume of documents related to Enron. The
firm said it was still gathering information about the episode before deciding
if it would discipline the employees involved.

The Securities and Exchange Commission, which is investigating both
Enron's collapse and Andersen's conduct, said its inquiry would be expanded
to include the destruction of documents, in addition to looking into whether it
had created off- the-books private partnerships that disguised the true
financial condition of the company.

Almost simultaneously, Attorney General Ashcroft said he was recusing
himself from oversight of the criminal investigation of the company’s
collapse because of his relationship with Enron. Common Cause reported
today that a canvass of federal election records showed that Mr. Ashcroft had
received a total of $54,499 from the company and Mr. Lay for his 2000
Senate campaign.

Enron, which pioneered deregulation of the nation's power business and grew
to be one of the world's largest energy companies before its sudden fall, has
long nurtured close tics to Mr. Bush, But in the Oval Office today, the
president went to some length to distance himself from Mr. Lay, who he said
had been a supporter of Governor Ann Richards of Texas when Mr, Bush

hup://www.nytimes.comy2002/01/1 1/business/1 LENRO,htm!?pagewanted=print Wil/02

01000000000063


Canter, Virginia

From: Canter, Virginia

Sent: Saturday, January 12, 2002 11:50 AM

To: Aufhauser, David; Schmalzbach, Kenneth

Subject: Fourteen Top Bush Officials Owned Stock in Enron.htm!
FYI.

01000000000067


LaKritz, Robb

a

From: Dam, Ken

Sent: Tuesday, January 08, 2002 3:54 PM
To: Lakriz, Robb

Subject: RE:

| hope os. I'd like to. Check with Reavie.

-—Origina Message--—-

From: Lakritz, Robb

Sent: Tuesday, January 08, 2002 2:45 PM

To: Sar, Sheils

Ce: McCardell, Dan; Adams, Tim; Dam, Ken; Gross, Jared; Kupfer, Jeffrey
‘Subject:

Sheila,

Do you have time tomorrow to meet with Dan McCardell and me to discuss an internal
policy roundtable we are hoping put together on issuea related to the Enron situation
and ancillary developments?

Thanks.

Robb Lakritz

00100000000006


Enron's President Said to Have Asked Treasury Official for Help

Today, the House Energy and Commerce Committee asked for the files of six
Andersen partners involved in the audit. And the Senate's Permanent
Subcommittee on Investigations subpoenaed documents from both Enron and
Andersen,

Also today, Enron said it had selected the investment bank UBS Warburg as the
winning bidder for its wholesale energy trading business after a private auction
overseen by a federal bankruptcy court. The deal, which must be approved by
the court, is aimed at helping Enron reorganize under Chapter 11 bankruptcy
protection. Details of the terms of the deal are to be disclosed on Monday in
bankruptcy court.

The Justice Department said on Wednesday that it had created a nationwide task
force to conduct a criminal investigation into the collapse of Enron, an energy
trading company with close ties to Mr. Bush and many top administration
officials.

On Thursday, the entire United States Attorney's office in Houston recused itself
from the investigation, saying many of its approximately 100 lawyers, including
the chief prosecutor, Michael T. Shelby, had family or other relationships with
people affected by Enron's filing on Dec. 2 for reorganization under Chapter |]
of the bankruptcy law.

The White House moved quickly to contain the damage. The White House
spokesman said Mr, Bush was made aware of the phone calls to the cabinet
members only Thursday morning during an Oval Office meeting.

“What you have here is a case where a contributor called up and asked for
something but did not get it," said Ari Fleischer, the White House press
secretary,

Yet the two cabinet secretaries who received calls from Mr. Lay described
somewhat different conversations. Commerce Secretary Donald L, Evans said
that Mr. Lay had indicated he would welcome any government help with its
bond ratings, while Treasury Secretary Paul H. O'Neill said the Enron chairman
requested no assistance at all.

Before the disclosure today of Mr. Whalley’s calls to Mr. Fisher at Treasury,
Enron officials disputed the White House version of events about Mr, Lay's calls
and said Mr. Lay was not asking for assistance from the Bush administration in
calling Mr. O'Neill and Mr, Evans, Mr, Bush's presidential campaign chairman
and chief fund-raiser. Enron officials also said Mr. Lay had called Alan
Greenspan, the chairman of the Federal Reserve, to alert him to the company’s
problems,

Mr. Lay was simply informing the government about the possible bankruptcy
filing of the nation's seventh largest company, Enron officials said, as has been
the practice of executives of other large companies whose collapse could affect
worldwide financial markets.

http://www. nytimes.com/2002/01/1 L/business! 11 CND-ENRON. html?pagewanted~print

Page 2 of 6

1/11/02

01000000000057


achieved largely as a result of the US companies’ innovation in creating liquid markets
and risk management products. However, foreign based energy and commodity
companies are quickly building their dealing capabilities and these foreign based
companies do not have home country tax laws equivalent to the Subpart F provisions
affecting risk management/dealing income.

There should be little or no revenue loss to the US Treasury as a result of better
integrating the physical commodities and financial dealer FPHCI exceptions because US
based risk man: ¢ ment providers are able to currently structure their operations 10 meet
the separate physical commodities and financial dealer exceptions. However, there could
be some revenue loss by subjecting commodity activities exclusively to the FPHCI
provisions.

February. 2001

00900000000346


Participating insurers would pay a "retention amount” for losses based on a
market share formula. Insurers would also be responsible for paying 20
percent of losses above the retention amount for damages amounting to less
than $10 billion. Insurers would pay 10 percent of total losses for
damages

between $10 billion and $100 billion. The program would last one year and
could be renewed by the Secretary of the Treasury for an additional year.
Under a draft bill circulated last week, a federal cause of action would be
created for any litigation arising out of a terrorist event and federal
funds to pay any punitive damage awards would be prohibited. At this time,
however, negotiations continue on how punitive damages language would be
addressed in a final bill.

Abeba eetedeeneenee

Kerry Early, Managing Associate Director, Washington Information
202-663-5316, or kearly@aba.com

Tom McElligott, Program Manager, Washington Information
202-663-5352, or tmcellig@aba.com

Office of Grassroots Programs and Washington Information
American Bankers Association

World-Class Solutions, Leadership and Advocacy

Since 1875

1-800-BANKERS

The information contained in this message may be privileged and
confidential and protected from disclosure. If the reader of this message
is not the intended recipient, or an employee or agent responsible for
delivering this message to the intended recipient, you are hereby notified
that any dissemination, distribution or copying of this communication is
strictly prohibited. If you have received this communication in error,
please notify us immediately by replying to the message and deleting it
from your computer. Thank you. Ernst & Young LLP

45

00600000000095


te contact cur Customer Service Department at custserv@americanbanker.com
or call {800} 221-1808, 8:30 am ~ 5:30 pm (EST}.

AmericanBanker.com
http://www. americanbanker,.com/

Copyright (c} 2001 American Banker, Inc.
All Rights Reserved.

00600000000081


12/05/01 15:44 FAX 202 646 5199 - @o12/023

WSJ.com } Page 1 of 2

| November 29, 2001
Major Business News |

Enron CEO's Political Connections
Run Silent During Conipany’s Crisis

By Bo® DAVIS
Staff Reporter of THE WaLi. STREET JOUR 1AL

For years, Enron Corp. Chairman enneth Lay has been George W. Bush's best friend in the board
rooms of America's top corporations.

Since 1993, Mr. Lay and Enron have donated nearly $2 million to Mr. Bush's political career, making
them Mr. Bush's biggest backers. When Mr. Bush wes Texas governor, Mr. Lay, a Houston resident,
helped him win passage of a state ¢ducation-reform plan that brought Mr. Bush national acclaim. During
that fight, Mr. Lay got to know aid=s who became power players in the Bush White House.

i
Mr, Lay was confident enough of tis friendship with Mr. Bush that be even needled him for needing
arthroscopic surgery to repair a jogzing injury. "I want you to know that at least one jogger [me] got past
50 without that surgery," Mr, Lay scribbled in a note to then governor in 1997.

Still, as Enron faces its greatest cri;is, Mr, Lay's influence and personal relationships with the
administration have amounted to lijtle. There appears to be no effort by the White House or Congress to
bai] Enron out of its difficulties, which are widely seen as self-inflicted. The White House had no
comment on Mr. Lay’s predicament, a spokeswoman said. Indeed, short of an actual beilout to help
Enron meet its obligations -- such 1s an aid package approved by Congress or organized by government
officials from private sources, simi'ar to the rescue of the Long Term Capital Management hedge fund —
there is little Washington can do at this stage to help the company. Nor is there likely to be a bailout,
since Enron has burned many bridyres on Capitol Hill with its history of strong-arm lobbying tactics,
some congressional aides say.

; See more coverage That muy reassure a cynical public, says Robert Mosbacher, Commerce
[MAA of tne rise and fall of |Secretary in the first Bush administration and a longtime friend of the current
Enron ; presidesit as well as Mr. Lay, "I don't see anybody being let off the hook," he

said.

Mr. Mosbacher says he introduced Mr. Lay to the Bush family around 1987, when he persuaded Mr.
Lay to help raise money for Georg: H.W. Bush's successful presidential bid in 1988. Mr, Lay
contributed $461,000 to the young -t Mr. Bush's two successful gubernatorial campaigns. He also made
Enron's fleet of corporate jets available to Mr. Bush and won his help in lobbying officials in other states
considering Enron projects.

His influence with then-Gov. Bust) was based on more than money. Mr. Lay was one of the state's
leading business executives and de|=ply involved in Texas politics. Under Mr. Bush's predecessor,
Democrat Ann Richards, Mr, Lay |\eaded the Governor's Business Council, a state advisory board. Mr.
Bush asked him to stay on the job |o help develop an educational reform plan and sell it to the Texas
Legislature. |

|

http://interactive.wsj.com/archive/ ‘etrieve.cgi?id=SB 1006987787276 109720.djmé&template,.. 11/30/01

01000000000841


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00900000000341


FW: Agenda Items Thought Dead Revived by Enron's Fall Page 2 of 3

Rep, Baker, who held hearings on the reliability of equity analysts this
year, has pledged to find out "whether the research analysts dropped the ball on
this, and why were so few people aware of what was coming or willing to speak up
about it."

Finally, the disclosure that the accounting firm Arthur Andersen had signed
off on financial statements that misstated Enron's earnings by $383 million over
four years has resurrected questions about the reliability and independence of
accounting firms,

“The effect of Enron's collapse could have farseaching implications for our
economy,” said Rep. Sue W. Kelly, R-N.Y,, who chairs the Financial Services
oversight subcommittee, "Mistakes or misstatements of this magnitude must not be
repeated. We need to determine why required disclosures gave no indication of
these problems until only recently.”

‘The issues of analyst independence and the reliability of accountants will be
addressed in a hearing scheduled for Wednesday before a joint session of Rep.
Baker's and Rep, Kelly's subcommittees. The House Energy and Commerce Committee
is also expected to hold a hearing next month.

The netting debate, though, appears most likely to produce a new law if it
can be separated from a highly controversial bankruptcy reform bill. Senate and
House Judiciary committee leaders have balked at allowing a separate vate on it.
‘They have viewed the nancontroversial netting measure as a key part of the

engine they hoped would propel the bankruptcy overhaul! package to enactment.

But last month Rep. Pat Toomey, R-Pa., introduced a standalone bill identical
to the netting measure in the bankruptcy bill. He has powerful supporters in the
regulatory community who have urged Congress to consider netting separately from
bankruptcy reform.

“We believe that failure to enact these financial contract netting provisions
would unnecessarily place the financial system at greater risk," seven top
federal financial regulators, including Federal Reserve Board Chairman Alan
Greenspan, Treasury Secretary Paul O'Neill, and Securities and Exchange
Commission Chairman Harvey Pitt, wrote in an Oct. 31 letter to House and Senate
leaders,

Proponents worry that the urgency for the quick passage of a netting bill has
been slightly mitigated by the fact that Enron did not bring down the
international derivatives market with it. Most contracts were successfully
unwound before the company collapsed.

“We have a little work to do to help" lawmakers “understand the risk Enron
posed and bow much safer our whole financial system would be if we could pass
these netting provisions," Rep. Toomey said.

During highly publicized hearings on the issue of analyst independence last

summer, Rep. Baker said that he was reluctant to impose a legislative solution
on what he saw as a crisis of credibility in the world of equity analysts— but

01/16/2002

00600000000053


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00600000000017


The lack of integration of the financial dealer exception with the physical commodity
exception is probably due to the financial dealer exception being enacted 11 years after
the physical commodity exception, From 2 tax policy perspective, there does not appear
to be any reason to prohibit a CFC from acting as a dealer in both financial and physical
risk management products. This proposed change is essentially just a technical
clarification.

The second significant Subpart F problem relates to the potential application of muluple
Subpart F provisions to a commodity transaction. As stated in the Senate Finance
Committee Report to the Tax Reform Act of 1986, the intent of the Subpart F rules for
commodity transactions is that net income from passive commodity investing should be
Subpan F income, but net income derived by an active commodity business should not be
Subpan F income, See page 364 of Senate Report 99-313. This is a well stated and
desirable goal which is adequately reflected in the Section 954(c) FPHCI rules and
Regulation 1.954-2/f).

If a commodity activity meets the stringent requirements of the Regulation 1.954-2(f)
active business test, the tax policy goals of the US should be satisfied and there should be
no reason to apply other Subpart F provisions. Under the current rules, other Subpart F
provisions might apply to an active commodity transaction depending on the type of the
commodity, whether a related party is the supplier or customer, where the commodity is
purchased and/or delivered. etc. These factors should not be relevant to determining
whether a commodity activity generates Subpart F income. The substantive economic
activity of an active commodity business occurs where the traders, originators and back-
office suppor personnel are located, Hundreds of employees are required 10 conduct an
active commodity business in each location. These dealers and originators are highly
trained and skilled professionals who work out of offices with substantial facilities. For
commercial reasons, the operations have to be located in major financial centers such as
London, Tokyo, etc. The location of the physical provisioning of the commodity is
typically not a major value-added activity.

" Furthermore, transactions with related parties should not raise a Subpart F concer.
Under the transfer pncing rules of the US and other countries, arm’s-length pricing must
be used for related party transactions. For an active commodity business, there are
typically comparable uncontrolled prices available (i.e., the publicly quoted screen price).
It is also clear that active commodity businesses create tax nexus in each country where
such businesses are located and such countries require an appropriate profit to be
attnibuted to the operation in each country. It would be difficult to artificially shift profits
out of the host countries to low tax jurisdictions. It would be even more difficult to
physically locate these substantial risk management dealing operations in a tax haven
junsdiction. In other words, Subpart F has often acted as a “back-stop” to the arm's-
length requirement of Section 482. We believe that due to the wealth of reliable,
comparable transaction pricing for these types of businesses, Subpart F is not needed for
such a back-stop.

The need for reform of the Subpart F commodity rules is driven by strong international
competitiveness concerns. Currently, US companies are among the most strongly
Positioned energy and commodity dealers intemmationally, This market position has been

“00900000000345



FOXNews.com Page 3 of 11

SNOW: So, at this point, one of the questions a lot of people want to
know is, why didn’t you tell the president, why didn't anybody tell the
president at this point?

O'NEILL: Well, again, you know, if you put this in the context of what's
going on, the president's prosecuting the war against the terrorists —
you know, | have been involved in big-league events for, | don't know,
most of the last 40 years. | didn’t think this wes worthy of me running
across the street and telling the president. | don't go across the street
and tell the presicent every time somebody calls me.

SNOW: This is the seventh-largest corporation in America. When you
got those phone calls, did it occur to you that Enron might very scon be
bankrupt?

O'NEILL: I had no idea, You know, | had — | frankly think what Ken told
me over the phone was not new news. You all had been reporting for
weeks that Enron had problems, that they were in trouble and the rest of
that, And, you know, it’s part of the reason | didn’t think there was any
reason for me to talk to anybody else, because | thought what Ken said
to me was public property. It was not new news,

SNOW: So were you surprised by the collapse of Enron's stock value?

O'NEILL: Well, not really. | guess, you know, Fve watched lots of
corporations come and go. It's an interesting fact that there are very few
companies that have been around for 40 or 50 years or 100 years.

‘So, you know, in the broader scheme of things, not really. Companies
come and go. It's — part of the genius of capitalism is, people get to
make good decisions or bad decisions, and they get to pay the
consequence or to enjoy the fruits of their decisions. That's the way the
system works.

SNOW: Now, a few years ago, a company called Long-Term Capital got
‘a bailout from the federal government as it was facing bankruptcy. At
least one —

O'NEILL: | dont think that's...

‘SNOW: I'm sorry. Go ahead.

O'NEILL: | don't think that's a correct characterization. My recollection is
that Long-Term Capital had a problem, and the New York Fed, I think it's
true, played a role in convening the banks that were at risk, but | don't
think the federal government provided anything at all, Tony.

SNOW: OK. In that case...

O'NEILL: There was no bailout. There was no bailout.

SNOW: OK. Well — and there was no requested bailout here. There
was a request for perhaps some aid in intervening with Moody's, which
was doing corporate ratings.

O'NEILL: Not to me.

file:!/C\WINDOWS\Temporary Intemet Files\OLKS14FO QOH O01 7 01/16/2002

01000000000088


FOXNews.com Page 6 of t1

O'NEILL: No, | think they're on the right track. | think — you know, | think
the information we have $o far in the dats on economic performance is a
mix but | think it's mixed toward the positive side, and I'm optimistic we're
going fo return to a good rates of real growth.

SNOW: With of without a stimulus package?

O'NEILL: Well, the stimulus package, | still believe, would hasten the
movement out of & slow economic period, It would help people who were
Girectly affected by the events of September 11.

The president said aver and over again, every person who has 2
Prospect of losing their jab or who has lost their job, we should care
about them and therefore, yes, we should do the stimulus package.

I'm hoping the Congress will come back informed by their constituents
that they, the constituents, want a stimulus package and thal welll finally
get a vote in the Senate, We already passed two bills in the House,
Hopefully the Senate's going to be responsive, and we're going to do
something in the next few weeks,

SNOW: All right. Secretary O'Neill, thanks for joining us.
O'NEILL: My pleasure.

SNOW: Up next, Congress takes a look at the Enron mess. (BEGIN
VIDEO CLIP}

BUSH: This administration will fully investigate issues such as the Enron
bankruptcy to make sure that workers are protected.

(BEGIN VIDEO CLIP)
{COMMERCIAL BREAK)

SNOW: Continuing our discussion of the Enron collapse, we welcome
two key players from the House of Representatives: Democrat John
Dingell, ranking member of the House Energy and Commerce
Committee; and Republican Tom Davis, chairman of his party's National
Congressional Committee,

Also here with questions, Brit Hume, Washington managing editor of Fox
News.

Representative Dingell, based on what you've seen so far, is there any
case for political hanky panky so far in Enron?

U.S. REPRESENTATIVE JOHN DINGELL, D-MICH.: | think it’s too early
to say. | think what we have to do is have a thorough investigation, get
all the facts, and then make the necessary judgment.

Certainly Enron's behavior, Andersen's behavior, have raised questions.
And certainly the fact that the administration would not reveal the matters
that went on wilh regard to the vice president's panel on energy and
Enron's part in it raises some questions.

BRIT HUME, FOX NEWS: Wall, let me just ask a follow up on that if |

file/C-\WINDOWS\Temporary Intemet Files\OLK5141\FOXNes Oo 5 O 2 (@) 01/16/2002

01000000000091


PrOANews.com Page 10 of 11

And the question then is, were they acting illegally, improperly, and do
‘we need to put in naw rules and reguations to stop this in the future?

SNOW: Representative Dingell, getting back to the investigations,
Attorney General John Ashcroft, who received money just last year from
Enron in a failed Senate bid in Missourl, said he's going to recuse
himself from the case.

Do you think anybody who's received money fram Enron over the years
should recuse themselves from the investigations? And that would
include you.

DINGELL: | think there's a judgment that should be made,

Well, Tony, I'm just going to tell you, I've opposed Enron at every tum.
And | intend to — with regard to deregulation and questions that they
regard important and contacted me on, and | intend to continue that

Practice.

No, I'l give Enron an honest investigation. We'll look and see what kind
of rascality went on.

Remember, there's plenty here to look into. There's the fact that Enron,
apparently, made false representations in connection with their annual
reports, their 10-Ks and their 10-Qs. They, either alone or together with
their accountant, misrepresented facts. Their accountant also destroyed
large volumes of papers.

' don't think you can find anybody in the country who doesn't want to get
to the boltom of this. That includes me and every other member of
Congress.

SNOW: Representative Davis, do you think either political party is going
to be abte to gain political advantage out of this Enron scandal?

DAVIS: Weil, right now there is absolutely no evidence that anyone in
elected office or in the administration acted improperly. So at this point, I
don't see any advantage. | see people — they're jockeying for it, when

you lock at the polls and how these have been used in the past, But |
Car assure you, we'll have a fair hearing on the House side.

SNOW: All right, Representative Dingell, very quickly, either side getting
an advantage? We'll get 10 seconds.

DINGELL: Well, Tony, | want to see a fair, thorough and complete
investigation.

SNOW: Alll right.

DINGELL: I dan’ think we ought to make a partisan issue out of this. 1
think we ought to get to the facts.

SNOW: All right. Representative Dingell, Representative Davis, thank
you both,

Copyright © 2002 by eMediaMillWorks, inc. No portion of this

file://C:\WINDOWS\Temporary Internet Files\OLK5141\FOXNe' @) 50 2 4 01/16/2002

a 01000000000095


http://www. americanbanker.con/cgi-bin/read_tagstory?20020122IPRDS94

MARKETS

KeyCorp Gets Upgrade on Better Midwest Outlook
Encouraging manufacturing numbers have at least one equity
analyst taking 4 more positive view on midwestern banking
companies in general and KeyCorp in particular.

http://www. americanbanker.com/cgi-bin/read tagstory?20020122MMONG612

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00600000000063


____1240$/01 15:45 FAK 202 646 5199 @o1s/o23
WSI.com Page | of

=) = Baer

wew.sevte.com
Nayember 30, 2001

Dow.Jones Newswires
White House: No Objection To Congress Probe Of Enron

Dow Janes Newswirer

WASHINGTON — The Bush administration Friday said it had no objection to calls in Congress to
Isunch hearings into the collapse of Enron and said such a move is well within Congress's jurisdiction in

providing oversight

"The president understands that at all times Congress should exercise its proper oversight role and that
includes anything, in a case like this...an investigation into the collapse of a company," White House
spokesman Ari Fleischer said. '

Fleischer said that other parts of tie federal yovernment have already launched their own investigations
and the Treasury Department is m»nitoring these.

-By Alex Keto, Dow Jones Newswires; 202-862-9256; Alex.Keto@dowjones.com

URL for this Article:
httpu/interactive.wsj com/archivelretreeve.cgl?id»DI-CO-2007 1130-004545.djm .

Copyright © “001 Dow Jones & Company, Inc, All Rights Reserved,
Printing, distribution, and use of this ¢yaterial is governed by yoar Subscription Agreement and copyright Laws.

For information about subscribing, go to http://wsj-com

hitp.//interactive.wsj.com/archive. retrieve egi?id=D1-CO-2001 1130-004645 djmldctermplates... 11/30/01

01000000000843


Proj Change:

Subsection (gXI) of Section 954 would be amended by adding the clause “(C) the
Pipeline transportation of oil or gas within such foreign country.” After amendment,
subsection (g)(1) would read as follows:

Foreign Base Company Oil Related Income-For purposes of this section -
(1) In General - Except as otherwise provided in this subsection, the term
“foreign base company oil related income” means foreign oil related
income (within the meaning of paragraphs (2) and (3) of section 907(c))
other than income derived from a source within a foreign country in
connection with — (A) oil or gas which was extracted from an oil or gas
well located in such foreign country, (B) oil, gas, or a primary product of
oil or gas which is sold by the foreign corporation or a related person for
use or Consumption within such country or is loaded in such country on a
vessel or aircraft as fuel for such vessel or aircraft, or (C) the pipeline
transportation of oil or gas within such foreign country.

Analysis, Tax Policy and Revenue Impact:

1. A gas transportation system of the scope existing in the U.S. and Canada will be
Geveloped in South America, Pipeline systems are also being developed in Africa,
Eastern Europe, Central Asia, India and elsewhere. Most of these countnes are adopting
open access transportation. Under the present rules dealing with FBCORI, only a limited
amount of income from such pipeline systems would qualify for deferral from U.S
income taxation. The FBCORI rules place U.S. developers of such pipelines at a
competitive disadvantage, which makes it more likely that foreign compeutors will play
the major role in the development and ownership of such pipeline systems.

2. When section 954(g) was enacted, Congress was concerned that under the then
existing foreign base company income rules, U.S.-based multinational oil companies
were avoiding U.S. income taxes on their foreign activities (see Attachment B). Because
oi] can be easily transported around the world by tanker. it was possible to produce in one
country, sell at posted price, transport by ship to a refinery located where there is no
income tax, take an additional marketing profit offshore and further transport the refined
products to market, all without paying significant foreign or U.S. taxes. This is the type
of easily moveable (and often passive) income which Subpart F was originally intended
to target.

3. However, this opportunity for tax avoidance is less likely when pipeline
transporiation is involved. Unlike the refinery, which could be located anywhere and
avail itself of inexpensive transportation by sea, pipelines can not choose their locations
to avoid income taxes. (The path of a pipeline is influenced by geographic, political and
market factors rather than by tax planning.) Further, title (and the source of income) to
oil and refined products transported by sea can be transferred where convenient to avoid

00900000000355


WSJ.com -- From the Archives Page | of 3

McGivern, Tom
From: Vagle, Steven
Sent: Tuesday, December 19, 2000 6:34 PM

To: McGivern, Tom; Vagle, Steven; Levy, Ronald; Dorsey, Karen; Anderson, Judy; Kenrick, Brian; Foss,
Robert; Ramsey, Jeanne; Ladds, Julie

Subject: fyi: WSJ story: “Wall St Uncomfortable With Non-Street Treasury Secretary*

MONEY & INVESTING
TECH CENTER ; ~ : © sym
December 19, 2000 Exchan
— ons [us
PERSONAL JOURNAL Wall St Uncomfortable With Non-Street Search:
.
& FAvonTes Treasury Secretary
By STEVEN VAMES Ady:
WSJ.com Audio:
Business Update Of DOW JONES NEWSWIRES
Markets Recap "
WSJ on Audible NEW YORK -- Wall Street is casting a leery eye at some of the Can
Lean More decidedly non-Wall Street cast of characters who are being considered
for President-elect George W. Bush's Treasury Secretary.
Journal Atlas:
Table of Contents At issue is whether several of the potential appointees being talked
Headlines about would be a good fit for the job, given that their backgrounds are
Business Index not directly related to financial markets
Search
News Search One major factor will be the fate of the "strong dollar policy,” a major E
Past Editions hallmark of the recent rein of former Secretary Robert Rubin and
Briefing Books current Secretary Lawrence Summers. —
In recent years, Wall Street has applauded that policy, noting that it
Resources: maintained overseas confidence in U.S. markets, staved off inflation,
Help and helped keep interest rates in check,
E a But some on Wall Street wonder whether a Secretary with more of a
E-mail Genter corporate or industrial background would be as committed to the strong
Your Account dollar, given that the currency's strength in recent years has been a drag
Contact Us on profits for U.S. corporations that operate overseas.
WSJ.com Gifts
01/23/2002

01000000001207


Enron's President Said to Have Asked Treasury Official for Help Page 4 of 6

Officials at the Treasury and Commerce Departments said Mr. Lay had spoken
to Mr. O'Neill about Enron's condition on Oct. 28 and Nov. 8 and had spoken to
Mr, Evans on Oct. 29. Although Mr. Lay had maintained until late October an
optimistic public face about Enron's future, on Oct. 16 the company reported a
third-quarter net loss of $618 million. On the same day, Moody's Investors
Service announced that Enron's long-term debt obligations were on review,

The dates of the calls and the announcements of the bad financial news about the
company are significant. If Mr. Lay had made the calls carlier in October, before
the state of the company was widely known, the Bush administration would
have been aware of the tru¢ condition of Enron while Mr. Lay was promoting a
different story on Wall Street.

in an interview on CNBC Thursday night, Mr. O'Neill said Mr. Lay had not
asked for a government bailout or other intervention to save the company.

"He called me to advise me that Enron's problems were mounting and to offer
access for our technical people to talk with his technical people about the
contracts that they had that were causing them problems," Mr. O'Neill said. "I
subsequently asked the undersecretary of the Treasury to speak with the Enron
people, which he did, so that we could satisfy ourselves that the Enron affairs
were not going to have a negative impact on U.S. capital markets.”

Asked whether Mr, Lay asked for government assistance, Mr. O'Neill said
“Absolutely not,”

On the same CNBC program, Mr. Evans said Mr. Lay had told him that Moody's
Investors Service was likely downgrade its rating of the company's debt.

Mr. Lay then said that if there was anything Mr, Evans could do to help the
company deal with Moody's (news/quote) "we would welcome that." But, Mr.
Evans added, Mr, Lay did not ask him specifically to intervene with Moody's.

"| listened to him and listened to their condition and listened to the issues he
wanted to raise,” Mr, Evans said. "Subsequent to that | talked to Secretary
O'Neill and told him I had the call. It was a pretty easy decision to make. I don't
think there was anything for us to do. Secretary O'Neill agreed with me there
was not so we didn't do anything."

A Commerce Department official said on Thursday that in Mr. Lay's call with
Mr. Evans, "there was no information discussed that wasn't already in the public
domain."

Mr. Fleischer said that Mr. Bush was first told Thursday moming in the Oval
Office by Mr. O'Neill and Mr. Evans that Mr. Lay had made the calls to them
and that they had not been willing to intervene to help. The president then told
Mr, O'Neill and Mr. Evans, according to Mr. Fleischer's account, "You did the
right thing.”

http:/www_.nytimes.com/2002/01/11/business/1 1CND-ENRON, html?pagewanted=print 111/02

01000000000048


12/08/01 15:45 FAX 202 646 5199 00 @oisro2s

WSJ.com Page 2 of 2

Enron officials have said they are :ooperating fully with the SEC, which has only been investigating
Enron for about five weeks and hsin't had enough time to assess possible ability of Enron executives.
SEC civil allegations could lead te fines and sanctions.

SEC Chairman Harvey Pitt, who tas taken some heat for some policies viewed being too soft on
business, has made the Enron investigation a top priority to show he will be a tough enforcer, In remarks
Thursday to the Consumer Federa'ion of America, Mr. Pitt said promised a thorough and swift probe of
Enrop. The SEC has a team of a hilf-dozen enforcement attomeys and accountants working the case-

Gregoty Bruch, a former SEC enfircement attorney who has litigated complicated accounting fraud
investigations, said Enron's involvement with partnerships and extensive energy derivatives trading
likely would take a year for the SEC unravel. He said the SEC would have to "cut comers" to bring a
case more quickly, meaning the reulator would name fewer defendants than it might in a broader, more
time-consuming case.

On Capitol Hill, the House Energy and Commerce Committee said it would investigate Enron's
accounting practices and Senate Commerce Commitee announced it would assess the impact on U.S
natural gas and electricity markets

Write to Michsel Schroeder at mike.schrocder@wsj.com*

URL for this Article:
httpviinteractive ws), com/archivelratr:2ve.cai?id=SB 1007087266825656640.djm

Hyperiinks in this Article:
(1) mailto:mike.schroeder@wsj.com

Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved,
Printing, distribution, and use of this raterial is governed by your Subscription Agreement und copyright laws.

For information about subscribing, go to http:/!wsj.com

htp://interactive.wsj.com/archive ‘retrieve eyi?id-SB 1007087266825656840.djmé&template-.. 11/30/01

01000000000845


http://www. americanbanker.com/cgi-bin/read_tagstory?20011129CARD428

COMMUNITY /REGIONAL

Executive Changes
Changes at the executive level in the banking industry.

http: //ww.americanbanker.com/cgi-bin/read tagstory?20011129CORGé 30

INVESTMENT PRODUCTS

Zurich Chief: Rethink the ‘Nature of Risk’
The insurance industry will take a large financial hit from
the events of Sept. 11 but will emerge stronger if it can
learn how to operate in a new environment and "think the
unthinkable," according to Rolf Héuuml;ppi, chairman and CEO
of Zurich Financial Services. The coming hard market for
insurance "is an industry opportunity to deal with some of the
issues in a manner that is slightly more sane than we have
done in the past,” Mr. Héuuml;ppi said, alluding to the price-
Slashing and looser underwriting criteria prompted by
competition in recent yea:

http://www, amexicanbanker.com/cgi-bin/read tagstory?20011129I1PRD436

MARKETS

Enron Exposure Hits Citi, JPM
The stocks of Citigroup Inc. and J.P. Morgan Chase &; Co.,
the banking companies with the largest lending exposures to
faltering Enron Corp., fell sharply on Wednesday. Standard 6;
Poor's cut the Texas energy company's rating Wednesday to
below investment grade, warning of liquidity problems if its
deal with Dynergy Inc. failed.

http: //www,americanbanker.com/cgi~bin/read_tagstory?20011129MMON44B

MORTGAGES

Fannie's Portfolio Gap Greeted with a Big Yawn
Concerns voiced recently by a Goldman Sachs analyst about
Fannie Mae's hedging metheds are cverstated, several observers
say. In 4 Nov. 16 research note, Howard Shapiro, who covers
Pannie and Freddie Mac for Goldman, Sachs &; Co., raised a
warning flag on the October duration gap of Fannie's mortgage
portfolio.

http: //wew.americanbanker.com/cgi-bin/read_tagstory?20011129MORG438

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00600000000087


(A) IN GENERAL. - In the case of any sale or exchange by a controlled foreign
corporation of an interest in a partnership with respect to which the corporation is
a 10-percent owner, such corporation shall be treated for purposes of this
subsection as selling or exchanging the proportionate share of the assets of the
partnership attributable to such interest.

(B) 10-PERCENT OWNER. - For purposes of this paragraph. the term ‘10-
percent owner’ means a contro‘!c 4 foreign corporation which owns |0 percent or
more of the capital or profits interest in the partnership. The constructive
ownership rules of section 958(b) shall apply for purposes of the picceding
sentence.

(Substantially similar language was included as Section 108 of the International Tax
Simplification for American Competitiveness Act of 1998 (S. 2231, H.R, 4173))

Analysis, Tax Policy and Revenue Impact:

1. The current Subpart F rules provide foreign multinationals with competitive
advantage over U.S. multinationals with respect to foreign infrastructure activities
Foreign multinationals are generally able to structure project sales in a tax efficient and
administratively simple manner. On the other hand, U.S. multinationals are frequently
faced with double taxation of such income, Because these foreign infrastructure projects
are very competitive, a decreased rate of retum for a U.S. based mulunational due to
Subpart F provisions could mean lost projects

2. The proposed change would conform the Subpart F partnership gain rule with
other partnership disposition rules and with U.S. tax policy. Specifically,

a. The current Subpart F rule for gi:ns from partnership sales is directly contrary
to the Service's position in Revenu~ Ruling 91-32 relative to the disposition of a
foreign partner's interest in a partnership that is engaged in a U.S. trade or
business. In this ruling, the IRS stated,

“it is appropriate to treat a foreign partner's disposition of its interest in a
partnership that is engaged in a trade or business through a fixed place of
business in the United States as a disposition of an aggregate interest in
the partnership's underlying property for purposes of determining the
source and ECI character of the gain or loss realized by the foreign

partner”.

The outbound partnership transfer rule of Section 367(a)(4) and the inbound
FIRPTA rule of Section 897(g), both statutory provisions, also use a look-through
(aggregate) rule for characterizing the gain from the sale or exchange of a
partnership interest. There is no tax policy reason why this same look-through
treatment should not apply for Subpart F purposes.

00900000000352


___12/05/0} 45:40 FAA 202 biG S299 @ort-o023

WSheom Page 1 of 2

! December 2, 2001

Dow Jones Newswires

Chronology Of Enron Corp.'s History

HOUSTON (AP)--A look at the history of Enron Corp, (ENE):

July 1985 -Houston Natural Gas merges with InterNorth, a natural gas company based in Omaha, Neb.,
to form the modern-day Enron, an interstate and intrastate natural gas pipeline company with
approximately 37,000 miles of pijic,

1989 -Enron begins trading naturs| gas commodities. Over the years, the company becomes the largest
natural gas merchant in North America and the United Kingdom.

June 1994 -Enron North America jrades its first electron. Enron goes on to become the largest marketer
of electricity in the U.S t

August 1997 -Enron announces it: first commodity transaction using weather derivative products. Enron
goes on to market coal, pulp. paper. plastics, metals and bandwidth

April 1999 -Enron agrees to pay $100 million over 30 years for the naming rights to Houston's new
ballpark, Enron Field. The Astros also sign a 30-year facilites management contract Enron Energy
Services.

November 1999 -Enron launches |inronOnline, the first global Web-based commodity trading site.
December 2000 -Enron announce: that president and chief operating officer Jeffrey Skilling will take
over a8 chief executive in Februar’. Kenneth Lay will remain as chairman. Shares hit 52-week high of
$84.87 on Dec. 28.

August 2001 -Skilling resigns after running the company for just six months; Lay becomes CEO again.

October 16, 2001 -Enron reports ¢. $638 million third-quarter loss and discloses a $1.2 billion reduction
in shareholder equity, partly related to partnerships run by chief financial officer Andrew Fastow.

Oct. 22, 2001 -Enron acknowledg~s Securities and Exchange Commission inquiry into a possible
conflict of interest related to the c »mpany’s dealings with those partnerships.

Oct, 24, 200) -Enron ousts Fastov'.
Oct, 31, 200] -Enron announces te SEC inquiry has been upgraded to a formal investigation. Enron

creates special committee headed xy University of Texas law school dean William Powers to respand to
the investigation.

hitp/interactive.wsj.com/archive, retrieve .cgi?id=BT-CO-2001 1 202-000301 .djml&template=... 12/3/01

an Se

te

00700000000029


Smith, Amy

From: Smith, Amy

Sent: Friday, December 14, 2001 10:08 AM

To: aoe. richard mall house. gov’

Subject: E Enron and Bankruptcy Bill —- ABI Website
FYI

ENRON UPDATE

Greenspan, Oxley Meet; Netting Bill Gains Support Following Enron Debacle

Federal Reserve Chairman Alan Greenspan met yesterday with key House lawmakers to
discuss this year's prospects for passing legislation that clarifies corporate bankruptcy laws
by allowing companies to quickly settle outstanding derivatives contracts in the event of an
insolvency, Dow Jones reported. The once-obscure financial issue has gained new
prominence and urgency on Capitol Hill as federal investigators sift through the mess left
behind by Enron’s chapter 11 bankruptcy filing. The measure allows institutions to quickly
close outstanding derivatives contracts with bankrupt trading partners by netting all the
losses and gains of individual contracts into one deal.

House Financial Services Chairman Michael Oxley (R-Ohio) invited Greenspan to meet with
House Judiciary Chairman James Sensenbrenner (R-Wis.) after Oxley held a bruising hearing
on Wednesday on financial improprieties leading to Enron's demise. Complicated, off-balance
sheet transactions were the company’s undoing. Its stock collapsed after a Nov. 8
announcement that the firm had overstated its net income over four years by $569 million.
Creditors are now lining up to collect on about $40 billion in debt owed by Enron.

“Congress should not fail to enact netting legislation this year,” Greenspan and Treasury
Secretary Paul O'Neill wrote House lawmakers a few weeks after the attacks. “Further delays
would unnecessarily place the financial system at greater risk.” Lawmakers are now
questioning whether the legislation, which is also attached to a broader bankruptcy bill in
both chambers, could be applied to Enron’s bankruptcy case if the bill passes this year.
Federal securities officials said it was unclear whether they could apply new contract netting
laws retroactively. Oxley hopes to get the bill passed by next week, before Congress finishes
its work for 2001.

House Probe Seeks Andersen's Records On Enron Audits
The House Energy and Commerce Committee yesterday asked Arthur Andersen to provide
records relating to its audits of Enron Corp., Dow Jones reported. At the same time, the
committee sent a letter to former Enron Chief Executive Jeffrey Skilling, requesting an
interview with committee investigators within the next two weeks. The committee also
formally sought interviews with David Duncan, Andersen's partner in charge of the company’s
Enron account, and Andersen employees involved in the company’s audits. The requests
came after Joseph Berardino, Andersen's chief executive, told the House Financial Services
Committee on Wednesday that the auditing and consulting firm didn't receive critical
information from its client concerning the special-purpose entities that brought about Enron’s
nancial downfall.

Enron Seeks Supplier to Take Over California University System Powers Contract

Enron Corp is looking for another electricity supplier to complete its contract with California's
two public university systems, a spokeswoman for California State University said yesterday,
reported Dow Jones. Enron Energy Services Inc.'s current contract with Cali ia State a

the University of California Systems expires on March 31, 2004, said spokeswoman Clara
Potes-Fellow. The Enron subsidiary filed for chapter 11 bankruptcy protection Dec. 2.

Enron Contract Hearing Moved To Dec. 18
A bankruptcy court hearing regarding embattled Enron Corp.'s motion to negotiate, end or

1

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00900000000327


Hambor, John

From: Kupfer, Jeffrey

Sent: Monday, September 10, 2001 10:41 AM

To: Hambor, John; Horowitz, John

Subject: FW: September 13th - Market Solutions to Climate Change conference in DC

John/John -- | got this email invitation to a conference and wanted to pass it along to you ~ or anyone else in your shop
Jeff

--—-Oniginat Message-——-
From: Mark Glickman [mailto:giicaman@rprogress..org]
Sent: ‘Thursday, August 30, 2001 11:40 AM
To: uspop@us.net
‘Subject: ‘September 13th - Market Solutions to Climate Change conference in DC
Hello,

This September 13th, Redefining Progress, in association with Conservation International, will be hosting a one-day
conference on Market Solutions to Climate Change in Washington DC

Redefining Progress, a member is @ nonprofit, nonpartisan policy group promoting economically sound and
environmentally effective solutions to climate change, The conference will provide a forum to discuss market-based
policies and firm initiatives aimed at reducing carbon emissions. Note that the focus of this conference is on domestic,
rather than international, efforts both private and public.

The DC conference promises to be a high-profile event with Glenn Hubbard, Chairman of the President's Council of
Economic Advisors, delivering the keynote address. As you may know, Hubbard is a member of the President's global
warming task force. Other keynote speakers include energy efficiency expert Amory Lovins. Academics from the
Brookings Institute and AEI will speak on some of the policy options available. Corporate representatives from the
Citigroup, Enron, Calvert Group end others will also be offering their insights.

The conference will be followed by a reception on Capitol Hill with Congressional sponsors of the '4-Pollutants' Bill
invited

Please note that we have been able to secure additional funding for this event and have reduced the registration fees to
- $100 for corporate representatives. and
~ $75 for non-profit, government and other registrants

Ive attached a registration form and agenda listing committed speakers below. Conference information can also be found
at www redefiningprogress.org/climate.

We look forward to your participation,
>
a) ®)
(Cevate Conterense 0S Conterance
Regutrste Agence doc
Regards,
Jerome Sayre
Business Outreach Manager
Redefining Progress
sayre@rprogress.org
1904 Franklin Street, 6th Floor

Oakland, CA 94612

00300000000094


22/05/01 15:46 FAM Zou 646 Sivu

= WSiicom Page 2 of 2

Nov. 6, 2001 -Enron’s stock price drops below $10 a share after reports the financially troubled energy
trader was seeking additional financing to shore up confidence.

Nov. 8, 2001 -Enron files documents with SEC revising its financial statements for past five years to
account for $586 million in losses.

Nov. 9, 2001 -Dynegy Inc.(DYN) ar sounces an agreement to buy its much larger rival Enron for more
than $8 billion in stock.

Nov. 14, 2001 -Fnron announces it ix trying to raise an additional $500 million to $1 billion in new
private equity to shore up customer sind market confidence.

Nov. 19, 200] -Enron restates its thi/d-quarter carnings and discloses it 1s trying to restructure a $6590
million obligation that could come de Nov. 27.

Nov. 20, 2001 -Concerns about Enrcn's ability to weather its spiraling financial problems send the
company's stock down nearly 23% t) its lowest level in nearly 10 years Officials from both Enron and
Dynegy say the merger was not in tryuble.

Nov. 21, 2001 -Enron reaches critic:!! agreement to extend $690 million debt payment.

Nov. 26, 2001 -Enron shares fall anither 15% as investors continued to doubt that the deal will
completed. Shares finish day at $4.04.

Nov, 28, 2001 -Dynegy backs out oF deal after Enron's credit rating is downgraded to junk bond status;
analysts say a bankruptey filing is likely. Enron shares plunge below $1 amid the heaviest single-day
trading volume ever for a NYSE or Nasdaq-listed stock.

Dec. 2, 2001 -Enron files for Chapter 11 bankruptcy protection; sues Dynegy for wrongful termination
of merger.

quLsuzs

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00700000000030

”


washingtonpost.com; Enron Asked for Help From Cabinet Officials Page | of 3

Enron Asked for Help From Cabinet Officials
CEO Sought Intervention Before Bankruptcy

By Dana Milbank and Peter Behr
Washington Post Staff Writers
Friday, Janwary 11, 2002; Page AOI

Bush administration officials yesterday disclosed that the top official of Enron Corp., one of President
Bush's biggest campaign donors, sought help from the administration to avoid a bankruptcy filing in the
weeks before the giant energy concern collapsed last year, wiping out the pensions of thousands of
workers.

Enron Chief Executive Kenneth L. Lay had conversations about his company's dire financial situation
with Treasury Secretary Paul H. O'Neill and Commerce Secretary Donald L. Evans. Lay told Evans,
Bush's former campaign manager, that he would welcome help stopping a private credit rating agency
from downgrading Enron debt -- an event that could force Enron into bankruptcy.

Administration officials said yesterday that Evans did not intervene. Enron filed for bankruptcy
protection on Dec. 2, the largest such case in U.S. history.

Also yesterday, Enron's auditor, Arthur Andersen LLP, informed the government that employees at the
accounting firm had destroyed a "significant" number of Enron-related documents -- thousands of
records, according to congressional investigators. The Securities and Exchange Commission took the
unusual step of saying it is widening its investigation of Enron . to include the destruction of those
records,

As the controversy grew yesterday, Attorney General John D, Ashcroft and a top aide recused
themselves from the Justice Department's just-announced criminal investigation into Enron's collapse.
Ashcroft's political committees received $57,499 from company executives in the last election cycle.
The U.S. attomey’s staff in Enron's home town of Houston also recused itself because of Enron tics.

The developments significantly expanded the controversy over Enron and its ties to the administration at
a time when the White House has sought to limit the political damage. Earlier this month, the White
House disclosed that the task force that developed the Bush administration's energy policy last year met
six times with Enron officials but said the company's finances were not discussed,

Until yesterday, White House press secretary Ari Fleischer said there was "nobody here that I'm aware
of” at the White House who had been informed earlier, The White House said O'Neill and Evans did not
notify Bush until yesterday of contacts with Lay about Enron's troubles.

Bush yesterday commissioned task forces to provide recommendations to reform pension laws "to make
sure that people are not exposed to losing their life savings as the result of a bankruptcy" and "to analyze
corporate disclosure rules and regulations.”

On Capitol Hill, Republicans joined Democrats in calling for probes into Enron. The Senate
Governmental Affairs Committee will hold a hearing on Jun. 24 and the Senate Commerce, Science and
Transportation Committee will begin hearings on Feb. 4, The House Energy and Commerce Committee,
whose investigators discovered Andersen employees had destroyed Enron documents, will have
hearings in "early February," a committee spokesman said.

http://www. washingtonpost.com/ac2/wp-dyn/A28350-2002Jan 1 0?language~printer 01/11/2002

00700000000105


LaKritz, Robb

From: Lakritz, Robb

Sent: Thursday, January 10, 2002 2:21 PM
To: Harvey, Reavie

Subject: FW: News Story

Thanks.

Robb Lakritz

--—Drigind Message--~--
from: Mecardel, Dan
Sent: Thursdey, January 10, 2007 1:26 PM
To: Lakritz, Robb
‘Subject: News Story

Thursday January 10 12:57 PM ET

White House: Enron Official Phoned

By KAREN GULLO, Associated Press Writer

WASHINGTON (AP) - Enron Chairman Kenneth L. Lay reached out to two of President Bush s Cabinet
officers when the energy company was collapsing, the White House disclosed Thursday as the Justice
Department opened a criminal investigation of Enron's bankruptcy.

Bush, who received significant campaign contributions from Lay and other Enron executives, said he himself
has never discussed Enron's financial problems with its embattled corporate chairman. The president said he last
saw Lay in Texas at spring fund-raiser for former first lady Barbara Bush's literacy foundation.

Lay also was among a group of some 20 business leaders who came to the White House early in the Bush
administration to discuss the state of the economy, Bush said.

Many Enron employees lost their life savings when the company filed for bankruptcy Dec. 2.

“What anybody's going to find out is that this administration will fully investigate issues such as the Enron
bankruptcy, to make sure we can learn from the past and make sure workers are protected," Bush said.

But Lay did seek the car of other top-level administration officials last fall.

According to White House press secretary Ari Fleischer Lay telephoned Treasury Secretary Paul O'Neill amid
Enron's collapse *'to advise him about his concern about the obligations of Enron and whether they would be
able to mect those obligations."

Lay also told O'Neill that Enron ‘was heading to bankruptcy," Fleischer said.

O'Neill received calls from Lay on Oct. 28 and Nov. 8, said Treasury spokeswoman Michele Davis, It was on
Oct. 16 that Enron made its stunning disclosure of a $638 million third-quarter loss.

Ina separate phone call to Commerce Secretary Don Evans, Lay similarly worried that the company might have
to default on its obligations. He brought to the secretary's attention “that he was having problems with his bond
rating and he was worried about its impact on the energy sector," Fleischer said.

00100000000014


Subpart F Look-Through Treatment for Partnership Sales

Power (and Other Infrastructure) Industry Problem:

Many U.S. based utility and energy companies have been pursuing foreign power
projects. U.S. based companies have also been pursuing other types of foreign
infrastructure projects (¢.g., pipelines, roads, dams, airports).

A US. based multinational will often structure large foreign infrastructure projects by
using a wholly owned foreign holding company (Holdco) to own its interest in the project
entity (Project). Project would typically be structured as a partnership for U.S. tax

purposes.

Because of the substantial capital investment required for these projects as well as for risk
diversification purposes, Holdco will usually not own 100% of Project. However.
Holdco may not be able to identify all third party investors for Project until some time
after project development has commenced. In these cases, Holdco may sel! part of is
interest in Project to third parties at a later date.

Under the current Subpart F rules, gain realized by Holdco on the sale of part of its
interest in Project would be Subpan F Foreign Personal Holding Company Income.
subject to the normal exceptions (¢.g., de minimis, high taxed). Because of the Section
864(c) interest expense allocation rules and the Section 904(f) overall foreign loss rules,
many U.S, based multinationals engaged in foreign infrastructure activities cannot claim
foreign tax credits. Accordingly, if Subpart F applies, there will likely be double
taxation.

In certain cases, Subpart F income can be avoided by having Project issue new
shares/units to the .hird party investors. Of course, this is an economically different
_ Fesult since Project, .ot Holdco, receives the cash

If the U.S, shareholder of Holdco is not required to pay tax on a Subpan F inclusion, the

cash would typically be reinvested by Holdco in other foreign projects or used to pay
down Holdco's debt

Proposed Solution:
The suggested solution would provide for a look-through (i.e., aggregate) rule for the sale
of a partnership interest for Subpart F purposes such that the sale of a partnership interest
would be treated as a sale of the underlying assets of the partnership provided that the
CFC partner owns more than a portfolio interest in the partnership prior to the sale.

itF +

New paragraph (4) would be added to Section 954(c) to read as follows:

(4) Look-through Rule for Dispositions of Partnership Interests. -

00900000000351


22605502 23:45 FAR ZOz2 Bae Sie Woz2-o23

WSJ.com Page 4 of 5

In addition, the company will contimie its accelerated program to divest or wind down non-core assets
and operations.

Details of the units to be affected wi]! be communicated shortly, the company said in its statement.

Enron said Chapter 11 filings were nade for 14 affiliated entities, including Enron Corp.; Enron North
America Corp., the company’s wholesale energy trading business; Enon Energy Services, the retail
energy marketing business; Enron Ti anspertation Services, the holding company for Enron's pipeline
operations; Enron Broadband Servic-s, a bandwidth trading operation; and Enron Metals & Commodity
Corp.

Enron-related entities not included ix the bankruptcy filing are not affected by the filing, Enron said
These non-filing entities include Northern Natural Gas Pipeline, Transwestern Pipeline, Floride Gas
Transmission, EOTT, Portland General Electric and numerous other Enron international entities.

Enron said that "from ap operational standpoint, our energy businesses-including our pipelines and
utilities-are conducting normal operotions and will continue to do so,”

‘The company said that although "uncertainty during the past few weeks has severely impacted the
market's confidence in Enron and jts!trading operations," Enron intends to "help preserve capital,
stabilize our businesses, restore the confidence of our trading counterparties, and enhance our ability to
pay our creditors.”

In connection with Enron's Chapter 1 1 filings, the company is in “active discussions with leading
financial institutions" for debtor-in-possession financing and expects to complete these discussions
shortly.

Upon the completion and court apprival of these arrangements, the new funding will be available
immediately on an interim basis to sypplement Enron's existing capital and help fulfil! obligations
including payroll and payments to viindors, Enron said.

Enron will ask the bankruptcy court lo consider a variety of "first day motions" to support its employees,
vendors, trading counterparties, cust mers and other constituents. These include motions seeking
permission to continue payments for employee payroll and health benefits; obtain interim financing
authority and maintain cash manage: neat programs; and retain legal, financial and other professionals.

‘The company said its legal adviser fiir the lawsuit and proposed merger with Dynegy and Enron's
Chapter 11 filing is Weil Gotshal & Manges LLP. Enron's principal financial adviser for its financial
restructuring is The Blackstone Grot p.

Enron, which hopes to have a "signi-icant ownership interest" in the proposed new entity that owns its
North American wholesale energy triding operations, said "we understand that it may take time for
counterparties to resume normal tracing levels with this entity, but we are confident that this business
can be put back on a solid footing.”

Dynegy terminated its plan to acquit Enron on Wednesday after credit-rating agencies downgraded a
major portion of Enron's debt to "jur|k" status, Enron's energy trading ground almost to a halt because
trading partners became worried abclut Enrun's finances.

Bankers involved in Enron's restructsring discussions estimate that liabilities total $40 billion, including

http://interactive.ws}.com/archive/re‘rieve.cgi?id=DI-CO-2001 1202-000436.djmldtemplatesy... 12/3/01

00700000000034



Barber, Francine

From: Salladin, Anne

Sent: Friday, Novernber 30, 2001 10:36 AM

To: Barber, Francine

Subject: FW: A Dow Jones Newswires Column: Enron's Derivatives Could Test Courts (discusses
bankruptcy netting issues)

Orginal Message--———

From: Carleton, Norman
Sent: Thursday, November 29, 2001 6:09 PM
To: Bar, Sheila; Berard, Steve; Bitsberger, Timothy, Cetina, Jil; Eichner, Matthew; Gabilondo, Jose; Gross, Jared; Hammer, Viva; Lori
‘Sanatamorere (E-mail); Nickoloff, Peter; Novey, Michael; Pietrangel, Fred; Roseboro, Brian; Schultheiss, Heidilynne; Sharer, James;
Wiley, Jean Wescman, Mark Blper, Peter; DeMarco, Edvard Drey, Kaen; Blt, Marth; lt Da Huffman, Lucy; Hughes,
; McGivern, Tom; McInamey, Roberta; Salladin, Anne; Smith, Amy; Sutton, Gary; Tishuk, Bian
Subject: ‘A Dow Jones Newswires Column: Enron's Dertvatives Could Test Courts (discusses baritruptcy netting issues)

November 29, 2001

IN THE MONEY: Enron's Derivatives Could Test Courts

By CAROL S. REMOND and PHYLLIS PLITCH
A Dow Jones Newswires Column

NEW YORK -- Prepare for the largest test in bankruptcy history of safe harbors designed to protect the liquidity
of the nations’ financial system,

Enron Corp.'s (ENE) much-anticipated bankruptcy filing, if it indeed comes, is certain to be precedent setting.
First, in terms of sheer magnitude, we're talking about $62 billion in assets. But also because it's likely to
involve hundreds, if not thousands, of counterparties intertwined with Enron in various financial and energy
derivative transactions.

Unlike other creditors whose claims will be stayed under U.S. bankruptcy laws, those counterparties will vie to
unwind their trades, may they be "power forwards" or credit derivative contracts, in order to find more worthy
hedging partners.

Built in the bankruptcy code are exemptions for securities or commodities contracts. These safe harbors were
developed over the years as a sort of security blanket for the vital hedging functions that these transactions
provide.

“These special rules are designed to avoid a domino effect," said a bankruptcy lawyer, who like many contacted

for this column, declined to be identified given the likelihood that he'll end up representing one or many parties
involved in Enron's expected Chapter 11 filing.

Counterpartics claiming redress through these exemptions should be able to net out their various derivative
contracts with Enron, attempting to use whatever collateral was pledged under those transactions to quantify
how much money they owe to or are owed by Enron, All of that is normally done on the side, without prior

bankruptcy court approval.

The problem is that Enron will likely question attempts to unwind those trades and take issue with the manner
in which its counterparties netted their exposure to the company, observers say.

Given the large number of parties involved and the magnitude of Enron's recent losses, the treatment of

1

01000000000941


Change Method of Computing High Tax Exception - § 954(b)(4)

Ww Asset Intensive) Indust H

Pursuant to the “high tax exception” to Subpart F, a U.S. corporate shareholder should
not be currently taxed on Subpart F income earned by a CFC if such income is subject to
foreign tax at a rate at least equal to 90% of the U.S. corporate rate (i.¢., currently 31.5%,
which is 90% of 35%). The House Committee Report to the Tax Reform Act of 1986
states that the high tax exception is supposed to provide taxpayers with certainty and
should be applied broadly where there is no tax avoidance. (See the attachment.)
Unfortunately, the final high tax regulations do not achieve these goals.

The final regulations require that the high-tax exception be computed in U.S. dollars
using U.S. earnings and profits adjustments. The requirement to use the U.S. dollar
translation of taxes introduces uncontrollable exchange rate uncertainties which preclude
the use of the high tax exception for pre-investment tax planning purposes. In addition,
the U.S. earnings and profits adjustments inappropriately dilute the foreign effective tax
rate for asset intensive businesses.

Subsequent to the TRA 1986 corporate rate reduction, many foreign countnes have also
adjusted their corporate tax rates to the 35% to 40% range. These countries also tend to
compute local taxable income in a manner similar to U.S. rules. Thus, one would expect
that the high tax exception could be met in the majority of these countnes. However,
because of the requirements to translate foreign taxes into U.S. dollars and make U.S.
earnings and profits adjustments, it is often impossible for asset intensive businesses to
meet the high tax exception.

Proposed Solution:

The proposed change would make three clarifications to the high tax exception
calculation. First, the exception would be computed in the functional currency of the
CFC, thereby avoiding unpredictable exchange rate problems. Second, the computation
would be based solely on foreign taxes paia or accrued during the year. Third, the tax
rate companson would be made to the U.S. taxes that would be due if the CFC were
conducting the same business in the U.S.

Subsection 954(b}4) would be amended to read as follows:
(4) Exception for Certain Income Subject to High Foreign Taxes. - For purposes
of subsection (a) and section 953, foreign base company income and insurance

income shall not include any item of income received by a controlled foreign
corporation if the taxpayer establishes to the satisfaction of the Secretary that such

00900000000347


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A2/0$/0) 35:48 FAX 202 646 5199 @ara-o23

-WSIcom Page 1 of 5
ar Spence 3° Fated due.
SOLUTIONS:
ere narih cost
December 2, 2601

Dow Jones Newswires
Enron Files For Chapter 11 Bankruptcy

HOUSTON, Dec. 2 /PRNewswire/ -- Enron Corp (NYSE: ENE) announced today that it along with
certain of its subsidiaries have filed * oluntary petitions for Chapter 11 reorganization with the U.S.
Bankruptey Court for the Southern Distriet ‘of New York. As part of the reorganization process, Enron
also filed suit against Dynegy Inc. () YSE: DYN) in the same court, alleging breach of contract in
connection with Dynegy’s wrongful :¢rmination of its proposed merger with Enron and seeking damages
of at least $10 billion, Enron's lawsu t also seeks the court's declaration that Dynegy is not entitled to
exercise its option to acquire an Enrvn subsidiery that indirectly owns Norther Natural Gas Pipeline.
Proceeds from the lawsuit would ber efit Enron's creditors.

In a related devolopment eumed at sre
e enerisy trading bu

pany's exis anergy trating = Ary
genent World be subject (0 tae 47 roval of the
sy Court.

In connection with the company's Cl.apter 11 filings, Enron is in active discussions with leading
financial institutions for debtor-in-pr'ssession (DIP} financing and expects to complete these discussions
shortly, Upon the completion and co.urt approval of these arrangements. the new funding will be
available immediately on an interim basis to supplement Enron's existing capital and help the company
fulfill obligations associated with opsrating its business, including its employee psyroll and payments to
vendars for goods and services provided on oF after today's filing.

Filings for Chapter 11 reorganization have been made for a total of 14 affiliated entities, including
Enron Corp.: Enron North America Zorp., the company’s wholesale energy trading business; Enron
Energy Services. the company's yeta.l energy marketing operations: Enron Transportation Services, the
holding company for Enron's pipeline operations; Enron Broadband Services, the company's bandwidth
trading operation; and Enron Metals & Commodity Corp.

Enron-related entities not included i the Chapter 11 filing are not affected by the filing. These non-
filing entities include Northern Natu“al Gas Pipeline, Transwestem Pipeline, Florida Gas ‘Transmission,
EOTT, Portland General Electric amit numerous other Enron international entities.

To conserve cepitel, Enron will imp/ement a comprehensive cost-saving program that will include
substantial workforce reductions. These workforce reductions primarily will atfect the company's

hep; interactive. ws}.com archive:re seve.ogi?id=DI-CO-2001 1202-000436.djmi&template=,,.. 12/3/01

01000000000848


1z-a3-a1 16:48 FAX 2

WSl.com Page 4 of 3

fo udditien, the sampany will contin:
and operations,

Details of the units ta De affected wil! de communicated shortly, the company said in

Enron said Chaprer 11 filings were a or 14 affiliated entities, including Enron Corp:
Mmerica Corp., the company's whol si

y ag business; Enron T: ansportation Servi
yor, Broadband Servie ss, a bandwigth ina

rural Gas Pipeline, Transw
i¢ and qumerous ther Zaron inter:

vandpoint, our energy businesses-including our pipelines and
jons and will cantinue to do so.”

ralthough "um ertainty during the past few weeks has severely impucied the
“help preserve capital,

The compaay
market's confidences in Enron and its wading operations,” Enron intends 1
stabilize our businesses, restore the confidence of our trading counterpartics. and enhance our ability to
pay our creditors."

In conaeetion with Enron's Chapter 1 filings, the company is in "active discusstons with leading
financial institutions" for debtoz-in-y ossession financing and expects to complete these discussions
shortly.

Upon the completion and court apprivval of these arrangements, the new funding will be available
immediately on an interim basis to s plement Enron's existing capital and help fulfill obligations
including payroll and payments to vendors, Enron said.

Enron will ask the bankruptcy court .o consider a variety of “Grst day motions” to support its employees.
vendors, vading counterparties, cust mers and other constituents. These include motions seeking
permission to continue payments for employee payroll and health benefits; obtain interim financing
authority and maintain cash manage: nent programs; and retain legal, financial and other professionals

‘The company said its legal adviser fiir the lawsuit and proposed merger with Dynegy and Enron's
Chapter 11 filing is Weil Gotshal & Manges LLP. Enron's principal financial adviser for its financial
restructuring is The Blackstone Grat.p.

Enron, which hopes to have a "signi:icant ownership interest” in the proposed new entity that owns its
North American wholesale energy trading operations, said "we understand that it may take time for
counterparties to resume normal tracing levels with this entity, but we are confident that this business
can be put back on a solid footing.”

Dynegy terminated its plan to acquir? Enron on Wednesday after credit-rating agencies downgraded a
major portion of Enron's debt to "jurk" status. Enron's energy trading ground almost te a halt because
trading partners became worried abclat Enron's finances.

Bankers involved in Enron's restruct aring discussions estimate that liabilities total $40 billion, including

hupy!interactive, w3j.com/archiverte seve.coi2id=D1-CO-20011202-000436.djmi&templaten;... 12/3/01

01000000000851


Smt, Any
Sone anys sin a PM

To:
Subject: iN News for for January 17, 2002

FYI....

Original Message
Fr ABA's Washington Information Network [mailto:WIN@abs.com]
Sent: Thursday, January 17, 2002 10:03 AM

Subject: ABA's WIN News for January 17, 2002

ABA'S WASHINGTON INFORMATION NETWORK NEWS
THURSDAY, JANUARY 17, 2002

Porter reer eee errr e ey

Reminder: There will be a State Legislative Issues Working Group (SLIWG)
conference call on Tuesday, January 22, at 3:00 p.m. (Eastern Time). To
participate, call 1-800-357-0498. There is no access cede for the call;
just ask the operatcr for the ABA call being hosted by Ken Clayton or
Mathew

Street. If you encounter any problems accessing the conference call,
contact ABA's Laura Vogel at 202-663-5345. To access the State Legislative
Issues Working Group area of ABA's Web site, click here:

http: //www.aba.com/memberstonly/legal/default.htm. These calls will be
held

every Monday {or Tuesday, if Monday is a holiday) through June to discuss
state legislative issues.

Se tteeeererseeseees

LEGISLATIVE NEWS
CONGRESSIONAL SCHEOULE

The second session cf the 107th Congress will convene on Wednesday, January
23, 2002.

FSCC SENDS LETTERS TO CONGRESS IN OPPOSITION TO REALTORS' BILLS

Yesterday, the Financial Services Coordinating Council, of which ABA is «
member, sent letters to all members of Congress expressing opposition to
H.R. 3424 and S, 1839, the realtors’ bills. The letter sent to members of
the House reads as follows:

"The Financial Services Coordinating Council (FPSCC} is an alliance of the
principal trade organizations in each of the financial service sectors
formec to address issues that cut across financial industry lines. Its
members, the American Bankers Association, the American Council of Life
Insurers, the American Insurance Association, and the Securities Industry
Association, wish to express their opposition to H.R. 3424,

"The fundamental purpose of the Gramm~Leach-Bliley Act (GLBA} was to
develop

a flexible structure fer cur financial system that could adjust to changes
in technology and other aspects of the marketplace. Congress believed, and
we agree, that such a flexible structure would increase the soundness of
our

financial system, promote economic growth, decrease costs, and provide
consumera and businesses with more choices. Congress recognized that the
legislative process is too slow to keep pace with changes in technology and

°

00600000000089


nn

From: uy

Sent: * November 29, 2001 7:37 AM

To: Eichner, Matthew; Hunt, ; Smith, Amy
Subject: FW: Daily Briefing for Thursday, November 29, 2001

~~---Original Message----~

from: AmericanBanker.com [mailto:briefing@ab-bb.com]
Sent: Thursday, November 29, 2001 5:20 AM

To: Daily Briefing

Subject: Daily Briefing for Thursday, November 29, 2001

AmericanBanker.com
http://www. americanbanker,com
DAILY BRIEFING

Thursday, November 29, 2001

Thomson Financial Conferences is proud to present its premier Money Laundering
Symposium to be held December 3-4, 2001 at the Marriott Wardman Park Hotel in
Washington, D.C. This timely event will examine policy, recently passed and
currently pending legislation as well as practical solutions for preventing
money laundering activities. For further information or te register click here:
http: //waw. tfconferences.com/conferences/ML/index.html or call 900-803-3424.

pen re rrr ener ssessssersessessessse=:

SSS Se see eee e eee ee ere seen

WASHINGTON

Faith-Based Proxy Item: Laundering Policies
WASHINGTON = Capitalizing on the post-Sept. 11 push to
toughen anti-money-laundering standards, a coalition of faith-
based institutional investors has filed shareholder proposals
with six major financial services companies that would require
them to adopt stricter rules than those in the new anti-
terroriam law. The resolutions ~- sent to Citigroup Inc., J.P.
Morgan Chase 6; Co., Bank of America Corp., Merrill Lynch é;
Co., FleetBoston Financial Corp., and Morgan Stanley Dean
Witter 6; Co. - were filed by members of the Interfaith Center
on Corporate Responsibility, a coalition of 275 investors with
a combined $110 billion of assets under management.

http://www, americanbanker.com/cgi-bin/read_tagstory?20011129WASHS31

NATIONAL/GLOBAL

Wells Fargo Returning To Cost-Control Roots
SAN FRANCISCO - Belt-tightening is back in vogue at Wells
Fargo &; Co., where the brass is conceding that the company
must begin implementing some of the cost-cutting moves alreacy
made by many of its peers. Details are few - management says
it is stiil sifting through next year's budget and cannot
release numbers - but this much is certain: $298 billion-asset
Wells is targeting everything from salaries to supplies, and
Plans to trim expenses in slow-growing business lines over the
next year.

http: //ww.americanbanker.com/cgi-bin/read_tagstory?20011129NATL455

00600000000085


Allman, Amy

From: Allman, Amy

Sent: Tuesday, January 15, 2002 4:55 PM

To: Quinn, Katie

Subject: Hearings and Committees investigating Enron

| have printed opening statements from the House Financial Services hearing. | can go in and look at the transcript but
am not allowed to make copies.

| can go to the Hill tomorrow morning to copy the Senate Commerce hearing transcript, including opening statements.
Attached is a list of past hearings and scheduled hearings:

Congressi
earings.d..

Following are the Committees and Departments either currently conducting investigations or have indicated they are
going to conduct an investigation

Senate Banking Committee: Shortcomings in accounting and investor protection
Consumer Affairs Subcommittee of Senate Commerce Committee: Inquiry into Enron retirement funds
Senate Energy and Natural Resources Committee: Impact of Enron collapse on Energy industry

Senate Governmental Affairs Committee: Possible regulatory violations; influence of Enron on Bush administration
energy policy

Investigations Subcommittee of Senate Governmental Affairs: Inquiry into Enron's board of directors and auditors to
determine who knew of the company’s impending collapse and when they leamed about it.

Senate Committee on Commerce, Energy, and Transportation

House Financial Services Committee: The role of Enron’s auditor, Arthur Andersen

House Committee on Government Reform

House Education and Workforce Committee: Laws regulating stock ownership by employees and their retirement plans
House Energy and Commerce Committee: Financial collapse of Enron; destruction of documents

Department of Justice; Criminal investigation by the FBI and US attorneys in Washington, NY, and San Francisco
Department of Labor: Enron's employee retirement plan

Securities and Exchange Commission: Auditing practices of Arthur Andersen

Amy Allman

Special Assistant - Legislative Affairs
Department of the Treasury
202-622-7593

00600000000011


It all sounds somewhat daunting: Not only has Patrick J. Coll
been thrust suddenly into the job of his longtime mentor, he
also is talking about cross-selling at a business - Fleet
Credit Card Services - that manages to generate only 2% of its
new accounts that way.

http://www. americanbanker.com/cgi-bin/read tagstory?20011217CARD815

MORTGAGES
Commercial Real Estate Market Seen Staying Soft
Tyson's Corner, an oasis of tony stores and corporate offices
in northern Virginia, is feeling the pinch of the recession.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011217MORGS13

MARKETS

Preferred Issues: Credit Derivatives Get Their Chance to Shine
Even in the early stages of Enron Corp.'s collapse, financial
services institutions faced a balancing act between two major
considerstions, financial risks and customer relationships.

http: //wew. americanbanker.com/cgi-bin/read_tagstory?20011217MMON812

INVESTMENT PRODUCTS

"529" College Flans Grow by Hundreds of Millions
As students prepare for their college board exams, here is an
analogy that isn't found in a Princeton Review manual but
probably is a college prerequisite:

http: //waw. americanbanker.com/cgi-bin/read_tagstory?20011217IPRDB11

ONLINE BANKING

Corillian, Sl Reach Agreement in Patent Dispute
Two rival companies that sell e-finance and e-banking
software have buried the hatchet in a long-running patent
infringement lawsuit: Corillian Corp. has agreed to license a
Sl Corp.-patented system it uses.

http: //waw. americanbanker.com/cgi-bin/read_tagstory?200112170L5K828

COMMUNITY /REGIONAL

Bank Payday Loan Deals Scrutinized in Colo. Case
In state regulators’ fight against the payday lending
industry, all eyes are on Denver, where # district judge is
expected to rule before the new year whether Colorado's
lawsuit against Ace Cash Express Inc. can proceed.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011217CORG821

WASHINGTON

Brokers Brace for Senate Probe
WASHINGTON - The same Senate subcommittee that took on the
banking industry during two bruising investigations of money
laundering through private and correspondent banking
v7

00600000000076


trust business to serve customers according to account size
and location.

http: //www.americanbenker.com/cgi-bin/read_tagstory?200112101PRD6S4

COMMUNITY / REGIONAL

In Brief: Belmont of Ohio Settles Two Suits
5ST. CLAIRSVILLE, OHIO = After spending two years embroiled in
lawsuits concerning fraudulent loans, Belmont Bancorp has
reached a financial settlement in one case and a “substantial
resolution" in another.

http: //www.americanbanker.com/cgi-bin/read_ tagstory?20011210CORGEs6

Equitable, Despite Layoffs, Pursues Bank Growth
Though Equitable Distributors Inc. laid off 10% of its work
force last month, its bank wholesaling unit stayed largely
intact, according to Alex MacGillivray, president of the New
York-based wholesaling organization that distributes the
company's insurance products to banks and broker-dealers.

http://www, americanbanker,.com/cgi~bin/read tagstory?20011210INSP64B

TECHNOLOGY

In Brief: Fiserv Completes 3 Acquisition Deals
BROOKFIELD, Wis. - Continuing 4 long streak of acquisition
deals, Fiserv Inc. has completed three, two in the United
States and one in Latin America, and announced 4 fourth.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011210TECH658

SUBSCRIBE TO AMERICANBANKER.COM

If you know of someone who would Ilke a two-week FREE trial to
AmericanBanker.com, please forward them to

http: //www.americanbanker.com/PSUser/user. html

and we'll start their trial immediately.

AmericanBanker.com offers subscribers immediate access to the complete

award-winning content of the daily American Banker newspaper and an

1B-month Searchable Archive of back issue articles. PLUS, you'll receive
links to primary sources, intraday news break, expanded access to data
and statistics, and filtered access to third party information resources.

Thomson Financial Conferences & Exhibitions is the premier producer of
financial service events. Our events are supported by the publications of
Thomson Financial and cover a broad range of topics including e-commerce,
retail banking, customer relationship management, small business banking,
mortgage technology, credit and debit cards, collections anc insurance.

Visit our website at www.tfconferences.com or call 900-803-3424 or
212-803-6093 for further informaticn.

If you have any questions or would like to unsubscribe, please feel free

n

00600000000080


12-05/01 15:47 FAX 202 646 5199 @ozr-023

WSI.com | Page 3 of 5

About Enron Corp.

Enron Corp. markets electricity anc| natural gas, delivers energy and other physical commodities, and
provides financial and risk manager nent services to customers around the world. Enron's Internet
address is www.enron.com.

Forward-looking Statements

This press release contains stateme:ts that are forward-looking within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Investors are
cautioned that any such forward-lot king statements are not guarantees of future performance and that
actual results could differ material, as a result of known and unknown risks and uncertainties,
including: various regulatory issues, the outcome of the Chapter 11 process, the outcome of the
discussions referred to above, gene:al economic conditions, future trends, and other risks, uncertainties
and factors disclosed in the Compa.iy's most recent reports on Forms 10-K, 10-Q and $-K filed with the
Securities and Exchange Commissi)n. SOURCE Enron Corp.

(CONTACT: Mark Palmer, -1-713 853-4738, or Karen Denne, +1-713-853-9757, both of Enron/

/Web site: http://weww-enron.com /

(ENE DYN)

NEW YORK -- Enron Corp. (ENE announced Sunday that it and some of its subsidiaries have filed
voluntary petitions for Chapter 11 r-organization with the US. Bankruptcy Court for the Southern
District of New York.

The company said that it had also f led suit against Dynegy Inc. (DYN) in the same court, alleging
breach of contract in connection wijh Dynegy's wrongful termination of its proposed merger with Enron
and seeking damages of at least $1 billion.

Enron's lawsuit also seeks the courts declaration that Dynegy is not entitled to exercise its option to
acquire an Enron subsidiary thet incirectly owns Northem Natural Ges Pipeline.

Enron said the proceeds from the lawsuit would benefit its creditors.

Enron said that it is in "active discussions” with financial institutions to recapitalize and provide credit
support for its North American ene:igy trading business under a new ownership structure.

Enron said in a statement that "it is anticipated” that the company would provide the new entity with
traders, back office capabilities and technology. The new cality would conduct cownterparty transactions
through EnronOnline, the company s existing energy trading platform. Any such arrangement would be
subject to the approval of the Bankruptcy Court, Enron said in the statement.

To conserve capital, Enron will implement a comprehensive cost-saving program that will include
substantial workforce reductions.

These cuts will primarily affect the company’s operations in Houston, where Enron currently employs
approximately 7,500 people.

|
http://interactive.wsj.com/archive/rtrieve.cgi?id=DI-CO-2001 1202-000436.djml&template=z.... 12/3/01

00700000000033

ty


Enron's President Said to Have Asked Treasury Official for Help Page 5 of 6

Mr. Fleischer said the president expressed no surprise, regret or annoyance that
he had not been informed of the calls from Mr. Lay until more than two months
after they occurred,

"Bankruptcies happen in our economy," Mr. Fleischer said, "And it's not
uncommon for people who arc in the community, business community or in the
labor community, to talk to a cabinet secretary to tell them about the financial
status of their business and it ends there."

Democrats on Capitol Hill moved immediately to question the White House
statements. "It is now clear the White House had knowledge that Enron was
likely to collapse but did nothing to try to protect innocent employees and
shareholders who ultimately lost their life savings,” said Representative Henry
A. Waxman, the Califomia Democrat who is his party’s senior member on the
House Government Reform Committee.

Mr. Fleischer said that he hoped that any Congressional inquiry would be even-
handed and that if it became “a one-party witch hunt, ! think the Congress is
going again to remind the country on why people soured and tired of those types
of partisan investigations,”

Mr. Lay and Enron executives have given more than $550,000 to Mr. Bush's
various campaigns, and Mr, Lay also gave $100,000 to Mr. Bush's inaugural
committee.

But Mr. Lay does not appear to have been a frequent recent visitor to the White
House, based on publicly available records. He visited the White House only
twice during the first five months of Mr. Bush's presidency, according to Secret
Service access contro] records obtained by The New York Times (news/quote)
under the Freedom of Information Act. The first visit occurred on Feb. 22, 2001,
the day Enron officials met with the staff of Vice President Dick Cheney's
energy task force,

The second visit, the records show, was on April 17, the day Mr. Lay and other
Enron officials met with Mr. Cheney for about a half-hour. Enron officials freely
discussed the meeting last year with reporters, providing a copy of the
memorandum on electricity issues the company presented to Mr, Chency,

One month later, Mr. Cheney's energy policy task force issued its final report. In
the section on deregulation of the electricity markets, the report's
recommendations resembled much of what Enron had advocated. They also
tracked with policies advocated by Mr. Bush during the 2000 presidential
campaign.

Mr. Cheney, in an interview last year, denied that Enron had improperly
influenced the task force's deliberations, saying the task force would "make

decisions based on what we think makes sound public policy," not what "Enron
thinks.”

hitp:/Avww.nytimes.com/2002/01/1 L/business/ 1 1CND-ENRON. html?pagewanted=print MLL 02

01000000000054


Enron's President Said to Have Asked Treasury Official for Help

“He did not ask for anything,” said Mark Palmer, an Enron spokesman.

Enron's troubles and its numerous links to the Bush administration threatened to
consume the president's time and attention even as he enjoys high approval
ratings for his conduct of the war on terrorism.

Mr. Bush summoned reporters to the Oval Office on Thursday to declare that he
had instructed his economic advisers to develop a plan to protect workers’
pensions from similar corporate failures. Thousands of Enron employees lost
their life savings and much of their retirement accounts when the company's
stock became virtually worthless last November.

Enron's auditor, Arthur Andersen, then said that it had destroyed a "significant"
volume of documents related to Enron. The firm said it was still gathering
information about the episode before deciding if it would discipline the
employees involved.

The Securities and Exchange Commission, which is investigating both Enron's
collapse and Andersen's conduct, said its inquiry would be expanded to include
the destruction of documents, in addition to looking into whether it had created
off-the-books private partnerships that disguised the true financial condition of
the company.

Almost simultaneously, Attomey General Ashcroft said he was recusing himself
from oversight of the criminal investigation of the company's collapse because
of his relationship with Enron. Common Cause reported Thursday that a canvass
of federal election records showed that Mr, Ashcroft had received more than
$50,000 from the company and Mr. Lay for his 2000 Senate campaign.

Enron, which pioneered deregulation of the nation's power business and grew to
be one of the world's largest energy companies before its sudden fall, has long
nurtured close ties to Mr. Bush. But in the Oval Office today, the president went
to some length to distance himself from Mr. Lay, who he said had been a
supporter of Governor Ann Richards of Texas when Mr. Bush defeated her in
1994.

“And she named him the head of the Governor's Business Council," Mr. Bush
said, "And ! decided to leave him in place, just for the sake of continuity. And
that's when I first got to know Ken and worked with Ken."

Mr. Bush said that he had never discussed the financial problems of Enron with
Mr. Lay and that he had last seen him in the spring, ata fund-raising event in
Houston. Mr. Fleischer said Mr. Bush had not talked to Mr. Lay since the

spring.

It was Mr. Fleischer who first told reporters Thursday moming, almost as an
afterthought at a sparsely attended early news briefing, that Mr. Lay had called
both Mr. O'Neill and Mr. Evans last fall to alert them about the company’s
financial straits.

http://www.nytimes.com/2002/01/1 L/business/! 1CND-ENRON.html?pagewanted=print

Page 3 of 6

W102

01000000000047


Enron: ISPs Page 2 of 2

Pooling Points delay-sensitive, high-bandwidth solutions to the
Rear desktop.
100k 200k 4008

This sweeping new approach provides a highly reliable, pay-for-what-you-
need, bandwidth-on-demand method to deliver data and streaming media to
three constituencies: content and application providers, network service
providers, and to end-users who want more from the public Internet.

Built With the Best Equipment Available

To implement this new architecture, Enron
Broadband Services has formed strategic alliances
with Cisco Systems, Ciena Corporation, and Sun
Microsystems, all leaders in network technology,

Cisco Systems' high BOS

speed backbone routers __RoalPiayer
determine which path the 100k 200k 400%
IP bits will take across

the Enron Broadband Services backbone. Ciena
Corporations’ Dense Wave Division Multiplexing
creates the high-speed optical circuits. Enron
Broadband Services provides the Pure IPTM fiber
network over which the Dense Wavelength

0 oq, Division Multiplexing (DWDM) logical fibers
operate and the operations and engineering
expertise to architect, integrate, manage, and maintain the network.

Servers

The Pure IPTM advantage? No ATM. No Frame Relay. No SONET.

Download whitepapers, diagrams and more on our Application Services and
our Network,

Top of Page

Copyright 1987-2000 Enron Com AB rights reserved. gAbout this site, Contact us

http://www.ec.enron.com/isp/ein’ 07/31/2000

00400000000016


Enron Asked Treasury for Credit Aid Page | of 5

YAHOO! NEWS @ News Home -Yatoo!:Hee Aly As
re

One million women and children

, hungry

home

Home Top Stories Business Tech Politics World Local Entertainment Sports Op/Ed Science Health Fu

[Search | [iver

Politics - Associated Press Ad 10 Wy amon

Reuters | AP | ABCNEWS,com
Friday January 11 2:23 PM ET

ADY

Enron Asked Treasury for Credit Aid

Related Quotes

9987.53
By MARCY GORDON, AP Business
Writer
0.02
rae _ , . 0.67 = 0.000
WASHINGTON (AP) - The 193.71 254

president of Enron Corp. asked a
top Treasury official last year to
intervene with bankers with whom
the company was negotiating for a
credit extension to avoid
bankruptcy.

-—
Get Quotes

Gelayed 20 mins - disclaimer

> Full Coverage

In-depth coverage about
Enron

The disclosure Friday was the first
indication that the energy firm had

sought the direct intervention of
administration officials as it faced
collapse

Related News Stories

Ashcroft withdraws as

Enron affair explodes - The

AP Phoeo Independent (UK) (Jan tl,
@ Enron The cascade of revelations about 2002}
AudiolVideo Enron's dealings with Bush Enron auditor destroyed

on Furor Grows
ABCNEWS.com)

administration officials has raised
questions about potential conflicts
of interest. The Justice Department

files - Chicago Tribune (Jan
11, 2002)

Did Enron's Auditors Think

(news - web sites), the Securities They ‘Had Something 10 a
& Take Profits When You Can- and Exchange Commission (news (repiswation reqd) ant, |e
(Yahoo! Finance Vision) - web sites) and five congressional 2002) “oe
Enon slecides quetion wi nl committees are investigating the Enron shares are suspend 7
ions BY gun politically connected company. - BBC (Jan 11, 2002)
Case brings scandal close tw
In one inquiry, Senate investigators on Friday finished issuing 51 Bush's door - The Sez
subpoenas for documents from Enron's current and former Philadelphia Inquirer (Jan
directors and senior managers and from its auditing firm, Arthur 11, 2002) ——
Andersen LLP. The big accounting firm disclosed Thursday that More...
http://dailynews.yahoo.com/h/ap/200201 1 l/ts/enron_investigation_7.htm! V1i02

1000000000049


After founding a successful smart card company in Russia,
Sergei Kousmine and his colleagues set off for Chicago, armed
with plenty of start-up capital and a firm belief that the
United States was ready for emart cards. They set up « U.S.
headquarters for the Siberia-based company they had started in
1991, Center of Financial Technologies Inc., and began
approaching banks and Visa with thelr idea of setting up 4
system analogous to the one they had built in Russia, which
boasted a fraud rate of 0%.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011206CARDS91

INVESTMENT PRODUCTS

Lincoln's New Bank Chief to Push Variables
Lincoln Financial's new chief of bank distribution likes his
chances a lot better than he did in the 1990s when he pulled
Pioneer Investment Inc. out of that channel. It is a matter of
Lineeln's being well established in sales relationships with
banking companies whereas Pioneer was a newcomer trying to
break in with what it believed was a good variable annuity,
aaid Stephen Long, who is now a senior vice president at
Lincoln.

http: //wew, americanbanker.com/cgi-bin/read tagatory?20011206IPRDS90

SUBSCRIBE TO AMERICANBANKER.COM

If you know of someone who would like @ two-week FREE trial to
AmericanBanker.com, please forward them to

http: //wew. americanbanker.com/PSUser/user html

and we'll start their trial immediately.

AmericanPanker.com offers subscribers immediate access to the complete
award-winning content of the daily American Banker newspaper and an
18-month Searchable Archive of back issue articles. PLUS, you'll receive
links to primary sources, intraday news break, expanded access to data
and statistics, and filtered access to third party information resources.

Thomson Financial Conferences & Exhibitions is the premier producer of
financial service events. Our events are supported by the publications of
Thomson Financial and cover a broad range of topics including e-commerce,
retail banking, customer relationship management, small business banking,
mortgage technology, credit and debit cards, collections and insurance.

Visit our website at www.tfconferences.com or call 800-603-3424 or
212-903-6093 for further information.

If you have any questions or would like to unsubscribe, please feel free
to contact our Customer Service Department at custservBamericanbanker.com
or call (800) 221-1809, 8:30 am - 5:30 pm [EST).

AmericanBanker.com
http://www. americanbanker.com/

Copyright (c}) 2001 American Banker, Inc.
All Rights Reserved.

00600000000084


Lakritz, Robb

From: Hunt, Betty Ann

Sent: Thursday, January 10, 2002 8:35 AM
To: Lakritz, Robb; McCardell, Dan
Subject: RE:

See you at 145 pm

sn Orginal Message----

From: Lakritz, Rabb

Sent: Wednesday, Jenusry 09, 2002 6:44 PM
To: Hurt, Betty Ann; McCardel, Dan
Subject: RE:

1:48 p.m. works for me. We will come down and see her.
Thanks.

Robb Lakritz

s-Origina Message--—-
From: — Hurt, Betty Ann
Sent: Wednesday, January 09, 2002 6:59 FM
To: Lakriz, Robb; McCardell, Dan
Subject: RE

Right now Sheila is avaiable at 1:45 (45 min) or 4:30 pm (1 hour). Please let me know what works for you.

soOriginal Messages

From: Bair, Seite
Sent: Wednesday, January 09, 2002 6:56 PM
To: Lakrkz, Robb; Hunt, Betty Ann
Subject: RE:

yep-- | will ry to make time. Tomorrow is tough. Betly ~ please try to work in

_ ‘Original Message-r-+
From: Lakritz, Roob
‘Sent: Tuescay, January 08, 2002 2:45 PM
To: Bair, Shea
Ce: McCardel, Dan; Adams, Tim; Dam, Ken; Gross, Jared; Kupfer, Jeffrey
Subject:
Sheila,

Do you have time tomorrow to meet with Dan McCardell and me to discuss an
internal policy roundtable we are hoping put together on issues related to the
Enron situation and ancillary developments?

Thanks.

Robb LaKritz

00100000000009


___ _12408/01 15:45 PAX 202 646 S1a8 @oisvo23

WSJ.com Page 2 of 2

In that capacity, Mr. Lay became clo'se to several Bush aides, including political guru Karl Rove and
communications adviser Karen Hugties, who have tsken positions at the White House. He also got to
know another leading Texas busines! man: Dick Cheney, then CEO of Dallas oi! concem Halliburton
Co., whe would become Mr. Busb's pick for vice president.

Against this backdrop, Mr. Lay was widely considered e top candidate for Treasury Secretary in the
younger Bush's administration. Ultin'ately though, he was disqualified, Bush insiders say, as too closely
identified with Mr. Bush, Mr. Cheney and others who worked in the Texas energy business for an
administration that wanted to show i. wasn't in the pocket of big oil companies.

. cod
Early on; Mr. Lay bad unrivaled acor'ss to the administration. When the president's advisers debated a
new energy policy in the spring, Mr. Lay was the only energy executive to be invited for a one-on-one
session with Mr. Cheney, who led thi: effort, Mr. Lay also worked with Mr. Rove and others to
successfully push for appointments tv the Federal Energy Regulatory Commission, which oversees
much of Enron's business.

As Enron's problems multiplied and |ts fortunes plummeted, however, the White House was silent.
During a several-hour long interview in the spring, Mr. Lay mused that his Bush connections could
boomerang someday. "It could hurt, from the standpoint that, at some point, they lean in the other
direction to make sure they don't fac: criticism,” he said.

Write to Bob Davis at bob.davis@w\s.com*

URL for this Articie:
hitp-interactive, ws). comarchive/retriev):,cgi7id=SB 1006987787276 109720.djm

Hyperlinks in this Article: 1
(1) http:/interactive.wsj.com/pages/enrc|npage.htm
{2) mailto:bob.davis@ws).com .

Copyright © 2041 Dew Jones & Company, Inc. All Rights Reserved.
Printing, distribution, and use of this material is governed by your Subscription Agreement and copyright laws,

For information about subscribing, go to yttp-//wsj.com

hmtp://interactive.wsj.com/archive/re tieve.cgi?id=SB 1006987787276109720.djma&templates... 11/30/01

01000000000842


MAR @: 2088 12:24 FR CWT 1333 NH AVE

Cadwalader, Wickersham & Taft

282 GE2 2688 TO 12ecas7EsIIsl2e2 P.21-eS

1333 New Hampshire Avenue, NW
Washington, DC 20036
(202) 862-2256
Fax number: (202) 862-2400
FROM: Ellen Levinson No. of Pages: 5 Date: March 1, 2000
FOR IMMEDIATE DELIVERY
TO: | Name: Norman Carleton Fax No.: 202-622-0974
Department of the Treasury Phn No.: 202-622-1855
cc) | Name: Carol St. Clair Fax No.: 713-646-3393
ENRON Phan No.: 713-853-3989
= ——— —— 4
cc) | Name: Jeff Keeler Fax No.: 202-828-3372
ENRON Phn No.: 202-466-9157
Dear Norm:

As we previously discussed, Enron has revised its proposed amendments and report language to the
Bankruptcy Reform Act. I have attached the current version for review and consideration by the
Financial Products Working Group. We expect ISDA and the Bond Market Association to agree to
these provisions, as they had approved the earlier draft.

We would appreciate discussing these amendments with you early next week. Please let me know a time
that would b most convenient.

Sincerely,

Ellen S.

Log vie

This communication is confidential and intended only for the addressee. Amy distribution or duplicating of this communication is strictly
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(87683.001

01000000001388


FOXNews.com

filev/C:\WINDOWS\Temporary Internet Files\OLK5141\FOXNew

SNOW: OK. But to people under your jurisdiction, correct?

O'NEILL: According to accounts that I've read in the newspapers, that’s
fight.

You know, this thing has become a subject of lots of conversation. We
have taken what | think are prudent steps, so that I've not spent any time
talking to the undersecretary about the conversations he had with other
people, to make sure that we do this correctly.

You know, | think we have done the right thing. We're going to continue
to do the right thing.

The president has asked me to lead a couple of different groups, to see
if there are lessons that we should learn, and possibly change law, rules
or regulations to better protect individuals who have a stake in a 401(k)
plan of @ pension plan, to make sure that the people that are involved
out there in companies are not disadvantaged by decisions that their
leaders make.

SNOW: Now, is the philosophy of this administration that, when a
company gets into 4 bind like this, it's on its own?

O'NEILL: Absolutely, You know, unless there's an issue related to the
company that reaches to public responsibility, you know, in the American
capitalist system, companies are responsible for their actions. And there
is a broad scheme of laws and rules and regulations that instruct and tell
companies what they're supposed to do. And so, of course, you know,
we don’t have an interest in individual companies, and that's it.

SNOW: So you're not talking to Peter Fisher, who's your undersecretary
working on this. There seems lo be almost a see-no- evil, speak-no-evil
kind of atmosphere. You're not talking to a guy who's working for you.
You and Don Evans don't talk to the president until a meeting just very
recently.

Surely there had to be some sense in your mind that these calls were
inappropriate, or that there was something about them that you did not
‘want to pass along to the president. is that correct?

‘O'NEILL: No, it's not. | didn’t think there was anything inappropriate
@boul someone calling me to give me a heads-up that there were some
technical things that we ought to pay attention to. | don't find that
inappropriate. It seems to me it's exactly the right discharge of my duties
to make sure that the public's not going to be hurt by some individual

company action.

SNOW: Now, Henry Waxman is saying that this administration — well,
let me read a quote from Congressman Waxman. He's going to be
conducting an investigation; 8 lot of people are. He's making allegation
about the way the White House has handled this, We're going to get it
up on the screen here presently,

He said, “It is now clear that the White House had knowledge that Enron
was likely to collapse but did nothing to protect innocent employees and

shareholders who ultimately lost their life savings. I'm deeply troubled
that the White House stood by and let this happen to thousands of

05018

Page 4 of 11

01/16/2002

01000000000089


 AS405/0L 15:45 FAX 202 646 S199 | WMois-ous

WSJ.com | Page 2 of 2

In that capacity, Mr. Lay became clo|se to several Bush aides, including political guru Karl Rove and
communications adviser Karen Hug!les, who have taken positions at the White House. He also got to
know another leading Texas busines! man: Dick Cheney, then CEO of Dallas oi] concem Halliburton
Co., who would become Mr. Bush's pick for vice president.

Against this backdrop, Mr. Lay was widely considered a top candidate for Treasury Secretary in the
younger Bush's administration. Ultin ately though, he was disqualified, Bush insiders say, as too closely
identified with Mr. Bush, Mr. Chenev and others who worked in the Texas energy business for an
administration that wanted to show i. wasa't in the pocket of big oil companies.

Early on, Mr. Lay had unrivaled ace'ss to the administration. When the president's advisers debated a
new energy policy in the spring, Mr. Lay was the only energy executive to be invited for a one-on-one
session with Mr. Cheney, who Jed the effort. Mr. Lay also worked with Mr. Rove and others to
successfully push for appointments ty the Federal Energy Regulatory Commission, which oversees
much of Enron's business. '

As Enron's problems multiplied and jts fortunes plummeted, however, the White House was silent.
During a severai-hour long interview’ in the spring, Mr. Lay mused that his Bush connections could
boomerang someday. "It could hurt, ‘tom the standpoint that, at some point, they lean in the other
direction to make sure they don't fac: criticism," he said.

Write to Bob Davis at bob.davis@w sj.com?

URL for this Article:
hitp:/finteractive ws) com/archive/retriev «,cgi7id@SB 1006987 787276109720 dim

Hyperlinks in this Article:
(1) bitp://interactve.wsj.com/pages/enrcpage. htm
(2) maitto:bob. davis@wsj.com

Copyright © 2001 Dow Jones & Company, Inc, All Rights Reserved.

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For information about subscribing, go to :ttp-//wsj.com

hitp://interactive. ws}. com/archive/te tieve.cgi?id~SB 1006987787276 109720.djma&template=.... 11/30/01

00700000000025


FW: Agenda Items Thought Dead Revived by Enron's Fall Page 3 of 3

that he was willing to consider that possibility.

‘The industry responded with a set of voluntary guidelines. Im the hearing
Wednesday, Rep, Baker will likely ask why thase guidelines did not prevent six
of 15 analysts following the company from listing Enron as a "strong buy” just
days before its bankruptcy filing. According to a news release issued by Rep.
Baker's staff, even as late as Nov. 27 only one analyst bad advised clients to
sell Enron shares,

‘The issue of Enron’s accounting problems will likely lead to a reprise of
last year’s debate over whether firms that audit a public company’s books should
be allowed to accept lucrative consulting contracts from that company as well

Andersen made more last year from the consulting services it sold to Enron

than it did for auditing the energy company's books, and critics have said that
the auditors may have bent the rules for a preferred client.

01/16/2002

00600000000054


B/OS5/Uk 16:44 FAX 202 G46 Gla Wulio2a

WSJ.com Page 2 of 2

over their treatment of trade prom stion expenses for their portfolio of "orphan" brands as capital
expenditures,

Enron is an opportunity for the Bush team to show it can police similar financial chicanery, if some is
found. Sorting the capitalists from the crooks is one way of protecting capitalism,

URL for this Article:
hitp://interactive ws) com/archive/rete ave cgi?id®SB 10070851 16787679680.djm

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| |
| |

|
i
http:/interactive.wsj.com/archive, cetrieve.cgi7id=SB 1007085 | 16787679680.djm&termplate=.. 11/30/01

00700000000023


Enron's President Said to Have Asked Treasury Official for Help

"He did not ask for anything," said Mark Palmer, an Enron spokesman.

Enron's troubles and its numerous links to the Bush administration threatened to
consume the president's time and attention even as he enjoys high approval
ratings for his conduct of the war on terrorism.

Mr. Bush summoned reporters to the Oval Office on Thursday to declare that he
had instructed his economic advisers to develop a plan to protect workers!
pensions from similar corporate failures. Thousands of Enron employees lost
their life savings and much of their retirement accounts when the company's
stock became virtually worthless last November.

Enron's auditor, Arthur Andersen, then said that it had destroyed a "significant"
volume of documents related to Enron. The firm said it was still gathering
information about the episode before deciding if it would discipline the
employees involved.

The Securities and Exchange Commission, which is investigating both Enron's
collapse and Andersen's conduct, said its inquiry would be expanded to include
the destruction of documents, in addition to looking into whether it had created
off-the-books private partnerships that disguised the true financial condition of
the company.

Almost simultaneously, Attorney General Ashcroft said he was recusing himself
from oversight of the criminal investigation of the company’s collapse because
of his relationship with Enron, Common Cause reported Thursday that a canvass
of federal clection records showed that Mr. Ashcroft had received more than
$50,000 from the company and Mr. Lay for his 2000 Senate campaign.

Enron, which pioneered deregulation of the nation's power business and grew to
be one of the world's largest energy companies before its sudden fall, has long
nurtured close ties to Mr. Bush. But in the Oval Office today, the president went
to some length to distance himself from Mr. Lay, who he said had been a
supporter of Governor Ann Richards of Texas when Mr. Bush defeated her in
1994.

"And she named him the head of the Governor's Business Council," Mr. Bush
said. "And I decided to leave him in place, just for the sake of continuity. And
that's when I first got to know Ken and worked with Ken.”

Mr. Bush said that he had never discussed the financial problems of Enron with
Mr. Lay and that he had last seen him in the spring, at a fund-raising event in
Houston. Mr. Fleischer said Mr, Bush had not talked to Mr. Lay since the

spring.

It was Mr. Fleischer who first told reporters Thursday morning, almost as an
afterthought at a sparsely attended carly news briefing, that Mr. Lay had called
both Mr. O'Neill and Mr. Evans last fall to alert them about the company's
financial straits.

http://www_nytimes.cony2002/01/1 1/business/1 1CND-ENRON. html?pagewanted=print

Page 3 of 6

WILO2

01000000000058


Smith, Amy

From: Martin. McGuinness@we.ey.com
Sent: Tuesday. December 18, 3001 11:30 AM
‘0: . o.treas,
Subject: Pot Sean News tor December 18, 2001

FYI....

~----Original Message---=-=

From: ABA's Washington Information Network [mailto:WIN@aba.com]
Sent: Tuesday, December 19, 2001 9:57 AM

Subject: ABA's WIN News for December 18, 2001

ABA'S WASHINGTON INFORMATION NETWORK NEWS
TUESDAY, DECEMBER 16, 2001

AA e eee eeeeeneeneneee

LEGISLATIVE NEWS
ECONOMIC STIMULUS LEGISLATION

House and Senate negotiators are still working to reach an agreement on an
economic stimulus package. Congressional leaders are expected to meet with
President Bush this morning regarding the talks. Health care assistance
for

unemployed workers is one of the main sticking points the negotiators are
trying te work cut. In the meantime, the House Rules Committee will meet
this morning to develop a rule for floor consideration of a new version of
the House-passed stimulus bill. This bill may be brought to the House
floor

by the Republican leadership this evening, despite the fact that
negotiators

are still working on a compromise House-Senate bil

TERRORISM INSURANCE LEGISLATION

A draft terrorism insurance bill may be introduced by Senate Majority
Leader

Tom Daschle {D-3D} today and be brought to the floor as early 4s tomorrow.
The main issue still to be worked out among Senators is 4 possible
provision

to cap punitive damages associated with terrorism acts,

SENATE FARM BILL

Yesterday, the Senate resumed consideration of S. 1731, the Farm Bill.

Sen.

Edward Kennedy (D-MA} filed a motion to invoke cloture on Agriculture
Committee Chairman Tom Harkin's {D-IA) substitute amendment. The Senate is
expected to vote today on the cloture motion. The first cloture motion
failed by a vote of 53-45 on December 13.

MARKUP OF TRADE AUTHORITY LEGISLATION

This morning, the Senate Finance Committee will mark up H.R. 3005, the
promotion Authority Act.

SENATE BANKING COMMITTEE TO CONSIDER KUD NOMINATIONS

This afternoon, the Senate Banking Committee will hold a hearing to
41

00600000000092


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NOUNTONTVTOANT SONTHV IN

00600000000013


Imagine walking inte a store with 4 smart card in your
pocket, picking the merchandise you want, leaving, and having
all the items charged to your card automatically.

http://www. americanbanker,com/cgi-bin/read tagstory?20020118CARDS64

INVESTMENT PRODUCTS

Banks Weigh Outsourcing Low-Yield Money Funds
As money fund profits fall with interest rates, banks with
smaller money fund complexes sre increasingly considering
outsourcing their management to larger fund companies.

http://www. americanbanker.com/cgi-bin/read tagstory?2002011BIPRDSSB

COMMUNITY / REGIONAL

Small-Bank Funds Not Seen Outpacing Big Ones
Mutual funds made up of small-bank stocks far outperformed
large-bank atock funds and general indexes last year, but few
analysts expect that trend to continue this year.

http://www, americanbanker.com/cgi~bin/read_ tagstory?20020118CORGSS9

SUBSCRIBE TO AMERICANBANKER, COM

If you know of someone who would like a two-week FREE trial to
AmericanBanker.com, please forward them to

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Thomson Financial and cover a broad range of topics including e-commerce,
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Copyright {c) 2001 American Banker, Inc.
All Rights Reserved.

00600000000066


Fourteen Top Bush Officials Owned Stock in Enron Page 2 of 3

Fleischer said that O'Neill, in response to the calls from Enron, "contacted
Undersecretary [Peter R.] Fisher, Undersecretary Fisher looked at that and
concluded there would be no more impact on the overall economy.”

Fisher was one of the 14 who owned stock in Enron at the time he filed his
re woo disclosure. He valued his holdings within a range of $1,001 and
15,000.

Among the report's other significant findings was that the largest sector in
which the administration is invested, in terms of maximum dollar value, |s the
energy sector, with some 221 investments worth up to $144.6 million.

The rest of the study's results will be released Monday on the Center's on-line
investigative report, The Public i, www.public-.org.

Officials Who Owned Enron Stock
Name Position Asset Minden Maxtium Assot
Namo Type
Fisher, Deputy EPA Enron 1001 15000 Stock
Linda Administrator
Fisher, Deputy EPA Enron 16001 50000 Stock

Lingar Administrator

Fisher, Undersecretary of Enron 1001 15000 Stock
Peter Treasury

Beers, Undersecretary of Enron 100001 250000 Stock
Charlotte State

Cooper,  Undersecretaryof Enron 1001 15000 Stock
Kathleen Commerce

Dorr, Undersecretary of Enron 1001 18000 Stock
Thomas = Agriculture
Dorr, Undersecretary of Enron 1001 15000 Stock
Thomas: = Agriculture
Marburger, Dir., Office of Enron 1001 15000 Stock
John Science and
Technology Policy
Rumsfeld, Secretary of Enron 1001 15000 Stock

Donald Defense
Deily, Deputy U.S. Trade Enron 15001 60000 Stock
Representative

Linnet
Deily, Deputy U.S, Trade Enron 0 1000 Stock
Linnets Representative
Aldonas, Undersecretaryof Enron 15001 50000 Stock
Grant Commerce
Calio, Assi. to the Enron 1001 15000 Stock
Nicholes = President, Dir. Of

Legislative Affairs
Libby, |. Vice President's Enron 1001 15000 Stock
Lewis Chief of Staff
Zoellick, US Trade Enron 15001 50000 Stock

Robert Representative

Tutweiler, Advisor to the Enron 15001 50000 Stock
Marnaret President far

file://C:\WINDOWS\Temporary Int...\Fourteen Top Bush Officials Owned Stock in Enron-htm 1/18/02

01000000000069


Providian Ordered Out Of Subprime
Tightening their grip on the troubled credit card issuer
Providian Financial Corp., federal bank regulators last week
handed the company a list of requirements to meet over the
next few weeks, including one that will eliminate it fron
subprime lending. Providian said Wednesday that
under its agreement with regulators it must submit by Friday a
plan for managing capital and growth for the next three years.
The company, Which made its name in subprime, agreed to stop
such lending.

http://www. americanbanker.com/cgi-bin/read tagstory?20011129NATL446

TECHNOLOGY

Microsoft: Still Server-Crazy After All These Years
When William 5. Harrison Jr. set foot om Microsoft Corp.'s
Redmond, Wash., campus in August 1999, he was helping the
software giant usher in a new way of nurturing fresh business
from financial institution clients. Mr. Harrison, the
president and chief executive officer of what was then Chase
Manhattan Corp., and his entourage spent the full day in
Microsoft's conference center, a warren of 12 ta 15 rooms
equipped with fancy audiovisual equipment.

http://www, americanbanker.com/cgi-bin/read tagstory?20011129TECHs32

NATIONAL/GLOBAL

Private Banking Aim Orove Deal for CSFB Direct
Though online investing is shrinking nationally, executives
at Bank of Montreal say their company's deal to buy Credit
Suisse First Boston's electronic brokerage unit is all about
growth in U.S. private banking. The $520 million CSFB Direct
deal, announced Wednesday, goes beyond just expanding Bank of
Montreal*s online brokerage capabilities, they said. The
company can turn CSFB Direct*s one million online brokerage
custemers into a million private banking customers, they said,
though more than half the CSFB accounts are inactive. And CEO
Tony Comper said, “Our strategy is to grow in the United
States."

http://www, americanbanker.com/cgi~bin/read tagatory?20011129NATL454¢

CARDS

Fee-Free ATM Venture Draws Doubt from EFT Community
Executives of electronic funds transfer networks say they are
skeptical about the prospects for a company that aims to
create a national network of surcharge-free automated teller
machines to benefit financial institutions with few or no
ATs, The company, ATM National LLC in Washington, says it
Plans to seduce major U.S. banks by offering them subsidies to
cover the surcharge revenue they may lose. Another selling
point, it says, is that customers of all participating
inetitutions = which may include community banks, credit
unions, Internet banks, securities firms, and brokerages =
would have free access to a much larger pool of ATMs.
Customers would even be able to make free deposits to ATMs
outside the United States.

00600000000086


RE: Enron and Bankruptcy Bill -- ABI Website

Smith, Amy

Page 1 of 2

From: Richard, Gregg (Gregg. Richard@mail, house.gov)
Sent: Friday, December 14, 2001 10:39 AM

To: Amy.Smith@do.treas.gov

Subject: RE: Enron and Bankruptcy Bill — ABI Website
Thanks.

Original Message-----

From: Amy. Smith@do.treas.gov [mailto: Amy. Smith@ido.treas.g04
Sent: Friday, December 14, 2001 10:08 AM

To; Richard, Gregg

Subject: FW: Enron and Bankruptcy Bill -- ABI Website

FYI

>» ENRON UPDATE

> Greenspan, Oxley Meet; Netting Bill Gains Support Following Enron Debacle
> Federal Reserve Chairman Alan Greenspan met yesterday with key House
> lawmakers to discuss this year’s prospects for passing legislation that

> clarifies corporate bankruptcy laws by allowing companies to quickly

> settle outstanding derivatives contracts in the event of an insolvency,

> Dow Jones reported. The once-obscure financial issue has gained new

> prominence and urgency on Capitol Hill as federal investigators sift

> through the mess left behind by Enron's chapter 11 bankruptcy filing. The
> measure allows institutions to quickly close outstanding derivatives

> contracts with bankrupt trading partners by netting all the losses and

> gains of individual contracts into one deal.

>

> House Financial Services Chairman Michael Oxley (R-Ohio) invited Greenspan
> to meet with House Judiciary Chairman James Sensenbrenner (R-Wis.) after

> Oxley held a bruising hearing on Wednesday on financial improprieties

> leading to Enron's demise. Complicated, off-balance sheet transactions

> were the company’s undoing. Its stock collapsed after a Nov. 8

> announcement that the firm had overstated its net income over four years

> by $569 million. Creditors are now lining up to collect on about $40

> billion in debt owed by Enron,

>

>

> "Congress shoukt not fail to enact netting legislation this year,”

> Greenspan and Treasury Sceretary Paul O'Neill wrote House lawmakers 2 few
> weeks after the attacks, "Further delays would unnecessarily place the

> financial system at greater risk." Lawmakers are naw questioning whether

> the legislation, which is also attached to a broader bankruptcy bill in

> both chambers, could be applied to Enron's bankruptcy case if the bill

> passes this year, Federal securities officials said it was unclear whether

> they could apply new contract netting laws retroactively. Oxley hopes to

> get the bill passed by next week, before Congress finishes its work for

> 2001.

>

> House Probe Seeks Andersen's Records On Enron Audits

01/16/2002

00600000000050


Enron's President Said to Have Asked Treasury Official for Help

Ehe New York Simes

wa wee

January 11, 2002

Enron's President Said to Have Asked Treasury
Official for Help

By ELISABETH BUMILLER

ASHINGTON, . he Treasury Department disclosed today

that the president of the Enron Corporation (news’quote) asked a top
department official last year for help in obtaining a credit extension to stave off
bankruptcy

A department spokeswoman, Michele Davis, said that Under Secretary Peter
Fisher spoke with Enron's president, Lawrence (Greg) Whalley, six or eight
times in late October and early November

"As Enron's negotiations with its bankers for an extension of credit neared a
decision point, the president of Enron asked Under Secretar call the
banks,” Ms. Davis said. She went on to say that Mr. Fisher
being asked to encourage the banks to extend credit."

he was

As Under Secretary for domestic finance, Mr. Fisher has considerable influence

Ms. Davis did not say exactly when Mr. Whalley asked Mr, Fisher to intervene
with banks.

Ms. Davis emphasized that Mr. Fisher made "no such calls.”

Enron, which not so long ago was a high-flying energy company, recently filed
for bankruptcy protection, Its stock, which rose above $80 a share less than a
last traded at 67 cents on Thursday; it did not trade today

year

I s disclosure of Mr. Whalley's contacts with an influential Treasury
Department official came a day after the White House disclosed that Kenneth L
Lay, the chairman of Enron and one of President Bush's biggest political
contributors, telephoned two cabinet officers last fall, and that one of them said
Mr. Lay had sought government help with its dire financial condition

Both cabi

ct secretari¢s said they declined to offer government aid.

cy General John Ashcroft has excused himself from all matters involving
Enron because of campaign contributions he received from it

Thursday's wave of disclosures included the revelation that Enron's auditor, the
giant accounting firm Arthur Andersen & Company, said it had destroyed
numerous company documents and electronic communications.

https/www. nyu

12/01/11 /business/1 1CND-ENRON.htm!?pagewanted=print

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WSJ.com | Page 2 of 2

over their treatment of trade prom ition expenses for their portfolio of "orphan" brands as capital
expenditures.

Enron is an oppertunity for the Bush team to show it can police similar financial chicanery, if some is
found. Sorting the capitalists from the crooks is one way of protecting capitalism.

URL for this Article;
hitte:/linteractive. ws} comvarchive/retr fave.cgi?id=SB 1007085 1 16787679680 din

“

Copyright © 1001 Dow Jones & Company, Inc. All Rights Reserved.
Printing, distribution, and use of this thaterial is governed by your Subseription Agreement and copyright laws,

For information about subscribing, goto http://ws}.com

http://interactive.wsj.com/archive, retrieve, cgi?id=SB 10070851 16787679680.djma&templates... 11/30/01

01000000000840


Kevin Cohee has spent the last two years working to realize
his dream of building his small, black-owned bank into a
nationwide franchise, and he expects to move closer to
achieving that goal early this year.

http://www. americanbanker.cam/cgi-bin/read_tagstory?20020109CORG313

CARDS

Card Companies Sell Euro's Convenience
Credit card companies are viewing the conversion te the euro
as a unique opportunity to boost adoption of credit cards in
Europe, where debit cards hold sway.

http://www. americanbanker.com/cgi-bin/read tagstory?20020109CARD315

INVESTMENT PRODUCTS

Banks Rewarding Srokers Who Go Fee-Based
In an effort to attract more high-net-worth investors,
several banking companies are either offering or planning to
pay their brokers more money up-front to adopt fee-based
compensation models in place of ccommission-based ones.

http://www. americanbanker.com/cgi-bin/read_tagstory?200201091PRD316

NATIONAL/GLOBAL

Preview 2002: Terrorism Insurance Central to Coordinating
Council Plan
WASHINGTON - Financial services lobbyists outlined a common
agenda Tuesday, and in the process sought to demonstrate that
their historically tumultuous relationship has matured into 4
powerful lobbying force.

http://www, americanbanker.com/cgi-bin/read_tagstory?20020109NATL325

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and we'll start their trial immediately.

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1B-month Searchable Archive of back issue articles. PLUS, you'll receive
links to primary sources, intraday news break, expanded access to data
and statistics, and filtered access to third party information resources.

Thomson Financial Conferences & Exhibitions is the premier producer of
financial service events. Our events are supported by the publications of
Thomson Financial and cover a broad range of topics including e-commerce,
retail banking, customer relaticnship management, small business banking,
mortgage technology, credit and debit cards, collections and insurance.

Visit our website at www,tfconferences.com or call 800-803-3424 or
212-803-6093 for further information.

9

00600000000073


washingtonpost.com: Enron Asked for Help From Cabinet Officials Page 3 of 3

Enron's attorney, Robert Bennett, said Lay believed he had an obligation to alert the administration to
Enron's precarious condition and the possibility that it could fall into bankruptcy. "He asked them for
nothing," Bennett said,

Federal and congressional investigators are probing whether senior Enron executives exaggerated
company profits and concealed rapidly mounting debts through hundreds of investment partnerships and
offshore corporations.

Andersen's disclosure of destroyed records, which led the firm to hire former senator John Danforth to
examine Andersen's records management, infuriated lawmakers. Sen. Carl Levin (D-Mich.), who heads
a Senate Governmental Affairs subcommittee investigation of Enron, said the destroyed records would
be a new priority.

House Energy and Commerce Committee Chairman Billy Tauzin (R-La.) said of the lost documents:
“Anyone who destroyed records simply out of stupidity should be fired. Anybody who destroyed records
to try and subvert our investigation should be prosecuted."

Investigators for the committee first requested the records on Dec. 13. But Bennett said Enron was
unaware that Andersen was destroying records, "The first they heard of it was today," Bennett said, after
checking with a senior Enron executive.

Andersen promised “all appropriate remedial and disciplinary action."

Rep, Henry Waxman (D-Calif.), who has been pressing for more information on White House ties to the
energy industry, said Bush should have intervened -- not to help Enron but to help its workers.

Waxman sent a letter to Ashcroft yesterday asking the attorney general to recuse himself before
Ashcroft did just that.

The White House sought to preempt congressional inquiries. Fleischer warned Democrats against
investigations into the administration's dealings with Enron. "The American people are tired of partisan
witch hunts and endless investigations,” he said.

Fleischer also said there was no need for a special prosecutor.

But Republican officials on Capitol Hill said they had little desire to defend the administration and
suggested the White House make fuller disclosures of contacts with energy officials. "I don't know why
they're sitting on it," said a GOP official on the House Government Reform Committee. "By not getting
it all out, it makes it look like they're covering something up."

© 2002 The Washington Post Company

http://www. washingtonpost.com/ac2/wp-dyn/A28350-2002Jan 10?language=printer 01/11/2002

00700000000107


@o1s/o23

12/05/01 15:45, FAX 202 646 5189 ..

WSJ.com Page 1 of 2

November 30, 2001
Major Business News

U.S. Attorneys Inform Regulators
They Want to Monitor Enron Probe

hd a —
By MICHAEL SCHROEDER
Staff Reporter of THE WALL STREET JOUtNAL

WASHINGTON -- Federal proseciutors in two states have told the Securities and Exchange Commission
that they are interested in monitoring the agency's investigation into possible accounting fraud at Enron
Corp., as a possible precursor to a separate criminal probe, according to @ person with knowledge of the

situation.

Meanwhile, members of Congress! announced new inquiries into the company’s activities.

Enron stock’s spectacular plunge the past few weeks has attracted the interest of officials in New York
and Texas, including the U.S. attolneys' offices in Manhattan and Houston, this person said. Spokesmen
for the U.S, attorneys’ offices dec! to comment.

In late October, Enron disclosed that the SEC had undertaken a formal investigation into the Houston
energy company’s financial dealins with partnerships headed by its former chief financial officer,
Andrew Fastow. .

A formal investigation involves thie SEC's enforcement branch going to the five-member commission
and obtaining formal subpoena power to pursue its inquiry. A person familiar with the SEC probe said
the agency felt it needed subpoen: power to compel the release of information by parties that have done
business with Enron.

Enron's stock price has collapsed |rom about $60 a share carly in the year to under $! amid financial
restatements due to improper acccjunting and a failed merger with crosstown rival Dynegy Inc.
Shareholder and Enron employee |etirement account values have been devastated by the meltdown.
Criminal authorities are interested to learn if the SEC finds that malfeasance contributed to the share-
price declines. j

In 4 p.m. composite trading Thurs day on the New York Stock Exchange, Enron was at 36 cents, down
25 cents, or 41%.

Ifa criminal probe were undertakiin, it would be handled by one office, mostly likely in Houston,

Enron’s hometown. But federal prisecutors in Manhattan, who have experience in securities-fraud cases,
could assert jurisdiction because Furon's stock trades on the New York Stock Exchange.

Early this year, Enron came undei| attack from California politicians and regulators for profiting from
spiking energy prices in that

One reason authorities haven't bejjun their own investigations is the fear that a criminal probe might
cause witnesses "to clam up," saic the person with knowledge of the situation.

http://interactive.wsj.com/archive retrieve.cgi?id—SB 1007087266825656840.djmétemplates... 11/30/01

01000000000844


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Oreedner Bank

ARM Kero

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--Michae] Wol in New York {212} 328-238, Jennifer Preedran in
Brussels and Tem Giles and Tom Bawden in the London newsroom (4¢
20) 7320-7171, with reporting by Tansy Narcourt in Sydney, Steve
hinds in Paria, #ilje Skogatad in Frankfurt, Stephen Voss and
David Wella in Mew York, Jim Polwon in Princeton, and Ganiel Taub

in Lea Angelea /tg/tn

Story illustration: To see a series of Blosrberg funeticns
outlining National Australia Bank*s performance, click on (MAB AU

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01/18/2002

Page 3 of 3

01100000000026


MAR OL 2088 12°26 FR CWT 1333 Nn Ave cde bee edOd 1U lewdworpnoddicde r.uo-e>

3) Conference Report Statement of Managers (“cross-product” netting).

a) Language:

Sections $61(a) and (c) of the Code; Section 1007(k) of H.R. 833
Section 362(b\(32) of the Code; Section 1007(d)(1)(F) of H.R. 833

Section 561(a) will protect the exercise of any “contractual right” to “offset or net
termination values, payment amounts or other transfer obligations” in connection with certain
enumerated types of transactions free from any stay or any order of a court or administrative
agency. Under subsection (c), “the term contractual right includes ... a right, whether or not
evidenced in writing, arising by reason of normal business practice”.

i) Section 561(a), therefore, will protect netting and setoff rights between, e.g.,
repurchase agreements and swap agreements, swap agreements and forward
contracts, and cash-settled and physically-settled forward contracts, even without
implementation of an umbrella “master master” agreement tying the agreements
together, as long as such netting and setoff is consistent with “normal business
practice”. The determination of what constitutes “normal business practice” in any
particular case will, of course, depend on the facts and circumstances. Nevertheless,
the drafters anticipate that where the normal practice in an industry is not to
implement master master agreements, but the participants in the industry nevertheless
rely on the enforceability of their “cross product” netting rights when entering into
transactions and making attendant credit determinations, such participants will be
protected under Section 561.

ii) The new Section 362(b)(32) established under Section 1007(d)(1)(F) will
complement Section 561 by protecting netting and setoff and collateral foreclosure
fights in connection with master netting agreements. The protections afforded by
Section 362(b)(32), on the one hand, and Section 561, on the other, are cumulative.
Accordingly, the absence in Section 362(b)(32) of explicit protection for rights
arising by virtue of “normal business practice” is not in derogation of such rights
arising under Section 561.

6) Explanation:

Both bills have provisions to protect netting and setoff nights between different types of
agreements, such as repurchase agreements and swap agreements, swap agreements and
forward contracts, and cash-settled and physically-settled forward contracts, even without
implementation of an umbrella agreement tying the agreements together, as long as such
netting and setoff is consistent with “normal business practice.” To clarify the intent of
these provisions the report language states that where the normal practice is not to
implement umbrella agreements, but the participants in the industry nevertheless rely on
the enforceability of their “‘cross-productTM netting rights when entering into transactions
and making attendant credit determinations, such participants will be protected.

we TOTAL. PAGE.25 +

01000000001392


PRESIDENT SIGNS SECURITIES LEGISLATION

Yesterday, President Bush signed into law H.R. 1088, the Investor and
Capital Marketa Fee Relief Act. The bill passed the House on June 14; it
passed the Senate on December 20.

Stee een sed eeeeseesee

Kerry Early, Managing Associate Director, Washington Information
202-663-5316, or kearly@aba.com

Tom McElligott, Program Manager, Washington Information
202-663-5352, or tmcellig@aba.com

Office of Grasaroots Programs and Washington Information
American Bankers Association

World-Class Solutions, Leadership and Advocacy

Since 1975

1-800-BANKERS

The information contained in this message may be privileged and
confidential and protected from disclosure. If the reader of this message
is not the intended recipient, or an employee or agent responsible for
delivering this message to the intended recipient, you are hereby notified
that any dissemination, distribution or copying of this communication is
strictly prohibited. If you have received this communication in error,
please notify us immediately by replying to the message and deleting it
from your computer. Thank you. Ernst & Young LLP

it

00600000000091


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

November 17, 1998

VIA FACSIMILE

The Honorable Pedro Lamport

Finance Minister

Guatemala Ministry of Finance

8 Avenue, 21 Calle Zona 1, Centro Civico
Guatemala City

Minister Lamport:

Rather than continue to exchange messages, I thought I might send you a brief letter as the
promised follow-up to our recent conversation regarding proposed changes to Guatemalas
Commercial and Agricultural Business Tax (the IEMA.).

First, let me reiterate what | believe Deputy Assistant Secretary Zelikow told you at your
meeting with him on October 9", It is nor the position of the U.S, Treasury Department that the
TEMA should be withdrawn or changed in a manner that adversely affects the revenue it generates,

If, however, it were possible to change the tax to make it creditable for U.S. tax purposes while not
significantly reducing the revenue collected therefrom, we would welcome such a change.

I would also like to stress that the U.S, Treasury Department has not evaluated the private
sector proposal for modification of the IEMA you have received, nor would it do so, Ordinarily,
determinations regarding the creditability of foreign taxes are made only by the U.S. Internal
Revenue Service with respect to already enacted taxes and upon receipt of a request from a taxpayer
subject to the tax. In the case of proposed taxes or proposed changes to an existing tax, foreign
governments sometimes rely upon the advice of U.S, tax counsel in crafting a tax that in counsels
opinion would be creditable for U.S. tax purposes. There is, of course, no way to be ceratin that the
IRS would agree with counsel.s advice, although the IRS has on occasion met with foreign
government representatives to discuss creditability issues gencrally.

These are the points I had hoped to make to you by phone. I hope they are clear. To help
ensure that there is no misunderstanding, we will convey to Enron the substance of this letter. Please
feel free to call me if you would like to discuss this matter further.

Sincerely,

Philip R. West
Intemational Tax Counsel

ce: Deputy Assistant Secretary Dan Zelikow

bec: Deputy Assistant Secretary Joseph H. Guttentag
Richard Johnston, Intemational Economist

00900000000319 —


6. It is clear that income from transmission of high voltage electricity 1s not the type
of income targeted by Subpart F. First, it is not of the same character as personal services
income such as “technical, managenal, engineenng... or like services” as listed in IRC
§ 954(e)(1). Second, it is not easily moveable, as it is only earned from the ownership
and operation of substantial, permanently affixed, high voltage transmission lines,
switchyards and complementary equipment, Third, the resulting income will generally
be subject to substantial income taxes in the countries where the assets are physically
located and the income is camed.

7. This type of income was not contemplated at the time Subpart F and the FBCS}
rules were first enacted in 1962. The proposed amendment would not be inconsistent
with the policy goal of the FBCSI rules, and it would put US based companies on a level
playing field with their foreign competitors.

8 There should be no revenue impact from this change. As alluded to previously, i1
is not clear that income from the transmission of electricity falls within FBCSI as
currently defined in the statute and regulations, The proposed change should be
considered a technical clarification. Even if it were considered a legislative change. there
should be no revenue impact. There are few cross-border transmission system projects
that have been developed by multinational companies, as the projects are only now being
started on a large scale. Without this proposed change, though, it is unlikely that U.S
based multinational companies will be chosen to develop many, if any, of these projects
due to the adverse impact on the project economics caused by the current U.S. taxation

that would occur under the existing Subpan F rules.
’

9. This proposed change was included as Section 904 of the Taxpayer Refund &
Relief Act of 1999, as passed by the Congress.

February, 2001

0900000000361


WSl.com -- From the Archives Page 2 of 3

Glossary Additionally, they're anxious about how well a market-outsider can

Special Reports manage day-to-day scrutiny from the markets, which will pick through

Weather the Secretary's every word to find hidden meanings and changes in
sentiment.

STOCK QUOTES

Select exchange: "The reason Wall Street prefers to see its own type of people is that
jus ¥ they understand fundamentals of how words and sentiment mix," said

eter oye: James Glassman, senior economist at Chase Securities in New York,
S| "A guy who has had no exposure to the trading world can think ‘what's
‘Syme! ookup the big deal’ about saying something off the top of his head without
realizing the market is listening carefully for small subtleties," he
Free WSJ.com Sites: added,

Books

Careers Recently, Bush advisors have stated that the search for the top

College Treasury post is focussed on candidates from the private sector, but

Homes not necessarily from Wall Street.

Qnline Investing

Qpinion As a list of potential candidates have emerged, some prominent names

Personal Tech from off-Wall Strect have emerged, including Alcoa chairman Paul

Starting a Business O'Neill, Enron chief executive Kenneth Lay, and financier Gerald

q Parsky, chairman of Aurora Capital Group in California.

Wealth of Choices ome of the names from Wall Street have included Walter Shipley,

Web Watch former chairman of Chase Manhattan and John Hennessey, former

Wine CEO of Credit Suisse First Boston, New York Federal Reserve
president William McDonough is also said to be under consideration.

‘The Print Journal:

Subscribe Corporate America Has A Different View

Customer Service

Some industry types have been vocal of their support for an appointee
More Dow Jones Sites: With a corporate background.

Barron's Online
Publications Library “Paul O'Neill and other representatives of industry are at a great
Reprints advantage of running enterprises that take close notice of energy prices,
SmartMo! foreign competition, exchange-rate fluctuations and the turmoil in
SmartMoney credit markets," said Jerry Jasinowski, president of the National
Work.com Association of Manufacturers.
Dow Jones & Co,
Jasinowksi said that the association is not necessirly in favor of a
Corrections weaker dollar, but added that "high interest rates combined with
excessive praise for a strong dollar from the Treasury,” could be seen
Privacy Policy as counter to the best interest of many U.S. industries.
Despite Wall Street's skepticism over the outsiders on Bush's list, most
Wall Street players note they will give an equally warm reception to
whoever is chosen.
"Virtually all of the candidates are highly qualified business people
who will fit with the administration's sinnert for free trade and olohal
01/23/2002

01000000001208


Many U.S, multinationals are able to partially or fully offset the negative FTC impact of
the interest expense allocation rules due to the “export sourcing” rule. The export
sourcing rule allows a U.S. company to treat approximately 50% of the income from an
export sale as foreign source income. Since export sales typically do not attract foreign
tax, the effect of this mule is to increase the FTC limitation.

Applica’ wy

Most power companies (whether utilities or independent energy companies) t > + the
worst possible FTC profile imaginable. First, large capital investments in foreign
projects cause the interest expense allocated to foreign source income to be high.
Specifically, the interest expense allocation calculation compares the tax value of new
foreign assets to the tax value of depreciated histoncal domestic assets, which causes a
disproportionate amount of interest to be allocated to foreign sources', Second. most
power companies do not have any export sales (or other types of low taxed foreign source
income). Thus, unlike many other U.S. multinationals, power companies generally do
not benefit from the export sourcing rule, Third, due to the capital intensive and
regulatory nature of their domestic operations, power companies tend to have relatively
high debt-to-equity ratios in their domestic operating companies. Accordingly, the
amount of U.S, interest expense subject to allocation to foreign source income is
relatively high. Fourth, the foreign energy projects have significant project level debt for
which there is no adjustment in the U.S. interest expense allocation calculation. In other
words, the FTC limitation for a power company is effectively charged twice with interest
expense — once at the foreign subsidiary level and again at the U.S. shareholder level.
Fifth, as an end result of the above factors, power compames tend to build-up OF L's

Due to these FTC problems, most power companies cannot efficiently claim FTC's.
Accordingly, to avoid U.S. double taxation, power companies must attempt to structure
their foreign operations to avoid paying dividends to the U.S, and to avoid the tax
acceleration rules of Subpart F. In many cases, this is simply not possible and .he
projects are lost to foreign competitors that are not subject to similar harsh tax result in
their home countries.

Conclusion

The interest expense allocation rules have a serious adverse effect on the ability of a
U.S.-based power company 10 compete for foreign projects. There does not seem to be
any tax policy reason why power companies should be effectively precluded from
claiming FTC's. Substantial and meaningful reform of the interest expense allocation
(and/or FTC) mules is urgently needed.

February, 2001

' The interest expense allocation regulations allow taxpayers to elect to allocate interest on a fair

market value basis. Because of the significant out-of-pocket appraisal costs required to support this
election and the fact that it only provides some marginal benefit, most power companies do not make the
elechon.

00900000000364


government repurchase agreements.

But bankruptcy laws have evolved significantly since the 1982 collapse of Drysdale sent shockwaves through
the financial community and forced banks to pay out tens of millions of dollars to cover Drysdale's obligations
to other government securities firms.

More recently, Orange County's 1994 bankruptcy following its derivatives debacle and the bitter dispute
surrounding German's Metallgesellschaft Ag for breach of forward petroleum contracts suggests that
acrimonious and lengthy litigations might be in the offing. In the latter case, many counterparties settled out of
court and took "haircuts" after a judge ruled that independent petroleum marketers who entered into long-term
hedging contracts as protection against escalating fuel prices could sue the metals and engineering conglomerate
for breach of contract,

But the extent to which those cases provide any lessons for Enron and its derivative counterparties remains to
be seen, experts said, depending on what sticky and complex issues might arise in potential court actions.

Meanwhile, although Enron has yet to file for bankruptcy, most of its derivative counterparties are likely
already scrambling to exit their trades.

That's because Dynegy Inc.'s (DYN) decision Wednesday to abandon its plan to rescue Enron all but sealed the
fate of the ailing Houston energy trader which has been hobbled by accounting irregularities and unquantified
ii balance-sheet liabilities. Enron shares plummeted from about $90 a share last summer to 36 cents

jur sday.

Derivative contracts are built around master agreements developed by the International Swaps and Derivatives
Association. As far as its power purchase deals go, Enron is said to have favored master agreements drafted by
the Edison Electric Institute, which draws heavily on ISDA’s blueprint.

Those master agreements include certain events under which a counterparty can terminate a transaction. Among
those are failure to pay, failure to deliver and, of course, bankruptcy.

Whether counterparties will be able to claim exemption from the automatic stay that prevents anyone from
terminating contracts with a company that filed for bankruptcy will hinge on the type of deals they're a party to
and whether they mect certain statutory irements. Although Enron and its lawyers are likely to nitpick the
unwinding of each and every contract involving the company, legal experts noted that Enron's fondness for EEI
agreements should help those entangled in power purchase agreements to liquidate their positions since these
contracts treat all participants as forward contracts merchants. Such merchants are exempt from the stay
stipulated by section 362A of the bankruptcy code.

Key to how well or poorly counterparties will make out now that Enron's business has been all but dried out, is
how much if any collateral protects their transactions.

So far, it's unclear how much of Enron's derivative transactions were collateralized. But lawyers familiar with
the matter said it was likely that a large amount of those contracts were not collateralized.

That's likely to be bad news for some counterparties. Because if they're owed money by Enron on their netted
derivative exposure, they'll have to join other unsecured creditors, likely receiving little of their claims. The
bonds and bank debt of Enron took a nose dive afier Dynegy rescinded its merger offer, with trading levels
indicating that those mostly unsecured creditors thought they would recoup only 20% to 25% of the money
loaned to Enron.

-By Carol S. Remond, 201-938-2074; Dow Jones Newswires; carol.remond(@dowjones.com
(Phytlis Plitch contributed to this column.)

00600000000060


Fourteen Top Bush Officials Owned Stock in Enron Page | of 3

The Publici

An investigative Report of the Center tor Public Integrity
HOME NEWS STORIES TER COMMENTARY !
Web posted Jan. 11, 2002
Main Page specia: mepurt

News Reports Fourteen Top Bush Officials Owned

Center Commentary :
Subserne DLOCK in Enron

From the Editor
Feedback

Join the Center (WASHINGTON, Jan, 11} Fourteen of the top 100 officials in the Bush
administration owned stock in embattled energy services firm Enron,
Subserit according to a Center for Public Integrity analysis of Bush administration
personal financial disclosure forms, Their holdings were worth-at the time of
their filings-between $284,016 and $886,000. (See the table below.)

By Derrick Wetherell

Go

=| 4 Revelations about Enron's financial
6-mail addres 4

nd cick Go" to subscribe the chore price 1 plusce signtcanty The Center for Public Integrity will

to The Punic J and receive Mi

brief overview of each issue. since the officials filed their disclosure release on Monday @ report

h
We Pre forms. Some of the 14 officials have sold rrleeah takenennty 00 high-
. their shares since tney filed their ranking Bush administration
=a personal disclosure forms, officials, from the President down to
Go cabinet undersecretaries and the
Advanced Search These findings are from an heads of independent agencies

unprecedented Center analysis of the

finances and professional affiliations of the top 100 Bush administration
officials, from the President to cabinet undersecretaries to the heads of
independent agencies. The full report and searchable database will be

released on the Public | site Monday moming, Jan. 14.

In addition to the 14 who owned stock in Enron, two officials had professional
ties to Enron. National Economic Council Director Lawrence Lindsey served
aS a consultant to Enron when he was managing director of Economic
Strategies, Inc,, 2 consulting firm. He also served on Enron's board of
advisers. U.S. Trade Representative Robert Zoellick, who owned stock in
Enron, also served on its advisory council, earning a $50,000 fee for his time.

Among the largest Enron shareholders, according the personal financial
disclosure forms, are senior adviser to the President Karl Rove and
Undersecretary of State Charlotte Beers, who each held between $100,001
and $250,000 of stock when their forms were filed. Others include Zoellick
and Undersecretary of Commerce Grant Aldonas, who each owned between
$15,001 and $50,000 of stock when they were nominated.

Aldonas’ boss, Commerce Secretary Donald Evans, and Treasury Secretary
Paul O'Neill were the two officials contacted by Enron CEO Kenneth Lay last
October. The first calls came after Enron reported a third quarter loss of $618
million and revealed that the Securities and Exchange Commission was
investigating the company.

White House Press Secretary Ari Fleischer said Enron, in its contacts with

O'Neill and Evans, suggested that its dire financial situation could have broad
implications for the economy.

file://

WINDOWS \Temporary Int...\Fourteen Top Bush Officials Owned Stock in Enron.htm = 1/18/02

01000000000068


12/05/01 15:48 FAX 202 646 5198 . @oisso2zs $

|
* WSiicom Page 2 of 2

Nov. 6, 2001 -Enron's stock price drivps below $10 a share after reports the financially troubled energy
trader was seeking additional financi 1g to shore up confidence,

Nov. 8, 2001 -Enron files documents! with SEC revising its financial statements for past five years to
account for $586 million im losses.

Noy. 9, 2001 -Dynegy Inc.(DYN) ar oounces an agreement to buy its much larger rival Enron for more
than $8 billion in stock.

Nov. 182001 -Bnron &fnounces itis trying to raise an additional $500 million to $1 billion in new
private equity to shore up customer yind market confidence.

Nov. 19, 2001 -Enron restates its third-quarter carnings and discloses it is trying to restructure a $690
million obligation that could come dite Nov, 27.

Nov, 20, 2001 -Concems about Enron's ability to weather its spiraling financial problems send the
company’s stock down nearly 23% t) its lowest level in nearly 10 years. Officials from both Enron and
Dynegy say the merger was not in trouble.

Nov. 21, 2001 -Enron reaches criticn! agreement to extend $690 million debt payment.

Nov, 26, 2001 -Enron shares fall ancther 15% as investors continued to doubt that the deal will
completed. Shares finish day at $4.01.

Nov, 28, 2001 -Dynegy backs out of’ deal after Enron's credit rating is downgraded to junk bond status;
analysts say a bankruptcy filing is likely, Enron shares plunge below $1 amid the heaviest single-day
trading volume ever for a NYSE or ‘Nasdaq-listed stock.

Dec. 2, 2001 -Enron files for Chapter 11 bankruptcy protection; sues Dynegy for wrongful termination
of merger.

URL for this Article:
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01000000000847


2000 presidential campaign.

The company played a key role earlier this year when a White House task force met with business executives
and other interests to fashion a national energy policy, The task force was headed by Vice President Dick
Cheney.

00100000000016


SEF 18°S9 17:46 FR CUT 1393 202 862 248@ TO 48768S5eal622e974 P.B4vBe

to the debtor from such repo participent under or in connection with repurchase

agreements or against’ after ‘contracts against"”.

“= TOTAL PAGE.204 =
01000000001453


Enron Asked Treasury for Credit Aid

congressional source said it was thousands of pages - related to
the company.

In another development, Attorney General John Ashcroft (news -
web sites) disqualified himself from Justice's criminal inquiry into
Enron's conduct. The energy-trading company donated thousands
of dollars to Ashcroft's Senate campaign in 2000, In Houston,
Enron's hometown, U.S. Attorney Michael Shelby announced that
his entire office disqualified itself from the investigation because
he and other local prosecutors ‘‘have family relationships with
individuals who are arguably affected by the Enron bankruptcy."

Bush has pledged to pursue aggressively the investigation into
whether the company defrauded investors, including 401(k) plan
holders, by concealing vital information about its finances.

‘Ken Lay is a supporter,” the president said. ““But what
anybody's going to find is that this administration will fully
investigate issues, such as the Enron bankruptcy, to make sure we

Page 3 of 5

Snes User erent ue
Enron Hearings - NPR {Dev
13, 2001)

Lawyers Bid to Freeze
Alleged Stock Gain by
Enron Execs - NPR (Dee 7.
2001)

More..
Video

Enron Collapse Prompts
Pension Review « AP Jan
10, 2002)

Bush comments on Enron
collapse, relationship with
CEO Lay - Yahoo!

Finance Vision (Jan 10,
2002)

Enron could raise up to S68
from asset sale - CNN
Money (Dee 12, 2001)

, Related Full Coverage
can lear from the past and make sure that workers are protected, Oil and Gas
Treasury Secretary Paul O'Neill said Friday: *’On first blush it Utility Industry
looks like Enron operated within the rules and regulations ... with Deregulation

regard to how they managed their 401(k) plan, and if they did, then we need to look and sce if
there are appropriate changes we could make." He was interviewed on ABC's ““Good Moming
America,”

Lay denied that he sought help from administration officials. Enron said Lay's calls to O'Neill,
Evans and Greenspan were simply to give them a “‘heads-up" about Enron's problems.

“He felt an obligation to let them know what was going on," Enron said in a statement. “At no
time did he ask for any assistance from the government, nor did he intend to leave the
impression that he was asking for assistance."

Dave Skidmore, a spokesman for the Federal Reserve, said Lay contacted Greenspan on Oct.
26, and “‘the chairman did nothing in response to the call, It would have been inappropriate.”

Lay also first reached out to Evans on Oct. 26. The two eventually spoke three days later. The
first of Lay's two conversations with O'Neill was Sunday, Oct. 28.

“It is now clear the White House had knowledge that Enron was likely to collapse but did
nothing to try to protect innocent employees and shareholders who ultimately lost their life
savings," said Rep. Henry Waxman (news), D-Calif.

The bankruptcy has forced White House officials to face questions once posed to the scandal-
tainted Clinton White House.

Would Bush support naming a special prosecutor to investigate? Fleischer said no. He also said
he did not know any White House aides who had hired lawyers.

http://dailynews, yahoo.conv/h/ap/200201 | L/ts/enron_investigation_7.html W1vo2

01000000000051


Enron's President Said to Have Asked Treasury Official for Help

Officials at the Treasury and Commerce Departments said Mr. Lay had spoken
to Mr. O'Neill about Enron's condition on Oct, 28 and Nov. 8 and had spoken to
Mr. Evans on Oct. 29. Although Mr. Lay had maintained until late October an
optimistic public face about Enron's future, on Oct. 16 the company reported a
third-quarter net loss of $618 million. On the same day, Moody's Investors
Service announced that Enron's long-term debt obligations were on review.

The dates of the calls and the announcements of the bad financial news about the
company are significant, If Mr. Lay had made the calls earlier in October, before
the state of the company was widely known, the Bush administration would
have been aware of the true condition of Enron while Mr. Lay was promoting a
different story on Wall Street.

In an interview on CNBC Thursday night, Mr. O'Neill said Mr. Lay had not
asked for a government bailout or other intervention to save the company.

“He called me to advise me that Enron's problems were mounting and to offer
access for our technical people to talk with his technical people about the
contracts that they had that were causing them problems,” Mr. O'Neill said. "!
subsequently asked the undersecretary of the Treasury to speak with the Enron
people, which he did, so that we could satisfy ourselves that the Enron affairs
were not going to have a negative impact on U.S. capital markets.”

Asked whether Mr. Lay asked for government assistance, Mr. O'Neill said
"Absolutely not,”

On the same CNBC program, Mr. Evans said Mr. Lay had told him that Moody's
Investors Service was likely downgrade its rating of the company's debt.

Mr. Lay then said that if there was anything Mr. Evans could do to help the
company deal with Moody's (news/quote) “we would welcome that." But, Mr.
Evans added, Mr. Lay did not ask him specifically to intervene with Moody's.

“L listened to him and listened to their condition and listened to the issues he
wanted to raise," Mr. Evans said, “Subsequent to that I talked to Secretary
O'Neill and told him I had the call. It was a pretty easy decision to make. [ don't
think there was anything for us to do. Secretary O'Neill agreed with me there
was not so we didn't do anything."

A Commerce Department official said on Thursday that in Mr. Lay's call with
Mr. Evans, "there was no information discussed that wasn't already in the public
domain.”

Mr. Fleischer said that Mr. Bush was first told Thursday morning in the Oval
Office by Mr. O'Neill and Mr. Evans that Mr. Lay had made the calls to them
and that they had not been willing to intervene to help. The president then told
Mr. O'Neill and Mr. Evans, according to Mr. Fleischer's account, "You did the
night thing."

http:/www.nytimes.com/2002/01/1 1/business/1 1CND-ENRON.btml?pagewanted=print

Page 4 of 6

W102

01000000000059


Enron Contacted 2 Cabinet Officers Before Collapsing

Mr. Evans added, Mr. Lay did not ask him specifically to intervene with
Moody's,

"[ listened to him and listened to their condition and listened to the issues he
wanted to raise,” Mr. Evans said. "Subsequent to that I talked to Secretary
O'Neill and told him I had the call. It was a pretty casy decision to make. I
don't think there was anything for us to do. Secretary O'Neill agreed with me
there was not so we didn't do anything.”

A Commerce Department official said today that in Mr. Lay's call with Mr.
Evans, "there was no information discussed that wasn't already in the public
domain.”

Mr. Fleischer said that Mr, Bush was first told this morning in the Oval
Office by Mr. O'Neill and Mr, Evans that Mr, Lay had made the calls to them
and that they had not been willing to intervene to help. The president then
told Mr, O'Neill and Mr. Evans, according to Mr. Fleischer's account, "You
did the right thing.”

Mr. Fleischer said the president expressed no surprise, regret or annoyance
that he had not been informed of the calls from Mr, Lay until more than two
months after they occurred.

“Bankruptcies happen in our economy," Mr. Fleischer said. "And it's not
uncommon for people who are in the community, business community or in
the labor community, to talk to a cabinet secretary to tell them about the
financial status of their business and it ends there."

Democrats on Capitol Hill moved immediately to question the White House
statements. "It is now clear the White House had knowledge that Enron was
likely to collapse but did nothing to try to protect innocent employees and
shareholders who ultimately lost their life savings," said Representative
Henry A, Waxman, the California Democrat who is his party's senior
member on the House Government Reform Committee.

Mr. Fleischer said that he hoped that any Congressional inquiry would be
even-handed and that if it became "a one-party witch hunt, | think the
Congress is going again to remind the country on why people soured and
tired of those types of partisan investigations."

Mr. Lay and Enron executives have given more than $550,000 to Mr. Bush's
various campaigns, and Mr, Lay also gave $100,000 to Mr. Bush's inaugural
committee.

But Mr, Lay does not appear to have been a frequent recent visitor to the
White House, based on publicly available records. He visited the White
House only twice during the first five months of Mr. Bush's presidency,
according to Secret Service access control records obtained by The New
York Times (news/quote) under the Freedom of Information Act. The first
visit occurred on Feb, 22, 2001, the day Enron officials met with the staff of

http://www.nytimes.com/2002/01/! L/business/1 1 ENRO.html?pagewanted=print

Page 4 of 5

V1 1/02

01000000000065


Monday, December 17, 2001 5: 20 AM
To: Daily Briefing
Subject: Daily Briefing for Monday, December 17, 2001

AmericanBanker.com
http://www. americanbanker.com

DAILY BRIEFING

Monday, December 17, 2001

Place your advertisement on CareerZone Online, the online employment site
available through AmericanBanker.com, and reach qualified financial service
professionals. CareerZone Online allows companies to run ads in both our print
and online products. Position your ad in front of the 130,000 professionals who
read American Banker daily.

http://www. bankjobs.com/American Banker _CareerZone.asp

NATIONAL/ GLOBAL

Bank One: Microsoft Deal Breaks New Ground
Distancing themselves from the Internet banner ads that their
company spent millions on in the late 1990s, Bank One Corp.
executives said Friday that advertising is just one component
of the blockbuster online marketing desl they have signed with
Microsoft Corp. and that the comprehensive two-way agreement
marks a new level of sophistication in Web marketing.

http://www, americanbanker.com/cgi-bin/read_tagstory?20011217CARD910

For Now, Big Airlines Say Ne to Guaranteed Loans

SAN FRANCISCO = Months after President Bush signed an airline
aid package that included 510 billion in loan quarantees, only
two small airlines have applied to participate in the program.

http://www. americanbanker.com/cgi-bin/read tagstory?20011217NATLS09

WASHINGTON
In Focus = FDIC: Plenty of Credit Still Going Untapped
WASHINGTON = There's no question that lending, like many
businesses, is in a slowdown.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011217WASHE16

CARDS

Fleet's New Card Chief Wants Deeper Relationships Bankwide
46

00600000000075


Page | of 2

Lebryk, David

From: — Lebryk, David

Sent; Friday, November 30, 2001 10:45 AM

To: Wiss, Barbara

Subject: FW: IN THE MONEY-2:Collateral Key To Counterparties

~--~-Original Message----~

From: Lori.Santamorena@bpd.treas.gov [mailto:Lori Santamorena@bpd, treas.gov]
Sent: Friday, November 30, 2001 8:01 AM

To: david.lebryk@do.treas.gov; donald.hammond@ido.treas.gov

Subject: 0): IN THE MONEY-2:Cofateral Key To Counterparties Recovery

this is a good article
—— Forwarded by Lori Santamorena/BPD on 11/30)01 07:08 AM =.

Norman. Carlatonide trons. gov
To: Sheila. Bair@do.treas.gov, Peter. Blagantco reas. gov, Timothy Bitsbargentido tess. gov,
Edward. Cemarcogdo.treas.gov, Karen Dorsey@3do.treas.gav, Martha Elietido tress.gov,
" esa pas Dina Elkeiido vous gov, Jose Gablondogdo.treas gov, Jared. Groseghda.trans gov,

buoy Humangado wees gov, Gerry Mucha do.treae gor, Toni Gremnion toes a0
te Mcinemey bdo reas. gov. Peter NickoloMigpde reas.

gov. gov, Brian | trees. gov.
hone Salsdneies eececor Heidiynne. Schulteissétce treas.gov. Amy Smith iBdo.treas.gow,
Gary Sulton @do, trees gor, Brisn. Tishukifpdo tress. gov, Stave Berardifpda tras gov, ILCetinagido.treas gov,

Matthew, Eichnan@do. trea gow, Vien. 0. treas.gov, Isantamorenagteed reas.gov,
Michael Naveyiaide tras. gov, Fred. {reas Gov, James. Sharerghco trans. gov,
Jaan. Whaley do tress gov. Mark. Wiedman @do reas gow

oc

Subpect: Oy IM THE MONEY-2 Collstera! Key To Counterpartias Recovery

Noverber 29, 2002

IM THE MOWEY-2:Collateral Key To Counterparties Recovery

Dow Jones Newswires

Thoughts of an Enron bankruptcy jogged semories of past filings, auch as the
case of Drysdale Government Securities Inc., which involved public entities
being left on the book for millions of dollars in uncollateralised
government repurchase agreevents.

But bankruptcy laws have evolved aignificantly since the 2902 collapae of
Drysdale sent shockws hrowgh the financial community and forced banks to
pay cut tens of williona of dollara to cover Orysdsle’s cbligations to other
government securities firma,

More recently, Orange County's 196 bankruptcy following itw derivatives
debache and the bitter dispute surrounding Gersan's Mecallgesellechaft ag
for breach of forward petrolewm contracts suggests that scrinonious and
lengthy litigations might be in the offing, In the latter case, many
counterparties mettled out of court and took "haircuts" after a judge ruled
thet independent petrolecs marketers «ho entered into long-terr hedging
contracts 98 protection against escalating fuel prices could cue the metale
and engineering conglowerate for breach af contract.

But the extent to which thoes cases provide any lessons for Envom and ite
derivative counterparties rensins to be seen, experts said, dependiag ca
what sticky and complex isgues might arise in potential court acticas.

01/18/2002

01100000000017


After that conversation, Evans spoke to O'Neill *‘and they both agreed no action should be taken to intervene
with their bond holders,” Fleischer said.

The spokesman had said Wednesday he did not know of anyone in the White House who discussed Enron's
financial situation,

Fleischer also brushed aside talk of any conflict in the Justice Department investigation and said there was no
reason to turn the probe over to a special counsel.

Lay gave $25,000 to a leadership committee headed by then-senator and now Attorney General John Ashcroft
according to the Center for Public Integrity.

An attorney for Enron welcomed Ashcroft’s inquiry, the latest in a series of governmental probes into the
company’s demise, saying the investigation would “bring light to the facts."

“We want to get to the bottom of this too,” said Robert Bennett, a Washington attorney representing the
Houston-based company. "A lot of decent and honorable people work at Enron and we should wait until the
facts are out.”

Bush ordered a separate review Thursday of pension and corporate disclosure rules that could jeopardize
workers’ savings, ‘“There has been a wave of bankruptcies that have caused many workers to lose their pensions
and that is deeply troubling to me,” Bush said.

The Justice Department is forming a national task force to look into the company’s dealings. The group will be
headed by lawyers at the department's criminal division and include prosecutors in Houston, San Francisco,
New York and several other cities, said a Justice Department official, speaking on condition of anonymity,

The official declined to say when the investigation began. Enron faces civil investigations by the Labor
Department and subpoenas from congressional committees,

All are looking into the energy trading company's collapse, the largest bankruptcy filing in U.S, history,

The failure hit employees and investors hard, Workers were prohibited from selling company stock from their
Enron-heavy 401(k) retirement accounts as the company's stock plummeted. Many lost their life’s savings.

Enron executives cashed out more than $1 billion in stack when it was near its peak,

Former Enron chief executive Jeffrey Skilling, who left the helm nearly two months before the company’s swift
descent, welcomes the investigation, said spokeswoman Judy Leon. Skilling has said he had no idea, despite
Enron's falling stock values, that the company was on the brink of failure.

Formed in 1985, Enron had 20,000 employees and was once the world's top buyer and seller of natural gas and
the largest electricity marketer in the United States, It also marketed coal, pulp, paper, plastics, metals and
fiber-optic bandwidth.

One likely focus of the Justice Department investigation is possible fraud based on Enron's heavy reliance on
off-balance-sheet partnerships which took on Enron debt. The partnerships masked Enron's financial problems
and left its credit ratings healthy so it could obtain the cash and credit crucial to running its trading business.

The Houston-based company went bankrupt after its credit collapsed and its main rival, Dynegy Inc., backed
out of an $8.4 billion buyout plan late last year.

Just a year ago, stock of Enron, the nation’s largest buyer and seller of natural gas, traded at $85 per share.
Today it is less than $1.

Lay has close ties to Bush and his father, the former president. Lay was a top contributor to the younger Bush's
2

00100000000015


It's official: The Farm Credit System's top regulator says he
will not reintroduce the controversial national charter
proposal, which would have allowed the system's lenders to do
business outside their gecgraphic territories.

http://www, americanbanker,com/cgi-bin/read_tagstory?20020117CORG527

INVESTMENT PRODUCTS

AIM Offers 401(k} for Businesses with 1 Employee
AIM Investment Management has taken advantage of tax-law
changes to unveil a 401(k) plan for people who work alone in
their own businesses.

http: //www.americanbanker.com/cgi-bin/read_tagstory?20020117IPRDS14

MARKETS

Wamu Expects More Chargeoffs, Fewer Deals in '02
On the heels of a blockbuster 2001, in which it built through
a series of acquisitions and benefited from a strong interest
rate tailwind, Washington Mutual Inc. is charting a very
different course for this year.

http: //wew, americanbanker.com/cgi-bin/read_tagstory?20020117MMONS29

Hartford Life's Fund Family Is Another Link to Banks
Hartford Life was one of the first insurers to expand into
mutual funds, in 1996, and it looks to this added product
capability to strengthen its relationships in the bank
distribution channel.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020117INSP537

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4

00600000000069


does not include income derived in connection with the performance of services
which are related to the transmission of high voltage electricity.

Analysis. Tax Policy and Revenue Impact:

I Electricity systems throughout the world have been generally operated by
monopolistic, vertically integrated companies for most of this century. Outside the U.S.,
these companies have often been state-owned in contrast to mostly private ownership in
the U.S. While deregulation and competition are gradually being introduced in the U.S.,
many foreign countries have already opened their markets 10 competition. This has been
accompanied by partial or complete privatization of the state-owned companies in most
cases. The developing regulatory environment is attempting to promote competition and
inhibit the creation of monopolies by prohibiting vertical integration through the direct
common ownership of gencration, transmission and distribution assets.

2. The U.S. has long had @ national electricity “grid” linking the proprietary
transmission systems of most electric utilities, allowing for movement of electricity from
areas with surplus electricity to those area electncity shortages. Due to the separate
national ownership of electricity assets. lack of development capital and other factors,
these large geographic transmission gnds have not developed to the same extent outside
the U.S, With the privatization of electncity systems as described in paragraph ]., these
gnds are starting to develop outside the U.S.

3. Under the current U.S. tax rules dealing with FBCSI, it is possible that the
transmission of electricity on behalf of a related party could be considered as foreign base
company services income. Thus, if a CFC owned a cross-border transmission system
which carried electricity generated by a related CFC, the income earned in the destination
country (i.¢, outside the country where the electricity was generated) could possibly be
taxed currently under Subpart F. The Subpart F issue could be avoided, in theory, by
owning the portion of the transmission facilities in the destination country through a CFC
incorporated in that country. However, this is often not feasible due to non-tax,
commercial or regulatory requirements.

4. If the FBCSI rules were applied in this situation, it would place U.S. developers
of these systems at a competitive disadvantage, making it more likely that foreign
competitors will play the major role in developing these systems. Panicipation in these
foreign projects is important to U.S. based energy companies to help mitigate the
economic disruptions likely to occur as a result of U.S. deregulation of this industry.

5. The intent of the FBCSI provisions in Subpart F was to currently tax easily
moveable income from personal services that could be eamed through tax haven
Jurisdictions. In many cases, the income from such personal services might be performed
in a third jurisdiction that would not tax the income. In such situations, the income would
escape all taxation until repatriated to the U.S

00900000000360


American Banker.com Page | of 1

Washington

In Brief: Sarbanes: Look Into Enron-Like Practices

Wednesday, January 16, 2002
By Michele Heller

WASHINGTON — Adding to the inquiries into the collapse of Enron Corp., Senate Banking
Committee Chairman Paul Sarbanes announced Tuesday that he had asked Congress’ investigative
amm to report on the adequacy of financial reporting and the investment of employee pension funds in
company stock.

The Maryland Democrat, who has scheduled a Feb. 12 hearing on these issues, asked the General
Accounting Office to look into whether employers give employees enough information to understand
the risk of having their savings invested in the company they work for, and whether the Securities and
Exchange Commission should “reconsider its administrative determination not to explore application
of the Securities Act and the Securities Exchange Act to defined contribution plans.”

He asked the GAO to give him its recommendations by June 30.

Employers generally shy away from giving their employees access to financial advisers, because they
could be held legally responsible for a bad outcome.

Supporters of a bill to case those legal disincentives hope the Enron debacle will give the bill
momentum. The House passed the measure in November, but it has drawn little interest in the Senate.

House Education and the Workforce Committee Chairman John Bochner, the Ohio Republican who
sponsored the bill, said in a statement: “The House has passed bipartisan Icgislation to allow
employers to provide their workers with access to high-quality, professional investment advice. The
Senate should follow suit.”

Copyright 1997-2000, American Banker, All Rights Reserved. -
Printing, distribution, and use of this material is governed by your Subscription Agreement and
copyright laws,

file://C:\WINDOWS\Temporary Internet Files\OLK3313\0116c.htm O1/17/2002

01100000000066


Enron Congressional Hearings

12/12/01

Joint Hearing on "The Enron Collapse: Impact on Investors and Financial Markets”
House Subcommittee on Capital Markets, Insurance and Government Sponsored

Enterprises Chairman Baker (R-LA), Ranking Member Ney (D-OH)
Subcommittee on Oversight & Investigations
Chairman Kelly (R-NY), Ranking Member Paul (D-TX)

12/18/01

Enron Collapse — Full Committee Hearing
Senate Committee on Science, Commerce, and Transportation
Chairman Hollings (D-SC), Ranking Member McCain (R-AZ)
Sen. Dorgan (D-ND), Chairman of Subcommittee on Consumer Affairs, Foreign
Commerce, and Tourism, presided

Scheduled Hearings
1/24/02, 10:00 a.m., 342 Dirksen

Senate Committee on Governmental Affairs
Chairman Lieberman (D-CT), Ranking Member Thompson (R-TN)
"The Fall of Enron: How Could It Have Happened?"

2/4/02, 9:30 a.m. (time subject to change), 253 Russell

Senate Committee on Science, Commerce, and Transportation
Chairman Hollings (D-SC), Ranking Member McCain (R-AZ)
Sen. Dorgan (D-ND), Chairman of Subcommittee on Consumer Affairs, Foreign
Commerce, and Tourism, most likely to preside again

00600000000012


_ Enron Broadband Services, Inc. - Bandwidth Solutions Page 1 of

enone os bandwith solutions

Bandwidth Solutions

I Bandwidin Solutions
[search] Enron's Bandwidth Solutions use Enron's own ‘Whe Benstts and How?
network along with other networks to provide bandwidth users and
Qeowtare in viders with customized solutions to their bandwidth needs. EBS's
Products and width Solutions offers customers innovative ways to actively mi
7 fluctuations in the price, supply and demand of bandwidth. This
Bandwidth Solutions gives customers much desired flexibility and a new way to manage growth.

Dark Fiber At EBS we are able to provide unique solutions to our customers’ bandwidth
needs by leveraging the following areas:

Trading and Risk
Notional Private « EBS owns its own network
Sine Because EBS owns its own network, we are more than just a trading
company. We have the flexibility to buy and sell capacity on routes
eeewnere that many other buyers would find unattractive.
‘wos « Leverage Risk management/trading experience
el Enron has been providing tailored risk management services to
Services customers in the Energy industry for years. Enron has become a major
catalyst for the devel of eCommerce in the gas and electric
for our Customers: industries and, currently operates the largest eCommerce site in the
Cangenen ree world - EnronOnline.
‘Sokmtons tor ISPs
Sobeegas ter Content
Solutions for the
Eenermrine
pane onine ‘Copyright 1997-2000 Eneon Corp, Al rights reserved. ggabout the site Contac wa
CRS
more information:
Press Room
Contact Us
http/www.cc.enron.com/bandwidth/solutions.htm! 67/31/2000

00400000000017


LaKritz, Robb

From: Lakritz, Robo

Sent: Wednesday, January 09, 2002 8:44 PM
To: Hunt, Betty Ann; McCardell, Dan
Subject: RE:

1:45 p.m. works for me, We will come down and see her.
Thanke .

Robb Lakritz

woe Oniginal Message---

From: Hunt, Betty Ann

Sent: Weenesday, January 09, 2092 6:59 PM
To: Lakritz, Robo; McCardell, Ban
Subject: RE:

Right now Sheila is available at 1:45 (45 min) of 4:30 pm (1 hour). Please let me know what works for you.

Original Message

From: Gat, Shella

Sent: — Wednesday, January 09, 2002 6:56 PM
To: Lakritz, Robo; Hunt, Betty Ann
Subject: 2:

yep-- | will try to make time. Tomorrow is tough. Betty - please try to work in

----Driginsl Message-——-
From: Lakritz, Reb
Sent: Tuesday, January 06, 2002 2:45 PM
To: Bair, Sheila
Ce: McCardell, Dan; Adams, Tim; Dam, Ken; Gross, Jared; Kupfer, Jeffrey
Subject:
Sheila,

De you have time tomorrow to meet with Dan McCardell and me to discuss an
internal policy roundtable we are hoping put together on iasues related te the
Enron situation and ancillary developments?

Thanka.

Robb Lakritz

00100000000010


Enron's President Said to Have Asked Treasury Official for Help Page 3 of 3

bankruptcy filing of the nation’s seventh largest company, Enron officials said, as has b«
practice of executives of other large companies whose collapse could affect worldwide }
markets.

“He did not ask for anything,” said Mark Palmer, an Enron spokesman.

Enron's troubles and its numerous links to the Bush administration threatened to consun
president's time and attention even as he enjoys high approval ratings for his conduct of
terrorism.

Mr. Bush summoned reporters to the Oval Office on Thursday to declare that he had ins
economic advisers to develop a plan to protect workers’ pensions from similar corporate
Thousands of Enron employees lost their life savings and much of their retirement accor
company’s stock became virtually worthless last November.

Enron's auditor, Arthur Andersen, then said that it had destroyed a "significant" volume
related to Enron. The firm said it was still gathering information about the episode befor
would discipline the employees involved.

The Securities and Exchange Commission, which is investigating both Enron's collapse
Andersen's conduct, said its inquiry would be expanded to include the destruction of dor
addition to looking into whether it had created off-the-books private partnerships that di
true financial condition of the company.

Almost simultaneously, Attorney General Ashcroft said he was recusing himself from o
criminal investigation of the company's collapse because of his relationship with Enron.

Cause reported Thursday that a canvass of federal election records showed that Mr. Ash
received more than $50,000 from the company and Mr. Lay for his 2000 Senate campai

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01000000000044


Attachment

Tax Reform Act of 1986 - Extract from the House Committee

R to Ac 2

"The bill modifies the rule of section 954(b)(4), which excludes non-tax avoidance
income from current taxation under subpart F, by replacing present law's subjective
“significant purpose” test with an objective rule. Under the new rule, subpart F income
does not include items of income received by a controlled foreign corporation if it is
established to the satisfaction of the Secretary that the income was subject to an effective
rate of foreign tax equal to at least 90 percent of the maximum corporate tax rate (36
percent under the bill). However, this exception to subpart F does not apply to foreign
base company oil-related income described in section 954(a)(5).

Although this rule applies separately with respect to each “item of income” received by a
controlled foreign corporation, the committee expects that the Secretary will provide
rules permitting reasonable groupings of items of income that bear substantially equal
effective rates of tax in a given country. For example, all interest income received by a
controlled foreign corporation from sources within its country of incorporation may
reasonably be treated as a single item of income for purposes of this rule, if such interest
is subject to uniform taxing rules in that country,

The committee intends, by making the operation of this rule more certain, to ensure
that it can be used more easily than the subjective test of present law. This is
important because it lends flexibility to the committee's general broadening of the
categories of income that are subject in the first instance to current tax under
subpart F, The committee's judgerment is that because moveable income could often be
as easily earned through a U.S. corporation as a foreign corporation, a U.S. taxpayer's use
of a foreign corporation to eam thal income may be motivated pnmanly by tax
considerations, I, however, in a particular case no U.S. tax advantage is gained by
routing income through a foreign corporation, then the basic premise of subpart F
taxation is not met, and there is little reason to impose the subpart F tax, Thus, since the
scope of transactions subject to subpart F will be broadened, and may sweep in a
greater number of non-tax motivated transactions, the committee expects that the
flexibility provided by a readily applicable exception for such transactions will
become a substantially more important element of the subpart F system." (emphasis
added)

00900000000350


___ 4g/G5/01 15:43 FAX 202 646 5299 oc igolo-oza

WSI.com | Page | of 2

November 30, 2001

Review & Outlook
Investigating Enron . |

You can cut the Schadenfreude witha machete these days as Enron careens toward failure. Like any
fast-rising, innovative business, the energy trader made enemies, some with a fair gfievance and some
not. We hope the inevitable (and necessary) investigations keep in mind the difference.

Enron was a forthright advocate of ¢ »mpetition, as every obituary of the past few days has noted. Some
see the firm's collapse as discreditiny the market economics it championed, though the opposite is closer
to the truth. |

It strikes us that Enron was partly @ victim of its own success. Its revenues quadrupled in a year, thanks
to the fillip that Califormia's troubles provided to the wholesale power market. But profits were up much
jess — i.c., Enron was caring thinner margins in the energy-trading business it pioneered. The new
industry quickly became too compet|tive and transparent to afford any windfalls, just as deregulation
admirers would have predicted. |

|
Enron does not own U.S. power plarits and generally did not seem to make outsized profits on power for
resale in, say, California. But that di.in't stop California's eccentric attorney general, Bill Lockyer, from
blaming Enron CEO Ken Lay for thit state's electricity mismanagement, Last summer he told a Wall
Street Journal reporter that. "I would love to personally escort Lay to an 8x10 cell that he could share
with a tattooed dude who says, ‘Hi my name is Spike, honey." Consider that an unfair grievance.

Accounting matters are more troublig. The struggle for a century has been to make sure corporate

managers don't pursue their own agendas at the expense of owners. The emergence of special

partnerships, controlled and owned ly Enron's own senior officers, with which the company did some of j
its murkiest deals, would cause even libertarians to wonder what's been going on. Clearly Mr. Lay didn't H
fully understand what former Enron CEO Jeffrey Skilling was up to, and shareholders weren't told 4
either.

At the same time, Enron officers hac! a large amount of personal wealth tied up in Enron stock, which
has fallen from $90 to 61 cents. So t)e mere existence of these partnership deals docs not automatically
indicate corrupt intent. Only a detail bd investigation can resolve whether these deals were honestly
motivated, and whether Enron's (anc! Arthar Andersen's) interpretation of accounting rules was
defensible. In any case. trial lawyers will descend to squeeze every penny out of Enron's troubles for
themselves (and for shareholders or :mployees who held Enron stock in their 401 (k)s).

As for the investigations, we hope they won't be influenced one way or another by long connections
between Mr. Lay and President Bus!i. Even the hint of special treatment would be 2 political disaster,
especially for an Administration tha| promised to clean up after Bill Clinton.

While tradition has been not to maki! criminal matters out of accounting scandals, exceptions have arisen
recently. Federal prosecutors in Nev York have gone after Walter Forbes, who sold his company to
Cendant, giving rise to what before /inron was the nation’s most costly stock meltdown due ta bad
accounting. San Francisco prosecuts|rs recently extracted guilty pleas from executives of Aurora Foods

http:/interactive.wsj.com/archive/re trieve.cgi?id=SB 1007085 1 16787679680.djmétempiater... 1 1/30/01

00700000000022


Lebi David

Carter, Ted; Dom13.DOPO7 ArkinS; Dom13.D0PO7.BAKERR; Conly, Sonia;
Dom13.00P07,CUMBYR; Dom13,D0P07,DAVIEB; Dom13.00P07,DELAVINAL;

Dom13.DOP07,HOLTZBLATT J; Dom13.D0P07.IWRYM; Dom13.00P07,KNOPFK;
Dom13.DOPO7.MCCUBBINJ: Dom13.00P07.MIKRUTJ; Talisman, Jon;

Dom13.DOPO7. VandivierD; Dom13.D0P07.WALKERD; Atkinson, Caroline; Baukol,
Andrew; Budington, Michele; Cetina, Jill; Dom13.00P08,CHAVESM; Eichenberger, Joe;
Fall, James; Geithner, Timothy; Gelpern, Anna; John, James; Lee, Nancy; Lowery, Clay;
Ludden, Ken; Schuerch, William; Stedman, Louelien; Truman, Ted; Walsh, Helen; Alagiri,
Priya; Andrews, Lisa; Arnold, Thomas; Bordoff, Jason; Cameron, Art; Carter, Jana; Cohen,
Alan; Comstock, Neal; Decker, Larry; Desler, Anne; Egolf, Brian; Eizenstat, Stuart; Fant,
William; Flanders, Stephanie; Gathers, Shirley; Grayson, Cherry; Harvey, Reavie; Herold,
Valerie; Johnson, Linda; Joseph, Verlene; Keene, Carolyn; Keller, Alan; Kim, Carol; Klasky,
Helaine; Levine, Marne; Longbrake, John; Luce, Ed; Matera, Cheryl; McAuliffe, Laura; Mejia,
Annabella; Moore, Holly; Muldoon, Lara; Nisanci, Didem; Powell, Linda; Robertson, Linda;
Sandberg, Sheryl; Smith, Michelle A.; Starks, Ora; Stern, Todd; Summers, Larry, Toohey,
Frank; Valentic, Marsha; Barber, Francine; Barbour, Gaylen; Bieger, Peter; Carro, Richard;
Cohen, David; Edsall, Alexandra; Greene, Michelle; Joy, David; Kellogg, Cliff; McGivern,
Tom; McHale, Stephen; Mcinerney, Roberta; Sachs, Lee; Wolin, Neal; ex.mal, JONESM:
ex.maill. VJORSTAD; Adashek, Jonathan; Affieck-Smith, Joan; Baer, Gregory; Barr, Michael;
Bell, Rochelle; Beresik, Michael; Bresee, Elisabeth; DeMarco, Edward; Foote, Norman;

From: Jones, Janet
Sent: Thursday, Novernber 09, 2000 9:31 AM
To:
Dom13.DOPO7.FLANAGANR; Dom13.DOPO7,GERARDIG;
Gensler, Gary; Johnson, James; Lebryk, David; Ross, Lisa
Subject: Linda Robertson's info.

Linda L. Robertson

Vice President, Pederal Government Affaire
@nron

1775 Bye Street, N.W., Suite 600
Washington, D.C. 20006

(202) 466-9159 (direct)

(202) 828-3372 (FAX)

e-mail address: linda.robertson®enron.com

01100000000014


RE: Enron and Bankruptcy Bill - ABI Website Page 2 of 2

> The House Energy and Commerce Committee yesterday asked Arthur Andersen to
> provide records relating to its audits of Enron Corp., Dow Jones reported.

> At the same time, the committee sent a letter to former Enron Chief

> Executive Jeffrey Skilling, requesting an interview with committee

> investigators within the next two weeks. The committee also formally

> sought interviews with David Duncan, Andersen's partner in charge of the

> company's Enron account, and Andersen employees involved in the company's
> audits. The requests came after Joseph Rerardino, Andersen's chief

> executive, told the House Financial Services Committee on Wednesday that
> the auditing and consulting firm didn’t receive critical information from

> its client concerning the special-purpose entities that brought about

> Enron's financial downfall.

>

> Enron Seeks Supplier to Take Over California University System Powers

> Contract

> Enron Corp is looking for another electricity supplier to complete its

> contract with California’s two public university systems, a spokeswoman

> for California State University said yesterday, reported Dow Jones. Enron

> Energy Services Inc.'s current contract with California State and the

> University of California Systems expires on March 31, 2004, said

> spokeswoman Clara Potes-Fellow. The Enron subsidiary filed for chapter 11
> bankruptey protection Dec. 2.

>

>
> Enron Contract Hearing Moved To Dec. 18

> A bankruptcy court hearing regarding embattled Enron Corp.'s motion to
> negotiate, end or sell certain contracts has been postponed to next

> Tuesday, Dec. 18, Dow Jones reported. The meeting was originally

> scheduled for today. Earlier this week, Enron filed a motion with the

> court asking to be allowed to terminate with other parties certain

> contracts with safe-hardor provisions. The company doesn’t want to ask

> for court approval every time it seeks to end an agreement.
>

> In its filing, Enron had asked for authority to end some of these

> safe-harbor contracts and negotiate payments for each termination,

> Creditors, including Cinergy Corp.'s Cinergy Services Inc. and Wiser Oil
> Co., have filed objections. The motions and objections will be addressed
> at Tuesday's bankruptcy court hearing.

>

>

01/16/2002

00600000000051


Enron's President Said to Have Asked Treasury Official for Help Page 6 of 6

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01000000000055


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00300000000095


Enron Asked Treasury for Credit Aid

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01000000000053


1205-91 15:48 FAX 202 646 5199 Mo2s-023

“WSI.com Page 3 ofS

Street Journal sepored.

+ in debt on its Salence she 1. The W

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Enron shares closed Friday at 26 cen s, down 10 cents. The stock reached as high as $90 Hite over a
year 2g0.

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URL jor this Arista;
sip lir iersatlve. w3), cote siwalreviows ce! Toe Di-DO-2057 1202-00435 gi

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hup:/finieractive.ws].comarchive'te. sieve cgi?id=DI-CO-2001 1202-000436.djel&tempiatesy... 12/3/01

01000000000852


sell certain contracts has been postponed to next Tuesday, Dec. 18, Dow Jones reported. The
meeting was originally scheduled for today. Earlier this week, Enron filed a motion with the
court asking to be allowed to terminate with other parties certain contracts with safe-harbor
provisions. The company doesn't want to ask for court approval every time it seeks to end an
agreement.

In its filing, Enron had asked for authority to end some of these safe-harbor contracts and
negotiate payments for each termination. Creditors, including Cinergy Corp.'s Cine
Services Inc. and Wiser Oil Co., have filed objections. The motions and objections will be
addressed at Tuesday's bankruptcy court hearing.

00600000000058


FOANews.com Page 7 of 11

can, Congressman. What link do you see between the discussions the
administration had on energy policy and the financial collapse of this
company? Is there any connection?

DINGELL: Well, there's no connection there, but there is a connection
which is even more important, and that is what energy poticy was put.

Remember, Enron was pushing very, very hard to have total
deregulation of energy, particularly electrical utility energy sales that had
8 particular effect upon California and which caused huge disasters to
the people of California with regard to energy. Ptus...

HUME: Well, how many investigations are you talking about here,
Congressman? Are you talking about one about the financial collapse of
Enron, of are you talking about two, including a separate investigation of
energy policy, Califormia’s predicament, Enron's discussion with the vice
President on that matter?

DINGELL: All this tes together.
HUME; How?

DINGELL: Enron was busy doing many things including stripping its
employees of their 401{k) benefits, including possible insider trading,
including filing fatse reports with the SEC, the 10-Ks, the 10-Qs and
annual reports, anc they were also tied up in a peculiar relationship with

SNOW: OK, Representative Davis, what do you think? | want to get your
response to what Representative Dingell said,

U.S. REPRESENTATIVE TOM DAVIS, R-VA.: First of all, | think a lot of
whal Representative Dingell says goes to what the Post says this
morning.

SNOW: That's The Washington Post.

DAVIS: The Washington Post, it's: "Poll finds bad news for Democrats
looking for a traditional mid-term election edge.”

Of course we ought to investigate the collapse of Enron and what
happened to the employees and how some of the largest owners of this
and the CEO were able to cash out while forbidding their own employees
to do that. We ought to take a look at the financial accounting standards
‘on this. We ought to see if new rules and regulations ought to come
forward.

But taking a look at these overall policies, just this politics, there's
absolutely no evidence to date that the administration did anything
improperty. And we know that Enron gave a lot of money to a jot of
players in Washington on both sides.

SNOW: Car! Levin, who is going to be running an investigation on the
Senate side, has said on another broedcast that he thinks that Ken Lay,
in fact, was asking over the phone for inappropriate favors from the
administration, Do you see any evidence of that?

DAVIS: Well, we know he was on the phone. We know that they had

file://C:\WINDOWS\Temporary Internet Files\OLK5141\FOXNes fe) 50 2 1 OW/16/2002

a _ 01000000000092


Fourteen Top Bush Officials Owned Stock in Enron

Page 2 of 3

Fleischer said that O'Neill, in response to the calls from Enron, "contacted
Undersecretary [Peter R.] Fisher, Undersecretary Fisher looked at that and
concluded there would be no more impact on the overall economy.”

Fisher was one of the 14 who owned stock in Enron at the time he filed his

financial disclosure. He valued his holdings within a range of $1,001 and

$15,000.

Among the report's other significant findings was that the largest sector in
which the administration is invested, in terms of maximum dollar value, is the
energy sector, with some 221 investments worth up to $144.6 million,

The rest of the study's results will be released Monday on the Center's on-line

investigative report, The Public i, waw.public-i.org.

Asset Minimum Maximum Asset

Officials Who Owned Enron Stock

Name Position

Name
Fisher, Deputy EPA Enron
Linda Administrator
Fisher, Deputy EPA Enron
Linda Administrator
Fisher, Undersecretary of Enron
Peter Treasury
Beers, Undersecretary of Enron
Charlotte State
Cooper, Undersecretary of Enron
Kathleen Commerce
Dorr, Undersecretary of Enron
Thomas Agriculture
Dorr, Undersecretary of Enron
Thomas: Agriculture
Marburger, Dir., Office of Enron
John Science and
Technology Policy
Rumsfeld, Secretary of Enron
Donald Defense
Deily, Deputy U.S. Trade Enron
Linnet Representative
Deily, Deputy U.S. Trade Enron
Linnet" Representative
Aidonas, © Undersecretary of Enron
Grant Commerce
Calio, Asst. to the Enron
Nicholas President, Dir. Of
Legislative Affairs

Libby, |. Vice President's = Enron
Lewis Chief of Staff
Zoellick, US Trade Enron
Robert Representative
Tutweiler, Advisor to the Enron
Margaret President for

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01/14/2002
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00900000000338


Enron Asked Treasury for Credit Aid Page 4 of 5

And there was a development reminiscent of Clinton's Whitewater: missing documents.

The big accounting firm that audited Enron's books, Arthur Andersen LLP, notified
investigators that it had destroyed a “ significant” number of documents related to the
company. Andersen said it didn't know whether its directive to preserve documents demanded
by government investigators was violated.

At the Securities and Exchange Commission, already investigating Andersen's auditing work
for Enron, Enforcement Director Stephen Cutler said destruction of documents was ‘an
extremely serious matter” but would not deter the SEC from pursuing its probe,

As for the company's contacts last fall, administration officials said Lay told Evans on Oct. 29
that he would welcome any support to help the company deal with a bond-rating firm that was
considering downgrading Enron. Enron's credit rating was critical because, if lowered, $3.9
billion in debt would come due. Of that amount, $2.4 billion previously had been hidden in
partnerships that were created to keep debt off Enron's books.

In one of two conversations with O'Neill, Lay discussed a past example in which the Federal
Reserve pressured several large financial institutions to bail out a Connecticut hedge fund,
Fleischer said.

The calls to Evans and O'Neill came after investors and the public learned of the extent of
Enron's problems, when the company posted major losses Oct. 16.

Enron filed for bankruptey Dec. 2, after months of conjecture about its finances.
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01000000000052


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00900000000324


IAN-23-2082

10:26
BUDLNESS

Joses a third of the electricity it buys to theft
and Wakege. The combines annual Josses of
India’s seate electricity boards ace staggering
Doubts remain about the wisdom ofthe
Dabhel project, if not the echics of its pro-
moters (which, Enron insises,met she highest
standards). Maharashtra has 2 power snort
age. which it naw copes with by cutting of
many of its custormers far hours every day.
But a plant designed ¢o kick in ot periods of
peuk demand rather chan a base-load plant
like Dalbhol could have cesit with ehss. If
MSEB cannot pay, tt will not be ¢!
holders who suffer bur the public in india
and abroad: payments ure guaranteed by la~
dia's state and central governments as well
as by agencies in investors’ home countsies.
Now that msee has met its October bill,

the tension has subsided—
‘Wade Cline, Baron's managing director in
India, says the company will "see if there is
room tonegotiate” as lord as sta conmnuss
someerits obligations. Ifitdoes mot, there isa
“big danger’ thatlenders will stop financing
the second phate There is calle chat Enron
may even sell ts stalaein Dabhol alogerher.
Reforms could help, A bill pending in
parliament would encourage full-fledged
tending of electricity, which would allow
Dabhot to seek customers besides mera (and
Enron to move into a business chat itis keen
1a enter) It would also encourage Mere and
ts hankrupt counterparts in tates fi-
nally 10 meter and price dectncity properly.
If that happens, eeznaps Dabho! will eum
putin be more cfa blessing thana curse.

Power in California

Light on solutions

Califarnia’s politicians are not resolving the state's energy crisis

ALIFORNIANS have been enduring the

lavestin asringof power "emengencie:’
that have become 20 routine that they are
announced alongside the weather forecest
on the evening news, Southern California
Edison and Pacific Gas & Electric, the state's
two giant power utilines, have been fore:
1 buy power for Ger more than they 2
gally allowed to chazge thei il custormess
in recent months, $0 they are bleeding red
ink Arthe latest count, they had oustanding
debis of over $10 billion, With credit-rating
agencies warnang thatthe utilities ore within
days of bankruprcy, the state's governor,
Gray Davis, has been under intense pressure
rocomeup with a solution.

MrDavis delivered his"stateofthestace”
speech on January Shy it was
mostly devoted 19 the power
crisis. He went on a rampage
against the power marketing
firms, calling them out-of:
state criminals and ne threat
ched to cut of the state fron
the regional electricity-trad-
ing markets ignoring the fact
that Calsfomis gets 8 Quarter
of its power from outside the
Stare) He also branded de~
regulation a “dangerous and
colossal failure” that had peo-
ducedan"enexgy nighrmare’,
and raised the spectre of some
sor of state control over
power distribution and gen-
eranon assets.

His speech did nar, there
fore, do anything to improve
ors were
cheered that the governor

aid explicitly thatke would noclet the utili-
tues go broke, but they nod that ne refused
to reveal how exactly that could be avoided
Standard & Poors. 3 rating agency, warned
hat “the governors message lacked con-
structive solutions vo the as’ finandal
crisis.”

‘Undererred, Mr Davis few the next day
10 Washington to plead his case For some sont
of abail-out Ata special emergency sumer
called by BUl Richardson, the energy secre
tary, ond Larry Summers, the treasury secre
cary, the governor's officials sat down wet
ities and the main suppliers of power
to California in the hope of forging some sort
of a compromise. No final deal was reached,
bur lower-level folk will consimue ciscus-

lights go out

sions, and the big-wigs will meet again ax the
weekend to my to finalise a pact

Any solution hasrocontaia a number of
clements For a start, the utilities need co be
pven more time ro pay the debts tha: they
have accumulated, Some bridping srrange~
ment. whether arranged as 8 loan from ced
inors or via the issut of 2 bond securitizing
antidpaed revenues, will stave off the a=
mediate liquidity crunch and pasipone
banleuptry, Then suppliers will probably
have 10 agree wo provide power at fixed
prices under long-term contracts, rather
thanentirely ough spotmarketson which
peices fluctuate rapedly. ;

Next comes the medium-term quesaan
of who will pay the utilides’ bills It seers
certain that Californian consumers will end
up paying some of thee, loth though the
politicians may be to pass them on through
further rave hikes, The beleaguered sharé-
holders of the ut jes can alsa expect to take
a further besting However, a federal b
out looks unlikely; the prasent adminisrra-
tisn has said it may be prepared to buy
power atan “artractive fined rae” from gen-
erasing Companies 10 help stabilise the mar~
ket, but che new administration owes Cali-
fornia, which voted against Mc Bush, few
Svours, In any case, it believes that states
should have more management of theirown,
affoirs. Phil Gramm, 3 powerful Republican
senator fram Texas, say’ he will “vigorously
oppose” any efforis to “let California poliri-
cans off the hock’.

That moves on to the third longer-tezmn
component of any solution: fixing the mud~
died regulatory morass thar passes for “de-
requlanae” in Califomis. James Hoecker,
chairman of the Federal Energy Regulatory
Commission (enc) put it bluntly: "As dis
appointing as it muy seem 10 some, we cans
nol ‘price cap’ California out of a supply
shortage. and generators should notexpect
furure earings that dramatically cutdis-
tance che industry's histerical
performance.” He added that
fing things will cequire work
“on several Fronts over a pet
jod of time=in California's
case, three mo five years.”

This is sensible, stright
tale that California's irte-
sponsible polivicians and reg-
ulstors would do well to heed.
That is because, while Mr
Hoecker proved no knightin
ghining armour for therm, he
was more sympatheuc %
some sore of federal role in
solving Californas's crisis than
were ather commissioness of
the reac On
however, Mr Hoecker te
signed Ir is now crystal clear
that cnly Califomia can fet
California cus of this mess.
——_—

‘Tae «EO MONIT Jamvanae 12TH L99H

01000000001016


Market Solutions to Climate Change
Marriott Metro Center, Washington, D.C.
September 13", 2001

Preliminary Conference Agenda

Time Item
8:00 — 8:30 Registration
8:30 — 9:00 Opening Remarks

Michel Gelobter, Executive Director, Redefining Progress
TBD, Conservation International
Keynote Speaker — Dr. R. Glenn Hubbard,
9:00 — 9:30 Chairman of the President's Council of Economic Advisers
9:30 = 10:15 Market Approaches to Carbon Reduction
Introduction - Mark Glickman, Redefining Progress
Presenter - Paige Brown, Corporation for Enterprise Development
_* _'Grandfathered’ vs. Auctioned Permits and Trading
10:30- 11:45 Policy Approaches to Strengthen the Economy
- Recycling Carbon Revenues
* Moderator — William Gale, The Brookings Institution
¢ Kevin Hassett, American Enterprise Institute,
- Corporate Tax Integration
¢ Andrew Hoerner, Center for a Sustainable Economy
- - Payroll Tax Reduction
11:45 -12:45 | Lunch Keynote Speakers (start 12:00) — Introduction — Michel Gelobter
« The Honorable George Miller, U.S. House of Representatives, D-CA
* Amory Lovins, CEO, Rocky Mountain Institute
1:00 — 2:15 Private Sector Initiatives to Limit Carbon Emissions
Introduction — Jerome Sayre, Redefining Progress
* Moderator — Glenn Prickett, Executive Director, Center for
Environmental Leadership in Business, Conservation International
* Lisa Jacobsen, Enron Corporation

2:30 — 3:45 Financial Market Views of Industry Exposure to Carbon Risk
introduction — Jerome Sayre, Redefining Progress

* Frank Dixon, /nnovest

* llene Fiezsel Bieler, Citigroup

* Julie Gorte, Calvert Group

¢ Alice LeBlanc, Environmental Finance Products

3:45 - 4:00 Closing Remarks
Michel Gelobter, Executive Director, Redefining Progress
5:00 — 7:00 Reception on Capitol Hill

00300000000096


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00900000000337


Fourteen Top Bush Officials Owned Stock in Enron Page 3 of 3

Communications

Rove, Karl Senior Adviserto Enron 100001
the President

250000 Stock

* Two separale holdings:

Dertick Wetneral is a senior weiter at the Camier, To wite a latter to the editor for putiicaion, per to
loners @publiciningnity org. Please incde a daytime telephone number.

© Copyright 2002, The Center for Public Intageity. All rights reserved.

=TOP

Min Page News Reports Center Commentary Subscribe From the E¢itor Feedback Jein tha Center for Public Intngrity
Suggest-a-Story

© Copyright 2001, The Center for Pubic integrity. Al nights mservod
IMPORTANT: Read the Copyright & Dfsctalmer sfatemmat for move information.

01/14/2002

file:/C:\WINDOWS\TEMPOR~2\OLK173\FOURTE~1.HTM
01000000000864


paté
RACEWELL 3
TTERSONu:

ATTORMETS AT Law

Michael L. Pate
Parner

2000 K Screer NW, Suite 500
‘Washingron, DC 20006-1872
; Phone: 202.828.5841
May 8, 2001 Fax: 202.223.1225
- : . mpate@brace «. com

Ms. Barbara Angus

Acting International Tax Counsel
United States Department of Treasury
1500 Pennsylvania Avenue, NW
Room 1000

Washington, DC 20220

Re: Meeting with Enron on Monday, May 14, 2001 at 3:30 p.m.

Dear Barbara:

Enclosed are materials provided by Enron detailing the issues for the meeting referenced above. We
look forward to visiting with you next week, and to discussing the material with you.

The people that will be present are:

] James ("Jim") Ginty
Vice President, Tax
Enron Broadband Services
DOB: { ole)

Cullen Andrew Duke
Vice President

International T.
DOB: (ble

Nw

3 Michael L Pate
Dog: ()(b)

Please cal! me a1 (202) 828-584) if you have any questions or need additional information. Thank
you

Very truly yours,
yy L.L.P.
Michael L. Pate

MLPijeb
Enclosures

00900000000342


MAR @2 2888 L2:25 FR CWT 1335 Nn Re 282 B62 2488 TO Lesgee Ted weled2 P.Gaves

manage their weather-related business risks. Second, the catch-all clause is revised to
ensure that the new definition (a) is not limited to products that address “economic”TM risk,
which could inadvertently narrow the current definition, and (b) refers to transactions
entered into “by swap participants” rather than “in the swaps market” since swap
transactions do not take place on federally-regulated markets; swaps are entered into by
agreements between parties “over-the-counter.”

To ensure that the intent of the amendments to the swap definition is clear, report
language in the Statement of Managers is necessary.

2) Protection of netting rights for commodity, securities and forward contracts and
repurchase agreements.

a) At the appropriate place in each bill add the following amendments to the Bankruptcy
Code:

Amend !1 U.S.C. § 362(b)(6) by (i) replacing “a margin payment, as defined in section
101, 741, or 761 of this title, or settlement payment, as defined in section 101 or 741 of
this title, arising out of” in the sixth through eighth lines thereof with “any payment or
transfer due from the debtor under or in connection with” and (ii) inserting between the
words “against” and “cash” in the eighth line thereof: “against any payment due to the
debtor from a commodity broker, forward contract merchant, stockbroker, financial
institution, or securities clearing agency under or in connection with commodity
contracts, forward contracts or securities contracts or against”.

Amend 1] U.S.C. § 362(b)(7) by (i) replacing “a margin payment, as defined in section
741 or 761 of this title, or settlement payment, as defined in section 741 of this title,
arising out of” in the third through fifth lines thereof with “any payment or transfer due
from the debtor under or in connection with” and (ii) inserting between the words
“against” and “cash” in the fifth line thereof “against any payment due to the debtor from
such repo participant under or in connection with repurchase agreements or against”.

5) Explanation:

Under current law, a safe harbor from the application of the automatic stay in bankruptcy
proceedings is provided for several types of financial transactions. This safe harbor is
intended to provide legal certainty to the enforceability of netting rights in the case of
bankruptcy of a counterparty to one of these types of transactions. For swap agreements,
netting rights in connection with “any payment or transfer” arising in connection with the
transactions are protected in current law. However, for commodity, securities and
forward contracts and for repurchase agreements, under current law the protection is
more limited -- it only applies to netting rights related to “margin payments” and
“settlement payments.” This inconsistency in statutory language can create legal
uncertainty about the exercise of netting rights in bankruptcy.

To remedy this problem, the amendment would apply the same protection for
commodity, securities and forward contracts and repurchase agreements that is already
provided for swap agreements.

01000000001391


JAN-23-2021

even more traumatic, partly because they
often hunt for a new name when

Aname thatis widely recagnived does

Agilent, the name he developed for a ‘Spin-
off of ue (as Hewlett-Packard wasin

18:28 OASIA IT! 282 622 8331 P.e1
c- ae a a7) er eekns |
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things new paren many sen x Sannces ADUNST TON

family ransivvities to consider, 20 much withadsay He TTIME — =o

need 10 pick omething hac will be memno- is over: so", Ur z

rable but not mocked. Campanies find ix this wes thecompany’s moniker. Lander Associates in San Francisco, tours

they are in the throes of a disnurbing
merger. cr when an old name has
become devalued
This week, for example, Glaxo
e unveiled a new cot-
antity developed by Fur
, a design company thet
ts the Wntermediate upper
hus joins the iuswious
PricewaterhouseCoopert
uerChrytler as examples
ries that merge but cannot
ide which is the underdog and
consigned to oblivion. Paul Bar-
reBrance’s creative director, has
with s new logo built around the
im, which it presumably what
Und upcalling che company.
tour are injuals a way to gloss over an
swhwerd past? British Petroleum, gobbling
up Amoca and Arco, managed to avoid be~
coming BritishamocoArce. Prudently, it
decided that the “Britith” was 2 butden-

l

notated much meaning. When a telecoms
company asked John Williamson of Wolff
Olins, a consultancy, winat he thought of
Microtel 25 a name for 2 wireless nerwork,
he thought ic was temible and sugested
‘Orange instead. tured out 1% be one of
the branding snumphs of the past decade.

Notmany know that Starbucks was
the coffee-drinking fit mate of “Moby
Dick", says Julie Conineau, director of
naming atinterbrand in New York, bur che

prouder days) At least Agilent is
proncunceable, as are other ersatz
dlassicals such as Vivendi, Avensis
and Corus, Not so Dingea. product
of the Guinnest-Grand Met mergst
(‘we hace it when people say
Diego.” complain che staff), Innogy, |
formerly Britain's National Power;
or Thales, once Thomson-car, #
French up now inscrurably
normed aftera Greek sclentst
These days, a new name has 0
be available as 2 domain name. Italso has
to squeak through trademark law, and to
avoid an undesirable meaning in a foreign
Isngunge (like c's Nova, whose name |
meant "No go" in Spanish) And it hast |
ess muner with the corporate top ‘brass, |
whe are likely to be deeply conservative. |
How else to explain why Andersen Con~
sulting should rejece the vivid and memo-
mble nome of Mind Rocket and semlein- |
svead for the meaningless Accenture? |

Enron in India

Generation gaps

ust

Enron's Maharashtra power project continues to spark cantroversy

INCE its conception neatly 2 decade 2¢0,
the Dabhol power project in the Indian
state of Maharashtra bas generated more
problems than power, Dabhol and its main
Shareholder, Enron Corp, based in Texas,
were accused of beibing Indian officials in
order 19 get the project approved, and of sol-
erating police brutality to get it built, charges
Enron says were dismissed by the courts.
This week its sole customer, the Maharashtra
Stave Electricity Boord (sisea), came chose co
default on v1 billlon rupees ($aym) of bills
owed to Dabhal since last Octaber.
Catastrophe was averted on January 9th
when the state came up with the money to
meer the bill, but the ensis is mor over. Dab-
hol's power will become even more expen~
sive when a second phase of the project goes
into operation larer this year. [tis bard to say
which is the bigger worry: the burden on Ma-
harathtrs of a power plant that it cannot af
ford, or the damage that would be dene 10
Indio’: reputation as a destination far for-
eign investment were the state todefault

a

‘Enron's investment in India was sup-
posed to Aaner both. India liberalised its
economy in 1991 and Bron looked brave for
pioneering foreign investment in the coun~
try's power sector, But the Dabhol project. on.
the Malabar coast, caused so much cons
versy that in subsequent elections it helped
to defeat the state government that had ap-
proved:t.

The World Bank refused to france it,
saying that Maharashira cou'd not absorb
the additions! power at the price which
Duabhol would charge Yer in i996 the new,
estensibly ant-Dabhol government sp-
proved a 740 megawatt plant costing $1.1 bul-
Gen that went int operation in May 1999
("Phase One"), anda second L4ac-megawat
plant costing $.9 billion, which is Bo% built
(Phase Two"). “india had no experience in
negosating” By 2 top Indian government

Picial dealing with elecwicity, "Enron was ®
Savvy nefotistor.” The process was secret,
deepening suspicions.

Phase One supplies champagne power

to 2 customer whose budget does not ever:
extend to beer. As india insisted, its fuel is
naphtha, which unexpectedly doubled in
price after the agreement was negotiated,
driving up the variable component of Dab-
hol's tariff. mses us also obliged topaya fixed
“capacity charge” of som rupees a manth—
covering debt, Axed running costs, and the
profits of Enron and other shareholders
even if it takes no electricity from Dabhol.
ven when the plant is operating at close to
full capacity, its electricity is more expensive
than that from other sources available to
sagen, mostly old coal-fired and hydro-elec-
tric plants The state's clectricicy regulator
has ordered mee 10 fvour cheaper sources
ef supply; the resulting dropin Dabhel’sour~
put makes each unit ridiculously expensive.

Nephiha prices have again receded, 0
voriablecosts should dropscon. But with the
cripling of capacity, Dabho! will switch Som
naphtha to liquefied astural gas. This is a
cheaper Fuel, butitis boughtuncer a zo-year
contract. Dabhol’s Axed charge to seta will
therefore soar. The worried stale gover
ment hat set up a committee to review the

ct.

sess Gnancial plight iv not entirely
Daichol’s fault As in osher states, Maharash-
tea’s politicians oblige the electricity board to
supply power st below cost te farmers and
other favoured consumers. Moreover, Maxs

fwd Leom@aory pAMUANY 13TH 2801

01000000001015


Anachment B

“Even with the changes made in 1975 and succeeding years that limited the opportunity
to use excess credits to shelter non-extraction income, multinational oi! companies had
paid relatively little U.S. tax on their foreign operations. In part, this was due to the
special per country extraction loss rule, which provided that in computing the 46-percent
limitation on extraction taxes, extraction losses were not taken into account if they arose
in a country for which the taxpayer had a net extraction loss for the year, and which this
Act repeals (Section 907(c)(4)). When the downstream act'vities were conducted in a
foreign subsidiary, however, U.S. tax generally could be avoided even if foreign income
taxes were not sufficient to shelter al! of the foreign income, since income of a U.S.-
controlled foreign subsidiary was not subject to U.S. tax until that income was paid to its
shareholders. Also, because of the fungible nature of oil and because of the complex
structures involved, oil income is particularly suited to tax have type operations. In
addition, because oil is fungible, downstream income can be manipulated - directly, if the
taxpayer produced the oil, or indirectly, through swapping or similar practices. Therefore
Congress did not limit Subpart F treatment to oil income associated with oi] produced by
the taxpayer. -

The net result has been that petroleum companies have paid little or no U.S. tax on their
foreign subsidianes’ operations despite their extremely high revenue. Congress believed
that all integrated oi! companies should pay U.S. tax on foreign oil related income
eared in countries with taxes on that income below the U.S, rate. Accordingly, the Act
applies the present law anti-tax have provisions (Subpart F) to tax currently certain low
taxed foreign oil relaied income earned by foreign. corporations controlled by U.S.
persons.

" Extract from the Report of the Jount Commitice on Taxation to Public Law 97-248; 97" Congress; H.R
4961 (emphasis added)

00900000000358


Smith, Amy

Seni Monday, Devore. 2001 12:20 PM
Subject: Fv ABA'SIIN News for December 17, 2001
FYI...

-----Original Message-----

From: ABA's Washington Information Network [mailto:WIN@aba.com]
Sent: Monday, December 17, 2001 10:15 AM

Subject: ABA's WIN News for December 17, 2001

ABA'S WASHINGTON INFORMATION NETWORK NEWS
MONDAY, DECEMBER 17, 2001

eee cee tree eee teers

LEGISLATIVE NEWS
CONGRESSIONAL CALENDAR

Tuesday, December 18:
“The Senate Commerce, Science and Transportation Committee will hold a
hearing on the bankruptcy of Enron.

Wednesday, December 19:

-The Commerce, Trade and Consumer Protection Subcommittee of the House
Energy and Commerce Committees will hold a hearing on how Electronic
Communications Networks (after hours stock-trading networks) have been
affected by the September 1ilth attacks.

CONTINUING RESOLUTION

On Friday, the Senate passed a continuing resolution te keep the federal
government funded through December 21. The House passed the resolution
last

Thursday.

SEIDMAN TO BE STAFF COUNSEL FOR REP. LAFALCE

House Financial Services Committee Ranking Member John LaFalce (D-NY) has
announced that former OTS Director Ellen Seidman will serve as staff
counsel

for the Democratic members of the Financial Services Committee.

ECONOMIC STIMULUS LEGISLATION

House and Senate negotiators worked through the weekend te come to a
compromise on economic stimulus legislation, although no final agreement
has

been reached. The House Republican Leadership has said that it may end the
stimulus talks if negotiators do not make progress on reaching a compromise
by Tuesday evening. A revised economic stimulus bill to be written by
House

Republicans may be considered on the House floor tomorrow evening.

TERRORISM INSURANCE LEGISLATION

Senate Majority Leader Tom Daschle (D-SD) reportedly may bring a consensus
terrorism insurance bill to the Senate floor tomorrow. A general agreement
was reached last week on most of the provisions of the Senate's plan.

ial

00600000000094


12/05/01 15:44 FAX 202 648 5199 . oizroz3

; .  WSIcom Page | of 2

November 29, 2001

Major Business News

Enron CEO's Political Connections
Run Silent During Conipany's Crisis

By Bon Davis
‘Staff Reporter of THE WaL!. STREET Jour jai

For years, Enron Corp. Chairman '<enneth Luy has been George W. Bush's best friend in the board
rooms of America’s top corporation s.

Since 1993, Mr. Lay and Enron have donated nearly $2 million to Mr. Bush's political career, making
them Mr. Bush's biggest backers. When Mr. Bush was Texas governor, Mr. Lay, a Houston resident,
helped him win passage of a state education-reform plan that brought Mr. Bush national acclaim. During
that fight, Mr. Lay got to know aids who became power players in the Bush White House.

Mr. Lay was confident enough of tis friendship with Mr. Bush that he even needled him for needing
arthroscopic surgery to repair a jopzing injury. "I want you to know that at least one jogger [me] got past
50 without that surgery," Mr. Lay scribbled in a note to then governor in 1997

Still, as Enron faces its greatest cri,is, Mr. Lay's influence and personal relationships with the
administration have amounted to litle. There appears to be no effort by the White House or Congress to
bail Enron out of its difficulties, Wiich are widely seen as self-inflicted. The White House had no
comment on Mr. Lay's predicament, a spokeswoman said. Indeed, short of an actual bailout to help
Enron meet its obligations -- such :\s an aid package approved by Congress or organized by government
officials from private sources, simi'ar to the rescue of the Long Term Capital Management hedge fund --
there is little Washington can do at this stage to help the company. Nor is there likely to be a bailout,
since Enron has burned many bridjes on Capitol Hill with its history of strong-arm lobbying tactics,
some congressional aides say.

fore on || That muy reassure a cynical public, says Robert Mosbacher, Commerce
‘ere and fall of || Secretary in the first Bush administration and a longtime friend of the current
Enron || presidest as well as Mr. Lay, “I don't see anybody being let off the hook,” he
‘said.

Mr. Mosbacher says he introduced Mr. Lay to the Bush family around 1987, when he persuaded Mr.
Lay to help raise money for Georg: H.W. Bush's successful presidential bid in 1988. Mr. Lay
contributed $461,000 to the young :r Mr. Bush's two successful gubernatorial campaigns. He also made
Enron's fleet of corporate jets available to Mr, Bush and won his help in lobbying officials in other states
considering Enron projects.

His influence with then-Gov. Bust! was based on more than money. Mr. Lay was one of the state's
leading business executives and delsply involved in Texas politics. Under Mr. Bush's predecessor,
Democrat Ann Richards, Mr. Lay .eaded the Governor's Business Council, a state advisory board. Mr.
Bush asked him to stay on the job 0 help develop an educational reform plan and sell it to the Texas
Legislature.

hitp://interactive,wsj.com/archive/ etrieve.cgi7id=SB 10069877872761 09720.djméctemplate=... 11/30/01

00700000000024



MAR Gi 2808 12:24 FR CWT 1333 NH RE 222 G62 2688 TO izedeB7Ea3eGleke P.eLes

6) Conference Report Statement of Managers:

C7]

The current statutory definition of “swap agreement” in Section 101(53B) includes an
enumerated list of products and a catch-all phrase for “any similar agreement.” The
catch-all phrase was included in the 1990 Amendments to ensure that the definition
would be broad enough to encompass future types of swaps that the financial marketplace
would develop. The revised definition in H.R. 833 also adopts this approach.

i) The conferees believe that a swap definition limited to specifically enumerated
transactions would soon be rendered obsolete by the ingenuity of financial engineers.
The conferees have taken the approach used in the 1990 Amendments a step further,
however, Specifically, the revised catch-all phrase in Section 1007(a)(1)(E) of H.R.
833 refers to “any agreement or transaction similar” to one of the enumerated types of
transaction that, “is presently, or in the future becomes, regularly entered into by
swap participants .,. and ... is a forward, swap, future or option on one or more rates,
currencies, commodities, equity securities, or other equity instruments, or on an
economic or other index or measure of economic or other risk or value”.

ii) The additional language in the catch-all phrase is for purpose of clarification only. It
is not designed to limit the circumstances in which a transaction may qualify as a
“swap agreement.” The conferees in no way intend to exclude from this revised
definition any transaction or agreement that is considered a swap agreement under the
version of the definition adopted in 1990.

iii) The use of the phrase “regularly entered into” in clause A(ii)(I) of the definition of
“swap agreement” is not intended to preclude from the scope of sections 362(b), 560,
561(a)(5), and other provisions relating to swap agreements, transactions that have as
their underlying items novel or unusual rights, services, interests or other measures of
value, whether or not such rights, services, interests or other measures of value have
previously been used or are thereafter used in any other transaction or by any other
parties. The conferees believe and intend that so long as the transaction or the
underlying item is vulnerable to market fluctuations, the same systemic risks sought
to be avoided by permitting non-debtor counterparties to liquidate, terminate and
accelerate swap agreements pursuant to contractual rights apply to such transactions.

Explanation:

In both the House and Senate bills the statutory definition of “swap agreement,” which
was established in 1990, is updated by (i) adding to the existing list of swap products,
types of transactions that have been introduced since 1990, and (ii) modifying the “catch-

all" phrase to provide flexibility to avoid the need to amend the definition as the nature
and uses of swap agreements matures.

The updated definition of swap agreements in H.R. 833 inadvertently did not cover some
legitimate transactions, and this amendment remedies this problem. First, the list of
swaps is amended to include “weather derivatives,” an important type of transaction that
allows end-users, such as energy companies, agricultural producers and agribusinesses, to

01000000001390


"Enron Broadband Services, Inc. - Collocation

EBS will provide cable between the cross
connection cabinet in the collocation room
and the customer. s collocation cabinet or

Page 2 of 2

Carrier is responsible for cabling be
their cabinet space and the demarca
point (DSX-1, DSX-3, FDP) in the

cage collocation room
oo +
EBS will maintain the environmentals Carrier is responsible for maintcna
within the collocation area their equipment and for keeping the
common area clean
} a
EBS will deliver normal AC or UPS Carrier will work with building

power to the Carrier via 120V AC, 20
Amp circuits

to get building entran
pull from the manhole and ter
the fiber in their assigned cabinct**

| EBS will deliver redundant A & B DC

The Carrier terminates the DC cabl

power via appropriate sized cables to the within the cabinet using either a fus
| customer. s cabinet i breaker panel provided by the Carri
Availability of Service
See Map
Collocation facilities are available thoughout EBS's footprint.

The following locations are available for collocation as of March 2000.

a

Seattle

San Jose
Washington D.C.

Copyright 1997-2000 Enron Comp. AB rights reserved. gAbout

http:/www.ec.enron.com/bandwidth/colo.html

thi site Contact us

07/31/2000

00400000000019


FOXNews.com

Transcript: O'Neill on Enron Mess @) Background |

Tres

SP respomrocome = EQ em mesammeie =D) pawteeemenner | arcone eros raw

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Sunday, Jarwary 19,2002 WASHINGTON — TONY SNOW, HOST, FOX
FOXNEWS NEWS SUNDAY: In one year Enron went
sHOws » from the toast of Houston to just plain .
toast. Executives walked off with millions of dollars, employees lost
their life savings, and accountants shredded critical papers.

TOP STORIES >>

pourrics »
(BEGIN VIDEO CLIP) .
BUSINESS »
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The
administration is deeply concemed about its effects on the economy. ot
views » We're also deeply concerned about its effects on the lives of our
citizenry. .
THER => “4
(END VIDEO CLIP)

HOMEPACE &

SNOW: Did Enron executives break the law, bend the law or fall victim to 12/801: Lag
Search our bad luck? Wil any politicians take a falf? Well ask Treasury Secretary They Have O
video and Paul O'Neill and two key congressional investigators, Representatives
transt?ipt John Dingell and Tom Davis. .
archives .
(NEWSBREAK)
Fox Fan discourts! °
SNOW: The top domestic story this morning: the collapse of Enron. Not ot

long age the company was the world’s largest energy trader, worth $70 n
billion. But last fall the company acknowledged several hundred million 14/27/01: Ere
dollars’ worth of previously unreported liabilities, and its stock, already hit ote
by a weakening economy, went into free-fall from a high of more than Res
$80 a share to less than 50 cents today °

A company that once boasted of never having had a bad quarter now -_: hve
has filed for the biggest bankruptcy in aur nation’s history. In the chairman & 6
process, thousands of employees have seen their retirement savings Profile
vanish, while some company executives managed to sell stock then « Winners ane
worth miltions. Demme
Timeline

Adding to the intrigue, Arthur Andersen, the firm auditing Enron's books,
claimed it didn’t get some important records from the company and
destroyed thousands of other pages of documents. The administration
and at least four congressional committees have launched Enron
investigations, but the complex case may take years to resolve.

So is this a corporate scandal, a political scandal, both, neither? For
answers we turn to the treasury secretary, Paul O'Neill

Good morning.

PAUL O'NEILL, TREASURY SECRETARY: Good morning

‘WINDOWS \Temporary Internet Files\OLK5141\FOXNe '@) 50 1 5 O1/16/2002

01000000000086


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0900000000339


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CL Loads SHYT HMINIG [SUSAN TALUIWWOD | FALIWWOD / ava |

00600000000014


http: //wew, americanbanker.com/cgi-bin/read_tagstory?20011210WASHE4S

MORTGAGES

Two Down, One to Go in B of A Subprime Exit
Bank of America Corp., advancing its business and operational
streamlining, said Friday that it had found a buyer for its
subprime servicing platform, a deal that will remove the
second cf three subprime assets it set out to purge itself of
last August.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011210MORGE57

MARKETS

Preferred Issues; Bancassurance Buzz at BNF Paribas’ BancWest
BNP Paribas, which completed the last hurdle of its pending
acquisition of BancWest Corp. on Tuesday, is starting to look
at ways to cross-sell BNP products - notably insurance -
through the BancWeat network in the western United States.

http: //wew, americanbanker.com/cgi~bin/read_tagatory?20011210MMONE47

NATIONAL/GLOBAL

B of A Rearranges Its Commercial Executive Lineup
CHARLOTTE, N.C. - Bank of America Corp. has shuffled
executives in its real estate and commercial banking
operations in a series of moves it says was triggered partly
by phe Geciston to consolidate seven commercial sales regions
into six.

http://www. americanbanker.com/cgi-bin/read_tagstory?20011Z210NATL645

MARKETS

Profit, Credit Concerns Hurt Regions Financial
Robert S. Patten, an equity analyst at UBS Warburg, trimmed
bis profit estimates for Regions Financial Corp. on Thursday,
noting a poor outlook for revenues and credit quality.

http://www, americanbanker.com/cgi-bin/read_tagstory?20011210MMON668

ELECTRONIC COMMERCE

Bank Outsourcing Trend Seen Helping Processors
Bryan Keane, an analyst at Prudential Securities, expects
financial inatitutions to continue to outsource technology
over the next five years and create a significant opportunity
for transaction processors.

http: //www.americanbanker.com/cgi-bin/read_tagstory?20011210ELEC671

INVESTMENT PRODUCTS

Merrill: E-Service $#145;Popular’ for Under-$1M Trusts
Saying that electronic services have proven “popular” with
its less wealthy trust clients, Merrill Lynch 5; Co. has
announced that it is making permanent a regionalization of the

a

00600000000079


Kelly, John Jr

From: Angus, Barbara

Sent: Tuesday, January 15, 2002 2:01 PM
To: Weinberger. Mark

Subject: Meeting with Enron

As [mentioned yesterday, | met with representatives of Enron on May 14th to talk about a series of international tax
simplification and reform proposals, most of which were items included in the Hatch-Baucus-Houghton-Levin international
bills introduced each Congress. Because of the variey of technical issues they wanted to address, Michael Mundaca, Pat
Brown and Michael Caballero all participated in the meeting. Participating from the Enron side were Jim Ginty (VP, Tax,
Enron Broadband Services), Cullen Duke (VP, International Tax) and Mike Pate (Bracewell and Patterson). They sent a
letter in advance of the meeting with a description f each of the issues they wanted to discuss and another letter with
follow up materials after the meeting. Both letters were sent for FOIA release.

Piease let me know if you would like a description of the issues they raised. Thanks.

00900000000334


Doubte Being Raised Over New OCC Tactic
Once again, the Office of the Comptroller of the Currency
finds itself on the defensive about its enforcement powers
over banks.

http://www. americanbanker,.com/cgi-bin/read_ tagstory?20020122CARDS92

NATIONAL/ GLOBAL

4Q Earnings: Regionals Tell Different Margin Tales
A disparate group of profit reports at the end of last week
offered a snapshot of what went well and what did not for
regional banking companies in the fourth quarter.

http://www. americanbanker.com/cgi-bin/read_tagstory?20020122NATLE03

CARDS

Household Ad Campaign Targets 4#145;Opinion Leaders’
Household International Inc.'s $12 million national
advertising campaign is not - that's right, not - aimed at
making its name a household word.

http://www, americanbanker.com/cgi-bin/read tagstory?20020122CARDS39

COMMUNITY/REGIONAL

Banks of All Sizes Help N.¥. Firms Rebuild
After terrorists destroyed the World Trade Center towers on
Sept. 11 and wreaked havec on lower Manhattan, 411 work at
Harris Smith Design, an architectural and interior design firm
near ground zero, virtually stepped for three months.

http://www. americanbanker.com/cgi-bin/read_ tagstory?20020122C0RG593

MORTGAGES

MPF Gaining Steadily om Fannie and Freddie
Fannie Mae and Freddie Mac last year got 4 break from the
political and public attacks they had te endure in 2000, but a
growing threat to their secondary-market dominance quietly
gained substantial ground.

http://www, americanbanker.com/cgi-bin/read_tagstory?20020122MORG595

TECHNOLOGY

Henry Will Take 1%, Considering
Jack Henry 4; Associates Inc., a 26-year-old provider of data
processing software and services to banks, says it is managing
te avoid the sales slowdown many other technology companies
are feeling in a weakening economy.

http://www. americanbanker,com/cgi-bin/read_tagstory?20020122TECKS96

INVESTMENT PRODUCTS

Some Banks Rush In as Rich Investors Get Restive
Some banks and other financial institutions see a chance
today to attract wealthy investors unhappy with the service
they get from their investment advisers.

2

00600000000062


FOXNews.com Page 9 of 11

do.
HUME: Sounds like the $10,500 was a bad investment.

DINGELL: Well, if they regard it as an investment, they lost their shirt.
But what we're going to do wilh that money is give that to the employees’
funds to try and help make whole from the fact that so many of their em

ployees lost everything in the process of the collapse because Enron
would not let them cash out their 401(k)s.

HUME: Congressman Dingell, when the hearings get under way, will you
be wanting to have Bob Rubin among those testify about attempts to
gain influence or bailout for Enron?

DINGELL: if you watched me when | ran investigations, and | ran a lot of
them, and they were very, very effective, we had everybody in. And we
saw to it that we got aif the facts.

HUME; That would be a yes?

DINGELL: And that's what | want of these investigations in the Senate
and the House.

HUME: Would that be a yes then?
DINGELL: That means absolutely yes.

SNOW: Representative Davis, I've heard you talk about returning
contributions, Representative Dingell talk about returning contributions. If
you returned everybody's contributions, you probably would be able to
Save One oF two of the people who worked. You've got thousands at
Enron. This is token help.

Now, is there going to be some move on Capitol Hill to make these
people whole? And if so, shouldn't other people who have been the
victim of bad business practices and had their portfolios hampered,
shouldn't they also expect help from Capitol Hill?

DAVIS: Wel, | don't know that they can expect a government bailout at
this point.

But, look, | agree with Congressman Dingell. We need to get to the
bottom of this matter, We have a criminal probe going on fram the
Justice Department. | think that's appropriate,

But | think on Capito? Hill, we need to look at why the seventh- largest
corporation in America fell so quickly, why their corporate execulives
were cashing out and their ordinary employees that had grown the
‘company were not able to do that and fost their pension funds.

SNOW: Is it your suspicion that corporate executives deliberately misied
employees and told them everything was going to be fine, meanwhile,
they cashed out while the employees were left halding the bag?

DAVIS: That's the appearance is, | think we need to nail that down, but
that is the appearance.

file://C:\WINDOWS\Temporary Internet Files\OLK5141\FOXNews.c (@) 50 2 3 16/2002

01000000000094


Enron's President Said to Have Asked Tr

ury Official for Help Page | of 6

Ehe New York Eimes

IwL wos

January 11, 2002

Enron's President Said to Have Asked Treasury
Official for Help

By ELISABETH BUMILLER

ASHINGTON, Jan. |] — The Treasury Department disclosed today
that the president of the Enron Corporation (news’quote) asked a top
vent official last year for help in obtaining a credit extension to stave off
bankruptcy

depart

A

Jepartment spokeswoman, Michele Davis, said that Under Secretary Pete
Fisher spoke with Enron's president, Lawrence (Greg) Whalley, six or eight
times in late October and early November.

“As Enron's negotiations with its bankers for an extension of credit neared a
decision point, the president of Enron asked Under Secretary Fisher to call the
banks," Ms. Davis said, She went on to say that Mr. Fisher "inferred he was
being asked to encourage the banks to "

nd cre

a

As Under Secretary for domestic finance, Mr. Fisher has consi
Ms. Davis did not s
with banks.

derable influence
ay exactly when Mr, Whalley asked Mr. Fisher to intervene

Ms. Davis emphasized that Mr, Fisher made “no such calls

Enron, which not so long ago was a high-flying energy company, recently filed
for bankruptcy protection. Its stock, which rose above $80 a share less than a
year ago, last traded at 67 cents on Thursday; it did not trade tod

ay's disclosure of Mr. Whalley's conta
spartment official c
the chairman

cts with an influential Treasury

me a day after the White House disclosed that Kenneth L
nron and one of President Bush's biggest political
contributors, telephoned two cabinet officers last fall, and that one of them said
Mr. Lay had sought government help with its dire financial condition

Both cabinet secretaries said they declined to offer government aid

Attorney General Joh
Enron b

excused himself from al! matters involving
use of campaign contributions he received from it

Thursday's wave of disclosures included the revelation that F n's auditor, the
giant accounting firm Arthur Andersen & Company, said it had destroyed
umerous company documents and electronic communications

hutp://www.nytimes.com/2002/01/1 L/business/ 1 1CND-ENRON. html?pagewanted=print 11/02

01000000000045


Harris-Berry. Gail V. Inventory

© Received a Christmas Card from Linda Robertson in December 2000 but discarded the card
afier the holidays

00600000000006


the global marketplace, as demonstrated by the long history of
Congressional
gridlock prior to GLBA.

"Congress expressly gave the Federal Reserve Board and Treasury the
authority to authorize financial holding companies to engage in new
activities in addition to the preducts and services enumerated in the
statute. In delegating this authority, Congress sought to empower
experienced and independent financial regulators to make such
determinations, based upon elaborate statutory criteria, that match
marketplace realities. This is what financial modernization legislation isa
about: the ability to evolve. H.R. 3424 seeks to return to the pre-GLBA

environment where industry competitors ask Congress to choose winners and
losers.

"The financial services industry, the regulatory agencies, and Treasury are
in the very beginnings of interpreting GLBA. Reopening one of its most
central provisions would raise a great deal of uncertainty within the
industry. We therefore strongly oppose H.R. 3424."

A similar letter was sent to members of the Senate.

SARBANES ASKS GAO TO INVESTIGATE QUESTIONS REGARDING FINANCIAL REPORTING
AND
EMPLOYEE INVESTMENTS IN COMPANY STOCK

Senate Banking Committee Chairman Paul Sarbanes (D-MD) has sent two letters
to the General Accounting Office (GAO) asking it to investigate the
adequacy

of financial reporting and to investigate the prevalence of investments of
employee retirement funds in campany stock, Sen, Sarbanes requested the
GAG

to evaluate the accounting profession's governance system and to consider
the extent of defects that may contribute to costly accounting errors.
Specifically, Sen. Sarbanes asked the GAO to examine: (1) situations over
the last 10 years in which employees have had “substantial retirement fund
losses" due to declines in the value of company stock; (2) the number of
retirement plans invested in company stock; and (3} the provisions of the
Employee Retirement Income Security Act (ERISA), the Securities Act, and
the

Internal Revenue Code that govern company stock retirement plans.

In 4 press statement, Sen. Sarbanes indicated that he is interested in
determining whether employers provide sufficient information and financial
education to permit their employees to understand the risks of company
atock

retirement investments and whether the SEC should reconsider exploring
application of the Securities Act and the Securities Exchange Act to define
contribution plans. Sen. Sarbanes said the reported results of Enron's
bankruptcy "raise significant issues" about the adequacy of certain U.S.
laws and their enforcement. The Senate Banking Committee will hold a
hearing to discuss these issues on February 12. Sen. Sarbanes has asked
the

GAO to report its findings and make recommendations by June 30.

POTENTIAL REGULATORY RELIEF LEGISLATION

House Financial Services Committee staff have recently indicated the
Committee's intention to try to move a regulatory burden relief bill
through

the Congress this year. While the contents of this legislative package are
still under discussion, a number of provisions affecting the banking
industry may become = part of it, such as: expanded credit union powers to
invest in Credit Union Service Organizations; expanded small bank
examination cycles; some subchapter S relief; re. ed restrictions on
interstate branching; and, expanded savings assoc ion inveatment advisory
authority. Watch for more details in the weeks ahead.

10

00600000000090


Enron's President Said to Have Asked Treasury Official for Help Page | of 3

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* Besant
~ Mutual Funds By ELISABETH BUMILLER
= Stock Portola
5 Cowes ASHINGTON, Jan. 1] — The Treasury Department disclosed today that the pr
Scene Enron Corporation (news/quote) asked a top department official last year for he
weom a credit extension to stave off bankruptcy.
New York Region oe
Educaton A department spokeswoman, Michele Davis, said that Under Sccretary Peter Fisher spo
feather Enron's president, Lawrence (Greg) Whalley, six or cight times in late October and earl:
NYT Front Page
Soocal'Nnter "AS Enron's negotiations with its bankers for an extension of credit neared a decision pe
Olympics president of Enron asked Under Secretary Fisher to call the banks," Ms. Davis said, She
say that Mr, Fisher “inferred he was being asked to encourage the banks to extend credi:
Ecnoraisop-£4
Readers’ Opinions

As Under Secretary for domestic finance, Mr. Fisher has considerable influence. Ms. Di
EDUCATION Say exactly when Mr. Whalley asked Mr. Fisher to intervene with banks.

LIFE

Ms, Davis emphasized that Mr. Fisher made "no such calls.”

ae Enron, which not so long ago was a high-flying energy company, recently filed for bank
Movies protection, Its stock, which rose above $80 a share less than a year ago, last traded at 67
Travel Thursday; it did not trade today.

Bring & Wine

Home & Garden

Fashion Lae Today's disclosure of Mr. Whalley's contacts with an influcntial Treasury Department o
eetGames day after the White House disclosed that Kenneth L. Lay, the chairman of Enron and on

Canoons Bush's biggest political contributors, telephoned two cabinet officers last fall, and that 0
vga ‘i eview Said Mr. Lay had sought government help with its dire financial condition.
Protos

raters Both cabinet secretaries said they declined to offer government aid.

se Interactive ©

“Brenve Attorney General John Ashcroft has excused himself from all matters Conacts With
casesiecs . involving Enron because of campaign contributibns he received from it. “°"TM"*
NYT Mobile
NYT Store Thursday’s wave of disclosures included the revelation that Enron's a Interactive *

E.Cards & More : : ; ea : Piece
AboulN¥TDigtal auditor, the giant accounting firm Arthur Andersen & Company, said it UP Me Pieces

Jobs at NYTDIaita hed dactrnued numernne camnony dacumente and alactranic

http://www. nytimes.cony2002/01/1 1/business/l 1CND-ENRON. html E102

01000000000042


Exclude Pipeline Transportation from Subpart F

Pipeline Industry Problem:

Many countnes in South Amenca, Europe and elsewhere are adopting open access
pipeline transportation, as in the U.S. Most of these pipeline systems will involve
transporting natural gas across national borders. The subpart F rules accelerating U.S
taxation of foreign base company oil related income (“FBCORI") include a CIC's
income from pipeline transportation of hydrocarbons. Exceptions are provided for 1)
transportation income earned in the country where the hydrocarbons are extracted or 2)
transportation income earned in the destination country but only if the CFC or a related
person sells the hydrocarbons for use or consumption in that country. This makes it
difficult for the CFC owner of a multinational open access pipeline to fal] within one of
these exceptions. In such a case, the CFC is unlikely to be involved in extraction
activities or own an interest in the hydrocarbons (either directly or through a related

party).

Furthermore, if the hydrocarbons are transported across a third country which is neither a
producer nor a consumer there is no possible exception to Subpart F. (The Section
954(b)(4) high tax exception does not apply to FBCORI.) See the attached map
(Attachment A), which ts representative of an open access pipeline project under
development that would fall within this latter category.

The intent of the FBCORI provisions in Subpart F was to currently tax the sales and
distribution income of U.S, based integrated petroleum companies where such income
was easily shifted to low tax junsdictions from the countnes where the petroleum
products were extracted or consumed. The ironic aspect of the current rules as applied to
the described situation is that the absence of ownership in the hydrocarbons prevents the
CFC pipeline from benefiting from the consumption exception. It js clear from the
legislative history that multinational oi] and gas company income and not pipeline
transportation income was the target of the FBCORI rules. Nonetheless. the current rules
capture U.S. developers of foreign pipelines which make them non-competitive in bids
for these pipeline opportunities

Pp sed 2

The proposed change would add a third exception to FBCORI for pipeline transportation
of oil or gas. Thus, the exception would apply whether or not the CFC owner of the
pipeline owns any interest in the hydrocarbons. In addition, the exception would apply to
income earned from transportation across a country where the hydrocarbons were neither
extracted nor consumed.

00900000000354


foreign 1ax. Pipeline transportation income, on the other hand. will be taxed by the
country or countries where the pipeline is physically located.

This type of open access pipeline transportation income was not contemplated at
the tume the FBCORI rules were first enacted. The proposed amendment would not be
imconsistent with the policy goal of the FBCORI rules, and it would put U.S. based
companies on a level playing field with their foreign competitors.

4. Ther should be an insignificant revenue impact from this change. There are a
few foreign pipeline projects which have been developed by U.S, multinational pipeline
companies. However, these few have fallen within the current limited exception to the
FBCORI rules by, for example, being wholly within the country where the hydrocarbons
are produced. Where the exceptions have not been met and Subpart F would apply, U.S.
based pipeline companies have generally failed to be the chosen developer. In fact. the
JCT has estimated the revenue impact as a loss of only $75 million over ten years, and
that estimate pnincipally reflects an indirect revenue loss as a result of the fixed GDP
revenue estimating convention.

5. This proposed change was included as Section 903 of the Taxpayer Refund &
Relief Act of 1999, as passed by the Congress.

February. 2001

00900000000356


Lakritz, Robb

From: Lakritz, Robb

Sent: Tuesday, January 08, 2002 2:45 PM

To: Bair, Sheila

Ce: McCarde4, Dan; Adams, Tim; Dam, Ken; Gross, Jared; Kupfer, Jeffrey
Sheila,

Do you have time tomorrow to meet with Dan McCardell and me to discuss an internal
oundtable we are hoping put together on issues related to the Enron situation
llary developments?

Thanke.

Robb Lakritz

00100000000011


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0900000000326


Smith, Amy

From: Upchurch, Carol

Sent: sday, January 17, 2002 7:29 AM

To: Eichner, Matthew, Hunt, Ann; LIBRARY, REFERENCE; Smith, Amy
Subject: FW. Daily Briefing for Thursday, January 17, 2002

Original Message----~

From: AmericanBanker.com [mailto:dailybriefing@AMERICANBANKER COM)
Sent: Thursday, January 17, 2002 5:20 AM

To: AMERICANBANKERELISTS .AMERICANBANKER .COM

Subject: Daily Briefing for Thursday, January 17, 2002

AmericanBanker.com
http://www. americanbanker.com
DAILY BRIEFING

Thursday, January 17, 2002

waeees=== =
Entire loan origination process now handled through one source.

TransUnion simplifies the loan origination process by handling everything from
atart to finish: credit approval, flood determination, property valuations,
title searches, closing services and more.

for more information, call TransUnion at 1-888-299-8787 or visit
http: //www.transunionssi.com/checkthisout_AB.htm

NATIONAL/GLOBAL

4Q Earnings: JPM-Chase Sees Credit Worsening, Enron Aside
For an indication of just how difficult J.P. Morgan Chase's
fourth quarter was, consider that by the time it reported
earnings, $2.6 billion of Enron Corp. exposure seened like
good news.

http://www. americanbanker.com/cgi-bin/read tagstory?20020117NATLS24

CARDS

Providian Sells Loans, But {Surprise) Not Subprime
Providian Financial Corp.'s decision to sell $8.2 billion of
its best-quelity credit card loans to J.P. Morgan Chase 4; Co.
was & Surprising move, even given its need to raise cash and
satisfy regulators pressing the tottering company te get back
on s feet.

http: //waw.americanbanker.com/cgi-bin/read_tagstory?20020117CARDS40

NATIONAL/GLOBAL

4Q Earnings: Cleanup Work At Bank One Almost Over
After nearly two years at the helm of Bank One Corp.,
chairman and chief executive officer James Dimon is still
cleaning house but may finally be approaching the end of a
lengthy restructuring at the $265 billion-asset banking
company.

http://www. americanbanker.com/cgi-bin/read_tagstory?2002011 7NATLS3B
2

00600000000067


Fourteen Top Bush Officials Owned Stock in Enron Page 3 of 3

sees gues

Rove, Karl Senior Adviserto Enron 100001 250000 Stock
the President

* Two seperale hokings

Darrick Wetherall 6 a senior weiter at he Center. To write a leer to the editor for publication, send to
tatters onc negity org. Plaase include @ daytine telephane qumper,

«TOP

Main Page News Reports Center Cammaniary Subscnbe From ihe Eciior Foedback Jain fhe Canter tor Public Integrity
Suggest.a-Stary

Cry.peart 200! Tiaw Canter for Pubic trtagnity
IMPORTANT: Fs! "1 Copyright & Ofsctainer

file://C:\WINDOWS\Temporary Int...\Fourteen Top Bush Officials Owned Stock in Enron.htm = 1/18/02
01000000000070


i y “Non-bind| ”’ from Section 367(d

Power r Infrastructure) 1 i

Many U.S, based utility and energy companies have been pursuing foreign power
projects. U.S. based companies have also been pursuing other types of foreign
infrastructure projects (¢.g., pipelines, roads, dams, airports).

In the early stages of a foreign infrastructure development project, the potential developer
will often sign one or more preliminary non-binding agreements (e.g., a Memorandum of
Understanding (MOU), a Letter of Intent (LOD), a Heads of Agreement (HOA), a Joint
Development Agreement (JDA)) with potential development partners and/or with the
potential foreign customer,

Under the current Section 367(a)(3) and 367(d) rules relative to the outbound transfer of
intangibles, there is arguably exposure to U.S, taxation if a U.S. corporation executes a
preliminary non-binding agreement and final awarded contracts are executed by a foreign
project company. In this case, the IRS might attempt to deem a transfer of the
preliminary non-binding agreements from the U.S. company to the foreign project
company. If the IRS were successful, the deemed transfer would be taxable to the extent
of any gain

Because of this theoretical Section 367 exposure, U.S. multinationals typically form
separate foreign project company structures for each potential foreign infrastructure deal
al a very early stage, and all project related agreements and contracts are executed by
such foreign project companies, This approach is not just a conservative defensive
position adopted by corporate tax department professionals, but is also advocated
publicly by experienced counsel

Many foreign infrastructure business opportunities never result in a final contract. The
success rate for most U.S. multinationals is less than 10%. Thus, U.S. multinationals that
are engaged in foreign development activities form numerous foreign corporations that
will eventually become dormant and worthless.

The process of forming foreign corporations for opportunities thal never matenalize into
awarded contracts is an administrative, legal, accounting and tax compliance burden
(For example, several major internationally accepted accounting sysiems cannot
accommodate the number of legal entities often owned by infrastructure companies as a
result of this issue.) Furthermore, because the potential foreign customer may take
several years to decide who should be awarded the project, a U.S. multnational
developer is forced to maintain its foreign structures for many years.

In summary, it is expensive, time consuming and counterproductive for U.S.
multinationals to form, maintain and eventually liquidate foreign entities with respect to
foreign business opportunities that do not progress beyond a preliminary stage. We

00900000000365


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0900000000340


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00600000000070