protetypa shows hew technclogy might solve frustrations of daily work life, from
uncomfortable temperatures to cranped meeting space. New Ecenomy. C4.

y Vote for New Switzerland Airline

The effert to organize a new national aizline for Switzerland passed a crucial
test when voters in Zurich agreed to invest $181 million in Crossair, the
company set to absorb the bankrupt flag carrier Swissair. The vote is part of
tae country’s ambiticus plan to reclaim ‘ts aviation prestige, Ccé.

Time's Exclu: @ Deal With Apple
Wren tinecar. com published Tim

account of the new iMac computer 4 week ago
Sunday night, and then pulled t eticl few hours later, the site ma it
excruciatingly clear that th was indeed an exclusive deal between Apple
Computer and the magazine. By the time Steven P, Jobs put his new iMac on
dispiay last Monday, the magazine and Josh Quittner, the author of a feverishly
positive article, were the villains cf the moment for journalists and Mac fans.
Media, C2.

Teenagers’ Online Spending Habits

A majority of teenagers use the Internet, But aot to buy things. Of the $155
billion a year they spend in the Unitea States, only $1 billion goes for oniine
purchases, a consulting firm says. Bob Tedeschi: E-Commerce Report. Cé.

Dominating the Occumentaries

Of the 16 documentaries competing at the Sundance Film Festival, five were
produced by HBO, including "The Execution of Wanda Jean," about a woman on death
row, left; five by the Independent Television Service for PBS; and one by “The
American Experience” for PBS. The remaining five were produced independently <=
but they, too, zay end up on PBS or HBO, C7,

Robust Holiday Bcok Sales at Chains

Barnes & Noble and Borders reported unexpectedly strong sales during the holiday
season, after months of dismal book sales. But their reports also suggested that
the rising tide might not have lifted the biggest shipa as high as it did the
smallest. CT,

Newspapers Turn to Paid Obituaries

The noticn cf selling obituaries, often while keeping them typographically
indistinguishable from regular news, was first adopted by a few small newspapers
nearly two decades ago. Now larger newspapers have adopted the practice paid
obituaries accelerated last year, while acvertising revenue fell and newsprint
prices increased, C7.

ABC Executives Concede Missteps

A few days after the departure of Stu Bloomberg, the ABC co-chairman, network
executives acknowledged that they made some major miscalculations the last two
years that resulted in a surprisingly weak performance this television
ce.

http://www. nytimes.com

GRAPHIC: Photos

Chart: “LAST WEEK”

Dow industrials -- 9,987.53 DOWN 272.22

Nasdaq composite -~ 2,022.46 DOWN 36.92

lO-yr. Treasury yield -- 4.86% DOWN 0.26

The euro -- $0,.8925 DOWN 3.0026

The dollar -- 132.24 yen UF 1.33

LOAD-DATE:; January 14, 2002

2 of 33 DOCUMENTS

Copyright 2002 The New York Times Company

n

0800000000189


v. 28
# merge> with Dynegy collapses.

LATE HOV,

Just days before it files for bankruptcy and lays off 4,000 employees, Enron
pays $55 million in retention bonuses to about 5C0 employees, with 11 executives
receiving between $590,000 to $5 milifcn each.

NOV. 29

The S.E.C, investigation expands to include Arthur Andersen, Enron's auciting
firn.

pec, 2
Enron declares bankruptcy, but its stock continues to be traded.
DEC. 12

Joseph F. Berardino, chief executive of Arthur Andersen, testifies before Con
2/3gress, saying Enron might have violated securities laws.

JAN, 10, 2002

Arthur Andersen discloses that it destroyed Enron cocuments in September,
Octoser and November.

(Sources: Bloomberg Financial Markets; Court Documents) (pg. 26)

Graph tracking Enron's stock price and when insiders sold some ct their shares
of stock, since August 2000. (pg. 26)

LOAD-DATE: January 13, 2002
19 of 33 DOCUMENTS
Copyright 2002 The New York Times Company
The New York Times
January 13, 2002, Sunday, Late Edition = Final
SECTION: Section 1; Page 27; Column 4; National Desk
LENGTH: 535 words

HEADLINE: ENRON'S COLLAPSE:
Treasury Official's Ties Led to Calls About Freblems Involving Enron

BYLINE: By RICHARD W. STEVENSON
DATELINE: WASHINGTON, Jan. 12
BODY:

As a Cemocrat, Poter R. Fisher, the undersecretary of the Treasury for
domestic finance, is a rarity in the Bush adtinistration. But in an
administration that 4a ncticeably light on connections to and expertise in the
financial markets, he is perhaps even more notable for having extensive and
leng-standing ties to Wall Street and the banking system.

It was Mr. Fisher's ability to gather facts, analysis and rumor from within
the financial system, drawn from his years of experience in a similar position
at the Federal Reserve Bank of New Yor, that led Treasury Secretary Paul k.
O'Neill to ask him last fall to check on how big a problem it would be if the
Enron Corporation were to go bankrupt.

tt was his role as the administra *s liaison to the markets that led
Robert E. Rubin, the former Treasury secretary whe is now chairman of the
executive committ: t Citigroup, one of Enron's two main lenders, to call him
about the situatcor.

0800000000210


Mz. Lay was one of the leacing contributors and fund-raisers for the elder
Mr. Bush, <n 1992, ho served a chairman of the Republicen Naticna> Convention,
which was held in Houston, and he sat with Mr. Bush in the presidential box that
week.

When Mr. 3ush’s son ran for president, Mr. Lay was one of his 214 so-called
Pioneers, who each raised at least $100,000 for the campaign. Mr. Uay was also a
transition advises to Mr. Bush efter the disputed electicn in 2900.

me Mr. Sush was inaugurated in January 2901, Enron anc « number of
oS, including Mr. Lay, hac contributed more money to Mr. Bush over
tical career than anyone alse, an amount exceeding $550,00C. Enron then
wrote « check for $100,900 for Mr. Bush's inaugural committee, and Mr. Lay added
anether $106,000.

Last winter, the perennial questions about access given to large campaign
contributors were asked about Enron. Mr. Lay had weighed in on nominees to the
Federal Energy Regulatory Commission, supplying Hr. Bush's chief personnel
adviser with a ist of preferred candidates.

And Curtis L. Hebert Jr., chairman of the commission until last August, said
he hed an unsettling conversation with Mr. Lay last winter in which Mr. lay
offered his 3 If he changed his views on electricity deregulation, Enren
would cortinue to support him in his job. “I was offended,” Mr. Hebert said.

Me. Lay said ac the time that he had no sway over Mr. Hebert's job prospects,
and that “the final decision on this was going to be the presiden='s, certainly
net ours,”

After the terrorist attacks of Sept. 11, there was almost no discussion in
Washington abeut Enron's connections to the White House. Even in the weeks
betore the company filed for bankruptcy in December, Democrats stcod by the
president in the war on terrorism and said little ebout the company's ties to
the 3ush aczinistraticn.

But four Congressional inquiries were begun after it was revealed that many
employees lost their life savings when Enron's stock ccllapsed, but executives
were able to cash our millions of dollars in stock.

The Enron issue finally hit the White House last week after the
administration acknowledged that Enron executives had six meetings last year
with administraticn officiels, including Vice President Dick Cheney.

The Justice Department announced that it was cpening a criminal investigation
of the energy compeny's collapse, including whether it had defrauded investors
by deliberately concealing < rmation about its finances. Attorney General John
Ashereft and his chief of staff recused themselves from the inquiry because Mr,
Lay and Enron hac contributed more than $50,000 to Mr. Ashcreft's 2000
stnatorial campaign.

Mere cisclosures followed. On Thursday, the White House disclosed that Mr,
Lay had called two of Mr. Bush's cabinet officers -- Treasury Secretary Paul H,
O'Neill and Commerce Secretary Denald L. Evans -- before the company filed for
bankruptcy. Mr. Evang said Mr. Lay had seught government help with its dire
financial condition. And on Friday, the administration said that Peter R.
Fisher, an under secretary of the Treasury, was contacted re edly tast fall
by Enron's president, Greg Whalley, fer help arranging bank loans. President
Bil. Clinton's treasury secretary, Rober: £. Rubin, now a tep executive at
Citicorp, one of Enren*s chief lenders, also called Mr. Fisher.

Aza Pleischer, the White House press secretary, described the contacts with
the two cabinet officers as “a case where a contributor called up and asked for
Something out did not get it." Mr. Fisher alsc did mot intervene on the
company's behalf. Mr. Bush hinself has said he never discussed Enron's troubles
with the cabinet members or Mr, Lay.

Denocrats are eager to question Mr. Lay at Congressional hearings this month
a

‘00800000000206


Clinton and Vice President Gore to back a “market-based” approach to the problem
ot global warming -~ a strategy that # later Enron memo makes clear would be
“gcod fo> Enron szock."

The following February, Lay met with Energy Secretary Federico Fen a to urge
tion favored by Enron. Pen ‘suggested
Presicent Clinton might be motivated [te act] by some key contacts from

important constituents,” according to another Enron memo.

Taking the cue, Lay, one of 25 business executives on Clinton's Council on
Sustainable Development, wrote te the president the same day.

Lay and cther Enron executives showed a clear preference for Republicans in
cheir politi giving. Lay personally gave GOP organizations $ 325,000 curing
the 2000 carpaicn. But the company itself was often more evenhanded.

The corporation contributed $ 532,000 in unregulated “soft money" to
Demo coffers ducing the 2000 election, sory. siightly less than the $
623,090 that went to GO? groups, according te PoliticalMoneyLine, a Washington
reseerch group. Enron's political actien committee also gave $ 10,000 to the New
Denserat Network, which was co-founded by Sen. Joseph I. Lieberman (9-Conn.).
uieberman, tae Denecratic vice presidential nominee that year, now chairs the
Senate Government Affairs Committee, which is leading an inquiry inte Enron's
collapse.

Several mior Enron officials spent election night at Vice President Gor
headquarters in Nashville.

The Center for Responsive Politics estimates that Republicans received 73
percent of total donations from Enron, its executives and its employees over the
past 12 years, Still, many cf the congressional members scon to investicate
Enren -- Democrats as well as Republicans -- have enjoyed the company's largess.
fnron or its executives have given money te nearly half of all current House
menbers, and te alzost three-quarters of the senators, according to groups
menitoring political donations.

The company backed Charles E. Schumer {0-N.¥.) in his successful 1998
campaign te cust Republican Sen. Alfonse D'Amate. Schumer's views on electricity
deregulation dovetatled closely with Enron’s. Two years later Schumer, who has
advocated deregulation as a way of reducing New York state's high power costs,
co-authcred a bill to restructure electricity markets along lines favored by
Enron.

Enron also has supported Senate Energy Committee Chairman Jef! Bingaman
{O-N.M.), whose state is traversed by a major east-west Enron gas pipeline.

Former employees say Lay's friendships with other Democrats were based as
ruch on rappor> as pragaatise. This group includes former senator Bob Kerrey
{D-te. » whose orief 1992 presidential bid had Lay's backing, and Sen. Evan
Bayn (D-Ind.t, with whom Lay served on the £1i Lilly Co. boara of directors in
the 1990s.

He denated to the 1994 campaicn of Texas Gov. Ann Richards, # Democrat, and
served cn her busiress council. And it was a Democrat, former treasury secretary
Rebert E£. Rubin, who called a Treasury official last Nov. 6 to inquire about
Enron's situation shortly before ic collapsed.

As Enron transformed itself from an old-line gas pipeline company into an
innovative, risk-taking trader of gas, electricity and more exotic derivatives
she early 3990s, it needed both Democrats and Republicans to help remove
regulatory obstacles.

“Kon Lay would write letters and pick up the phone to call whoever was
needed, anc the party didn't matter that much,” said one former employee.

In 1992, a Demccratic-controlled Congress approved a major energy bill that
sot the stage for a new wholesale electricity marketplace. Trading companies

0800000000215


3 of 6

PIVOTAL HOUSE TRADE VOTE SET FOR THURSDAY

We tend to be pessimistic on the White House's chances of winning a key trade vote
scheduled for this Thursday in the House.

« Amidst uncertain vote counts, House leaders have scheduled a vote for this Thursday
on Bush's Trade Promotion Authority (TPA) legislation (the proposal formerly known as
fast track).

* Vote counts to date have been bleak, but the number of undecideds is high. The
thinking is that only by forcing legislators to commit will they know if they have the
votes,

* The plan is to reprise the strategy used on the stimulus bill and the airline security bill —
rely heavily on White House and leadership involvement to secure a maximum number
of Republican votes. In addition, proponents hope to pick up enough pro-trade
Democrats to garner a majority.

* Our sense is that they face an uphill fight. We think there are more Republicans who
for constituent reasons will be opposing TPA compared to GOP defections on the
stimulus of airline security bills. And the number of likely Democratic “yes” votes will be
very small. A good share of those that had voted for Clinton's fast-track bills did so
mainly out of loyalty to Clinton and won't be there on this vote, particularly in light of the
partisan atmosphere characterizing most recent House debates. Furthermore, the
President's involvement so far has been minor, although that is expected to pick up in
the next few days.

* On the other side, the leadership appears to be going all-out on the vote - Ways and
Means Chairman Thomas is scheduling votes on trade adjustment assistance and the
Customs Service to secure more votes.

* We don't have a strong view, but we lean more toward the view that TPA
supporters will fall short. It's possible that they would actually be defeated, but
(despite statements to the contrary) we think the leadership would not move to vote if
they thought they would lose,

* The TPA vote comes after the successful WTO meeting in Qatar, which gave trade
liberalization some momentum. A setback for TPA would make capitalizing on that
momentum difficult, since other countries would question the US domestic political
support for new trade pacts and thus be reluctant to make meaningful concessions.
Despite these negative consequences, in the past, setbacks for fast track were
not market-moving events.

NK NK DK NH DK NHK RDKH GH KH KD HK DKHGHGHHKHHKPKHDHK HHH HK

12/3/01 ISI GROUP

00100000000773


Enron bankruptcy, to make sure we can learn from the past, and make sure that workers are protected,

Q What can you do about pensioners -- what can you do about pensioners now? Isn't that horse already out of
the barn at Enron?

THE PRESIDENT; Our group is meeting, and they will bring recommendations here. They'll look at -- fully
investigate what went on. My concern, of course, is for the shareholders of Enron. But my -- I have great
concem for the stories -- for those | read about in the stories who put their life savings aside, and for whatever
reason, based upon some rule or regulation, got trapped in this awful bankruptcy and have lost life savings.

And one of the things this group is going to do is take a good hard look at it.
Thank you all.

01200000001524


The New York Times
January 12, 2092, Saturday, Late Edicion - Final

SECTION: Section A: Fage 2; Column 3; Metropolitan Desk
LENGTH: 1190 words
HEADLINE: NEWS SUMMARY
BODY:

INTERNATIONAL A3-6
Military Chief Says India Is Ready to Fight Pakistan
Gen. 3. Padmanabhan said the militery was prepered for a large-scale
conventional war with Pakistan and could deliver a devastating nuclear blow if

Pakistan struck first. A senior official said the remarks had not been cleared
by the prime minis: Al

Palestinians Hold 3

The Zalestinian Authority detained three officials accused by israel of
overseeing the smuggling of arms into the West Bank and Gaza. Yasir Arafat again
denied any knowledge of the smuggling attempt. as

The runway of Gata International Airport -- a potent symbol of Palestinian
aspirations f atehood -- was blocked with piles of broken after
israeli tanks and bulldozers dug trenches in the tarmac. AS

Argentine Peso Falters
Freed from its link to the Amorican dollar, the peso dropped sharply on foreign
exchange markets. Aa

World Briefing AS
NATION CHALLENGED A7-8

First Flight of Captives Arrives at Guantanamo
Twenty prisoners from the Afghanistan war -- including an Australien -- arrived
at the American naval base at Guantanamo Bay, Cuba. ar

f, Obtained U.S. Missiles

Tran bought Arerican-built Stinger antiaircraft missiles in Afghanistan in 1994
ard passed =hem to 4 Lebanese-based terror group, but the missiles proved
cefective, American intelligence reports say. aT

Gauging Actions in Crackdowns

Some reports submitted to the United Nations on what members are Going to combat
terrorism underscorec warnings from human rights groups that some governments
could use the campaign to setcle scores.

Singapore Plot Detailed
Terror suspects arrested in Singapore last nonth are linked to Al Qaeda and
planned to bomb Western targets, Singapore said. As

Berder-Control Proposal

The White House Office of Homeland Security set off a storm in the Bush
administration with a proposal to create an agency to consolidate border
security efforts now spread across the feceral government. AB

Chargea Tied to Aviation Radic

An Egyptian studert, Abdallah Higazy, 30, who was staying in a hotel room with a
view of the World Trade Center on Sept. 11, was charged with lying to federal
tnvestiyators about an aviation zacio in the room's safe. AS

NATIONAL AS~12
8

0800000000225


But while there is wicespreac suspicion about Enron's motives, pension
experts sald brief freezes are common and necessary when companies change
administrators,

"To move from one perfectly competent administrator ta ancther perfectly
sompetent administrator, you co need a period to make sure you've got everything
tategrated right and sunning,” Lofgren said.

Finally, there is the question of what to do about employee stock ownership
plans (ES }, which are by their nature invested entirely in company stock.
TSOPSs are meant both as setirement savings and to encourage employee ownership.
A question for policymakers will be whether those goals are incompatibie.

One avenue that may appeal to many Lawmakers is an easing of the barriers
that make many employers reluctant to provide advice to workers about managing
their 401{k} accounts.

The Labor Department recently ruled that a company could give advice to
workers, but some firms say they are still fearful of what the courts might do.

A bILI by Rep. John A. Boehner (R-Ohio} that would allow companies to pay
for advisers for their workers has passed the House and is awaiting Senate
action.

"Wealthy Americans can afford to hire an investment adviser to warn ther
that they've got too sany eggs in one basket. Most working families can't afford
guch a luxury,” Boehner said Friday.

LOAD-DATE: January 13, 2902

17 of 33 DOCUMENTS
Copyright 2002 The New York Times Company
The New York Times
January 12, 2002, Saturday, Late Edition - Final

SECTION: Section C; Page 1; Column 1; Business/Financial Cesk

LENGTH: $80 words

HEADLINE: BUSINESS DIGEST

BODY:

Enron Official Sought Help From Government Last Fall
The president of the Enron Corporation repeatedly called a senior Treasury
Department official last fall and sought help arranging bank loans for the
energy company as it scrambled to avoid collapse, the Bush administration seid.
The official, Peter R, Fisher, the under secretary of the Treasury for
domestic finance, spoke six or eight times during late October and early

November with Greq Whalley, Enron's president, a Treasury Department spokeswoman

said. age Al.
Ford Motor Plans to Restructure
Ford announced its most sweeping cutbacks in two decades, cutting 35,000
workers, closing five plants and dropping four models, Al.

Ford's plan to eliminate 15,900 hourly joba in the United States end Canada may
revive an old partnership between the unions and Ford to compete with foreign
rivals. C3.

The four vehicles being dropped by Ford include some storied names, but none of

them have sold well lately. They are the Lincoln Continental, the Fore Escozt,
the Mercury Villager minivan and the Mercury Cougar. C3.

0800000000223


January 12, 2002, Saturday, Late Edition - Final

SECTION: Section Ar Fage 1; Column 5; Susiness/Financial Desk

LENGTH: 1602 words

READLINE: ENRON'S COLLAPSE: THE OVERVIEN;
ENRON SOUGHT AID OF TREASURY DEPT. TO GET BANK LOANS

BYLINE: ®8y SICHARD W. STEVENSON
DATELINE: WASHINGTON, Jan. il
BODY:

The president of the Enron Corporation repeatedly called @ senior Tressury
Department official last fall and sought help arranging bank loans for the
energy company as it scrambled to avoid collapse, the Bush administration said
today.

Tne official, Peter R, Fisher, the under secretary of the Treasury fcr
comestic finance, spoke six or eight times during late October and early
November with Greg Whalley, Enron's president, said Michele Davis, the
department's spokeswoman.

its lenders had to
keg Mr, Fisher to call

Ms. Davis said thet as Enron reached the point whe
decide ther to advance it more money, Mr. Whalley
the company’s banks.

Mr. Fisher “inferred he was being asked to encourage she banks to extend
credit,” Ms. Davis said.

She said that Mr. Fisher did not intervene on Enron's behalf, “He made no
such calls," she saic. Mr. Fisher declined to coment.

A spokeswoman for Enron, Karen Denne, said Mr. Whalle:
Mr. Fisher were “informational.” She said she was “not awa:
seaxing help from Mr. Fisher.

inversations with
ef Mr. Whalley’s

“We always felt it was appropriate te keep the Treasury Department inforned
of the Enron uation,” Ms. Denne said, “Enron was the seventh-largest company
in che country, and the largest energy player."

The Tre 'y Department also disclosed tenight that Robert £. Rubin, who was
the secretary in tae Clinten administration and is now chairman of the executive
committee at Citigroup, the banking company, had called Mr. Fisher on Nov, 8
about the s,tuation.

Accorcing to the account provided by the Treasury Department
Mr, Fisher what he thought of Mr. Fisher's calling the credit-rating agencies to
encourage them to work with Enron’s bankers to avert an immediate downgrade in
Enron's debt. A downgrade would make it difficult for Enron te borrew mere
money.

Mr. Rubin asked

Ur. Fisher, according to the department's account, responded that he did not
think making such 4 cal: would be a good idea, and Mr. Rubin then agreed that
his position was reasonable.

Analysts say Citigroup has lent at least $750 million to Enron, and may also
have adcitional liability through insurance policies that its Travelers
subsidiary issued on Enron oil and gas contracts.

21

A person te Mr. Rubin said the Treasury Department's account was
largely accera emphasizing that Mr. Rubin hac agreed in the end that it would
not be appropriate fer Me. Fisher to make the call.

The disclosures came a day after the administration said that Enron's
52

“0800000000229


Charles iW. Stenholm D, Tex. 14,439
chet Edwards ©, Tex. 19,000

Doug Bereuter R, Neb, 1¢,000
uarry Combest Kk, Tex. 9,820

John D. Dingell D, Mich. 9,000
tarl Blumenauer D, Ore. 8,590
Kevin Brady KR, Tex. 8,009

*incledes a $100,000 contribution to the Democratic Senatorial Canpaign
Committee made in the fall of 2001. The committee is considering giving the
contribution te charity.

{Sturces: Political Money Line soft money contributions and contributions te
Bush presidential campaign ; Center for Responsive Politics top Congressional
recipients, inaugu=4l gala donations }

tpg. CS)

LOAD-DATE: January 12, 2092

21 of 33 DOCUMENTS
Copyright 2002 The New York Times Company
The New York Times
January 12, 2002, Saturday, Late Edition - Final
SZCTION: Section A: Page 1; Column 6: Business/Financial Desk
LENGTH: 2352 words

HEADLINE: ENRON'S COLLAPSE: THE POLITICS:
Parties Weigh Political Price Of Enron*s Fall

BYLINE: By RICHARD L. BERKE
DATELINE: WASHINGTON, Jan, 11
BODY:
Concern that the e#caiating Enron inquiry could ensnare the White House has
sed some Republicans in Congress, who said they were not yet willing to

stration while sco many facts were ill unknown but who warned
trying to use the case for partisan advantage.

in interviews, many Republicans saic thoy were hopeful that the
investigations would conclude that administration officials had done nothing
wrong. But they were approaching the matter warily because so many questions
remained unanswered.

“The danger here is if somebody acted in a capacity for the administration
and the administration cut them a speci faver," said Representative Thomas M.
Cavis Ill of Virginia, chairman of the ionel Republican Congressional
Committee. “Then you have an issue. So far, there's no evidence of that. But we
have @ responsibility to take a look.”

Representative Mark Foley, Republican of Florida, said that while he would be
surprised if there was a finding of wrongdoing by the White House: "I don’
taink this goes away. We have to go to where this 1 us. It doesn’t matter if
it's a cabinet secretary or a line worker in the White House.”

Mr, Foley added, “When the front page described « presidential link, it's not
helpful.”

Riready, the publicity over Enron has unnerved Republican pelitictans as Mr.
Sush tres te keep the public rallied behind the war and his plans for the
economy, and his perty is gearing up for midterm elections. With the prospect of
Congressional hearings, the distraction is likely to continue for seme time.


Russian default.

The danger is that the Bush Treasury will conclude that nonintervention is
always the best policy. It isn't.

You san make a case, for example, that now that Argentina has taken the hit,
the United States should help put the pieces of a sound market economy back
together. Otherwise, there's a danger of what might be called “political
contagion,” as the populist anger of ordinary Argentinians spreads to other
countries tn Latin America. Those countries may decide to default on their
debts, too.

The real black hole in glebal finance right now is Japan. Despite hopes for
reform and revival under Prime Minister Junichire Koizumi, things in Japan have
gone trom bad to worse to disastrous. That's why the Japanese finance ministry
halted its yen devaluation last week -- things were beginning to spin out of
control.

Tn Japan as elsewhere the Bush Treasury has tended to show disdain for the
sort of aggressive financial intervention the Clinton team favored. But that's
beginning to look misquided. Jepan needs help now, badly. Most of all, it needs
an erderly way for its financial secter to, in effect, declare bankruptcy -- a
process something like the savings-and-loan cleanup in the United States a
Secade ago, The Japanese could use U.S, help in restructuring, but the Bush
administration is mostly sitting on its hanes.

The Bush administration paradox is that it is wildly interventionist in its
foreign military policy but almost passive in international economic policy.
That imbalance is a misteke, One lesson of the war against terrorism is that the
Unites States needs to be involved in the welfare of ordinary people around the
world -- sharing the fruits of the global economy sc that more people have a
stake in its success.

tervention was the right choice with Enron and Argentina, but the Bush
ration shouldn't make a fetish of ic.

LOAD-DATE; January 13, 2002
16 of 33 DOCUMENTS
Copyright 2002 The Washington Post
The Washington Fost
January 13, 2002, Sunday, Final Edition
SECTION: FINANCIAL; Pg. HO1
LENGTH: 397 words

READLINE: Revisiting Pension Requiations; Lawmakers, With Enron on Their Minds,
Face Sensitive Issues

BYLINE: Albert 8. Crenshaw, Washington Pos: Staff Writer
BODY:

Under pressure from President Bush to keep future corporate bankruptcies from
wiping out the retirement savings of thousands of employees, as in the recent

collapse of Enron Corp., members of the adwinistration's economic team said last
wees that they intend to do just that.

Treasery Secretary Paul H. O'Neill, Labor Secretary Elaine L. Chao and
Commerce Secretary Donald L. Evans spoke with assurance, but those who design
and operate pensions and retirement plans were left wondering: Exactly what are
they going te cdo?

“

~~ 90800000000221


http://www, nytimes.com
LOAD-DATE: January 14, 2002
4 cf 33 DOCUMENTS
Copyright 2002 The New York Times Company
Tae New York Times
January 14, 2002, Monday, Late Edition - Final
SECTION: Section A: Page 2: Coluan 6: Metzopolitan Desk
LENGTH: 23 words
HEADLINE: QUOTATION OF THE DAY
PODY:
“Companies come and qo. It's part of the genius of capitalism.”
PAUL O'MEILL, Treasury secretary, on the collapar of Enron, Al2
http: //wuw.nytines.com
LOAD-DATE; January 14, 2062
5 of 33 DOCUMENTS
Copyright 2002 The New York Times Company
The New York Tines
January 14, 2002, Monday, Late Editicn - Final
SECTION: Section Ai Page 15; Column 5; Editorial Desk
LENGTH: 732 words
HEADLINE: Andersengeate
BYLINE: By WILLIAM SAFIRE
DATELINE: WASHINGTON
BODY:

Fed Chairman Arthur Burns, worried that the impending collapse of Penn
Central would roil the capital markets, suggested that the Pentagon arrange a
loan to prevent bankruptcy. George Shultz, then the Mixon budget director,
argued that government intervention would send the wrong message about
risk-reward to our economic system.

The dispute was resolved when Bryce Harlow, the sage speechwriter-adviser,
entered the Oval Office and said tc President Nixon: “The board of Penn Central,

in its infinite wisdom, has just hired your old law firm te help you decide. Mr.
President, you can’t touch this with a cen-foot pole."

Nixor tock the advice not to meddle. The huge company went bankrupt
the markets quietly absorbed the shock. No scandal touched the White House
{until later).

anc

We had another non-intervention in the Enren ccllapse. Kenneth Lay, chairman
ot the nation’s seventh-Large: company and 4 longtime political contributor,
callec 4 couple of Bush cabi: secretaries to reveal his rapid unraveling. He
was surely hoping for some government succor. The Bush Treasury and Commerce

0800000000193


It also made Mz, Fisher a natural poinz of contact for Enron itself. whether
simply =9 keep the government informed of financial problems at the dominant
player in the burgeoning business of trading energy, as Enren says it was doing,
or seeking assistance as it fought to survive, as the administration has
suggested twice in recent days was the case, Mr. Fisher was clearly the go-to
quy.

Mr. Fisher's job entails several duties, including managing the government's
Gebt and overseeing regulaticn of the banking industry. During the weeks in late
October and early November when he was called six to eight times py Greg
Whalley, Enron's president, Mr. Fisher was enacting a plan to suspend issuance
of the 30-year Treasury bond, perhaps the best-known security in the financial
markets and long the bencimark for investment safety.

But as much a8 anything, Mr. Fisher, who declined a request for an interview,
is an intelligence gatherer who can pick up the phone and talk to just about any
Wall Street or banking executive.

Ur. Fisher's role in dealing with Enron started when Kenneth L. Lay, the
energy company's chaizmen, called Mr. O'Neill on Oct. 28. Mr. Lay,
administration officials said, drew an analogy between Enron’s deteriorating
financial condition and the crisis set off in 1998 by the fall of Long Term
Capital Management, a giant hedge fund. Because Long Term Capital owed money to
so many banks and iavestment firms, regulators were concerned that its collapse
could set off a chain reaction that could endanger the entire financial system.

Enron had similar entanglements throughout Wall Street. But it was far from
reat to anyone else, or the financial system as
for an opinion, Mr. O'Neill was able to draw

Gh someone who was almost uniquely qualified to render a judgment.

As an executive vice president of the New York Fed, Mr. Fisher had played a
critical role in dealing with Long Term Capital's troubles.

Wnern asked to look into Enron's situation by Mr. O'Neill, Mr. Fisher was able
to call on people he had been calling for rs. They included his successor at
the New York Fed, Dino Kos. He was also able to canvass executives at most of
the major investment firms. Mr. Fisher's verdict was that Enron did not present
the sare type of threat to the financial system that Long Term Capital had.

chele Davis, the spokeswoman for the Treasury department, said the
information passed to Mz. O'Neill and Mr. Fisher was of the same sort that was
appearing in the newspape-s about Enron during that period.

hetp://www. nytimes.com
LOAD-DATE: January 13, 2092
11 of 33 DOCUMENTS
Copyright 2002 The Washington Post
The Washington Post
January 13, 2002, Sunday, Final Edition
SECTION: A SECTION; Pg. AQ?
LENGTH: 1267 words
HEADLINE: Enrom Executive Sought Help Fr ...

S30DY:

0800000000211


Fisher, Peter

8

From: Gross, Jared

Sent: Thursday, January 10, 2002 11:53 AM
To: Fisher, Peter

Subject: POTUS Remarks (less Middle East Q&A)

REMARKS BY THE PRESIDENT IN MEETING WITH HIS ECONOMIC TEAM
The Oval Office
9:42 A.M. EST

THE PRESIDENT: Thank you all for coming. I met with my economic security team last week to talk about
ways to create jobs. We're meeting again with the components of the team to talk about one part of economic
security, and that's pension security.

One of the things we're deeply concemed about is that there have been a wave of bankruptcies that have caused
many workers to lose their pensions, and that's deeply troubling to me. And so I've asked the Secretary of
Treasury, Secretary of Labor and Secretary of Commerce to convene a working group to analyze pensions,
rules and regulations, to look into the effects of the current law on hard-working Americans, and to come up
with recommendations how to reform the system to make sure that people are not exposed to losing their life
savings as a result of a bankruptcy, for example.

As well, Secretary of Treasury, along with the SEC, the Fed, and the CFTC, are going to convene a working
group to analyze corporate disclosure rules and regulations. In light of the most recent bankruptcy, Enron, there
needs to be a full review of disclosure rules, to make sure that the American stockholder, or any stockholder, is
protected.

And so, I think this is an important part of, obviously, other investigations that are ongoing. The Justice
Department announced and informed us late yesterday that they're in the process of investigating aspects of the
Enron bankruptcy. The administration is deeply concerned about its effects on the economy. We're also deeply
concemed about its effects on the lives of our citizenry.

I'll be glad to answer a few questions.

Q When was the last time you talked to either Mr, Lay or any other Enron official, about the -- about anything?
And did discussions involve the financial problems of the company’?

THE PRESIDENT: | have never discussed, with Mr. Lay, the financial problems of the company. The last time
that I saw Mr. Lay was at my mother’s fundraising event to -- for literacy, in Houston. That would have been
last spring. I do know that Mr. Lay came to the White House in -- early in my administration, along with, 1
think 20 other business leaders, to discuss the state of the economy. It was just kind of a general discussion. |
have not met with him personally.

Q -- to inoculate and your administration politically from the fallout?

THE PRESIDENT: Well, first of all, Ken Lay is a supporter. And I got to know Ken Lay when he was the head
of the — what they call the Governor's Business Council in Texas. He was a supporter of Ann Richards in my
run in 1994. And she had named him the head of the Governor's Business Council. 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, and he
supported my candidacy.
This is -- what anybody's going to find, if -- is that this administration will fully investigate issues such as the

1

01200000001523


Labfvustbel tell

1500 Pennsylvania Avenue, NW
Washington, DC 20220

Room 3330

The Honorable Robert E. Rubin
U.S. Department of Treasury

Secretary of the Treasury

i

|
fF
ul

. "4a

~ 00100000000567


1445 New York Avenue, NW Headquarters
Washington, DC 20005-2148 40 Broad Sarect
Telephone 202.434 8400 New York. NY 10004287)
Fax 202.434.8456 Telephone 212.440.9500
wew 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 20220
x ah
Dear Mr. leton: gues.

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

1 would like to clarify the Association's position regarding a memo sent to you by
Enron on March 1. The characterization of our Association’s position conceming
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.

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,

Executive Vice President

01956

01300000000564


regulators that pipelines would falter unless they were freed to shop for
Gussomers and for the best deals from producers. Once the marke: began to cpen
up, 943 prices began to fluctuate wildly. Enron stepped in with new prodects
that alicwed customers to lock up long-term gas supplies at stable prices --
with Enron taking a cut.

By the 1990°s, the federal qovernment was similarly speeding the ceregulation
of wholesele electricity markets, an effort strongly backed by Enron and other
energy companies. New, independent power producers were free to build plants and
sel. power, and an ever-growing amount of electricity was traced azong
acilities, unregclated power generators and power marketing campanies.

Encen moved aggressively, seeking te gain the biggest share: f trading in
these new and fast-growing markets -- lining up supply contr: to buy power
and gas while at the same time cutting deals to sell the energy to customers,
often over the long term.

Analysts estimate that at its peak Enron accounted for about one-quarter of
the nation’s energy trading -- not producing much energy itself, but serving
wnestly as a middleman.

More significantly, Enron domimatea the trading of financial contracts, or
derivatives, based on the value of gas and electricity traded at physical “hutsTM
around the nation, At seme hubs, rival energy traders say, Enron accounted for a
much higher percentage of trading of some preducts, giving it enormous influence
in the marketplace,

Waat remains a point of contention is how Enron used its power. The company
always maintained that it took only small profits on individual trades, and
instead made money by packaging and arranging complex deals for customers.

But in the wake of its collapse, to many investors Enron appeared more like a
giant energy hedge fund, making bets on energy prices. Last year California
ort 3 went further, accusing Enron, and other pewer traders, of profiting oy
pulating prices there and criving up electricity costs by billions of
dollars in late 2000 and early 2003. (California's deeply flawed deregulation
schene played a large role in the price spikes, as the state had net built a
majoz power plant in 4 decade.!

Enron denied any wrongdoing in California, But in securities filings last
year, the company acknowledged that its enormous gaina in energy-trading profits
were partly due to cverall hig! natural gas pric which had soared along
woth the price of electricity, as gas is an important fuel used for generating
power -- ard price volatilicy.

The company's critics observe that while energy prices were rising, Faron was
riding high, but that it begar. to falter this sumer -- when prices for
ctricity and gas collapsed. it may not be a coincidence, they say, that
nren's house af cards tumb! at the same time energy costs sherply retreated,
and those profits were no loncer able to mask severe problems at the company.

Alarms Unraised
Limited Cversight And a ‘Black Hole‘

Flying high after being unshackled fron regulation, Enron crashed quickly
last fall after a series of revelations about its bookkeeping practices -- in
particular, concealing huge chunks of debt by transferring them into still-nurky
pertnerships.

By recucing the debt on its books, the company looked healthier and its
prolits looked more robust, even as the results of its trading operations and
energy tales were flagging. Steck analysts and shareholders coula breathe
easier, as could credit rating agencies like Stardard & Poor‘s and Moody's
Investors Service, which assess a company's health for lencers,

But within weeks, the company found itself in bankruptcy, under investigation
ana the target of lawsuits from burned investors and former trading partners.

7

~ 00800000000204


The New York Times
January 14, 2002, Monday, Late Edition = Final

SECTION: Section Az Page 15; Column 1; Editorial Desk
LENGTH: 741 words
HEADLINE: Silencing The Alarm
BYLINE: By BOB HERBERT
ROGY:

The e-mails are chilling.

Last Aug. 14, the day Jeffrey Skilling mysteriously resigned after just six
months as Enron's chief executive, the company’s chairman, Kenneth L. Lay, sent

an e-mail to l employees in which he said, "I want to assure you that I have
never felt better about the prospects for the company.”

By then Enron's prospects were as hopeless as those of a sand castle at high
tide. Mr. Skilling and Mr. Lay had already cashed in more than $160 million
werth of Enron stock. Om Dec. 2 Enron would go into the record books as the
Largest corporate collapse in the nation's history.

But unsuspecting Enron employees -- who, by the thousands, were about to lose
thelr jobs, their retirement nest ir entire life inga -- could read
an Mr. Lay's e-mail: “Our performance has never been stronger; our busine:
model has never been more robust; our growth has never been more certain.”

On Aug. 27? Mr. Lay sent employees another e-mail, this time asserting, "One
of my highest pricrities is to restore investor confidence in Enron. This should
result in a significantly higher stock price.”

The e-mails were released over the weekend by Representative Henry Waxman, a
California Democrat whose office is investigating the Enron collapse. In a
letter to Mr. Lay, Mr. Waxman noted, "By the time of the second e-mail, when the
stock price was $37, you had already sold $40 million of Enron steck during 2001
and over $1C0 million since October 1998.°

Two menths after his encovraging e-mails to employees, Mr. Lay was on the
phone w. the secretary of the Treasury, Paul O'Neill, telling him about the
perilous state of Enron's affairs. He also called Commerce Secretary Donald
Evans. And he was in frequent touch with a Treasury undersecretary, Peter
Fisher. So the Bush administration knew that Enron's situation was dire.

@at did anyone sound the alarm with the company's employees, or with the
millions of Enron shareholders from coast to coast? Not only were the employees
deliberately left in the dark, but Enron had many of them locked into rules that
prohibitea them from selling their stakes in the company, thus assuring their
financial ruin.

If any of this was a matter of concern to the Bush administration, we haven't
heard about it. Treasury Secretary O'Neill was on television yesterday blithely
ing, “I didn't think this was worthy of me running a 35 treet and
lling the president."

Enron's collapse may have been a devastating financial blow to tens of
thousands cf hard-working families, but Mr. O'Neill, during an appearance on
"Zox News Sunday,” mace it clear that he was unperturbed. "Companies come and
go," he said.

fe added that “part of the genies of capitalism" is that “people get to make
good decisions or bad decisions, And they get to pay the consequences of to
enjoy the fruits of their decisions. That's the way the system works."

(0800000000190


MATIONAL AL9-13

Cemocrats Weigh Changes To Better Challenge Bush

‘Tne Domecratic Party is expected to approve a complote overhaul of the
presidential primary schedule in 2004 that party officials say will ensure that
Democrats more competitive with President Bush. Al

Bush Chokes on Pretzel
Tae president fainted and fell off a couch after choking on a pretzel while
watching football on television, the White House physician said. All

Enron's Cabiret Calls

Two cabinet members said they were not obligated to inform President Bush or tne
public about requests for assistance from the Enron Corporation last fall as it
hurtled toward bankruptcy. Treasury Secretary Paul O'Neill and Commerce
Secretary Donald L. Evans said they did nothing to help Enron, the bankrupt
energy trading conglomerate with ties to the administration, A12

The collapse of Enron is rippling slowly through its stunned hometown of
Fouston, where 4,000 local employees lost their jobs. The company had been a
vital civic dynamo. Al

A Common Denominator

Amador Anchondo-Rascen, @ grocery owner in Shelbyville, Tenn., pleaded guilty in
federal court in Chattanooga toe acting as a middleman in what prosecutors
describe as a conspiracy te supply Tyson foods with more than 2,000 illegal
workers te provice the new arrivals with counterfeit documents. His story is
a familiar one to these who have studied the influx of Hispanics to small tows
in the Seuth ang Midwest. Al3

SCLENCE/HEALTA

Money Crisis for Medicaid

The insurance program for 4¢ million lew-income pecple is in a fiscal crisis,
prompting state legislatures to look for ways to cut benefits and reduce
payments. AL

Lactose Intolerance Advance

Researchers have icentified the genetic basis of lactose intolerance, the
inability of most adults in the world to digest the principal sugar in milk.
More than 3¢ millicn Americans are prone to lactose intolerance. The finding may
lead to 4 more accurate test for the condition,  Al10

NEW YORK/REGION 81-5, 8

Tex Assessors Are Accused Of taking Millions in Bribes
A grand jury is investigating accusations that assessors cut property tax bills

for the owners of skyscrapers, apartment houses, factories and warehouses in
Manhattan im return for millions of dollars in bribes. 1

Fighting Police Attrition

In an effort to stem the excdus of officers from the New York Police Department,
Commissioner Raymond W. Kelly is preparing to ask the Lecisiature to allow
officers retirement benefits while on the job. Al

Lawsuit Roils Church

A legal dispute between a priest and a bishop has roiled the congregation at
Grace Church in Manhattan end disconfited Episcopal clergy members. More
broadly, it has raised the issue of where the line between religious and secular
authority lies. Bl

Neediest Cases 84

ARTS 21-10

Watching Ellie, Nervously

0800000000196


"I didn't think this was worthy of me running across the street and telling
the president,” Mz. O'Neit] sata in an interview or "Fox News Sunday," "I
frankly think what Ken told me over the phone was not new news,”

In late October, Enron was borrowing heavily in an effort to shore up
investors’ confidence. Or Oct. 25, tt announced that it had Grawn $1 billion
from banks against its existing unsecured credit lines. And on Nov. i, it
announced that J. ?. Morgan and Solemon Smith Barney had agreed to lend it
another $1 billion in secured credit.

On Oct. 29, as Enron scrambled to find new financing and its stock price
continued to plummet, Mr. Lay called Mr. Evans to about reviews of Enron's
business by credit agencies and to see if Mr. Evans might be able to help. Mr.
Evans said he did nothing to assist Mr. Lay.

“dnen I was talking to Ken i wasn't thinking about ban«<ruptcy,” Mr. Evans
said in an interview on the NBC News program “Meet the Press.” “I was thinking
maybe their credit rating would be Groppea some. It wasn e@ crisis yet that
ensued some 30 days Later.”

Mr, Evans said he later told Andrew H. Card Jr., the White House chief of
staff, about Mr, Lay's request, but Mr. Card did not inform Mr, Bush of the
call. Mr. Evans said he discussed Enron's problems with the president at several
meetings in Novembez and December, telling Mr. Sush “how sad it was to see what
was happening to that once great company" but not mentioning Mr. Lay's calls,

Mr. Evans said he had never considered doing a favor for Mr. Lay. “If 1 had
stepped in, I think it would have been an egregious abuse of the office of
secretary of commerce," he said on "Meet the Press."

Congressicnal Democrats argues today that Mr. O'Neill and Mr. Evans had a
responsibility to tell the public about Enron's probiens.

Both Mr. Zvans and Mr. O'Neill said st would have been inappropriate for then
to discuss the issue publicly. "It's net the role cf government officials to
call attention to the things that are already being recorded in the media in a
very strong way,” Mr. O'Neill said om the ABC News program “This Week”.

Mc. O'Neil! saic he was not surprised by the sudden collapse of Enron,
“Companies come and go,” he said today. "It"s part of the genius of capitalism.”

Senator Joseph 1. Lieberman, the Connecticut Democrat, called that comment
“cold-blcoded." Senator Jon Corzine, the New Jersey Derocrat, said the remarks
were “unfortunate” and showed “an insensitivity to those who have lost so much.”

Nr. Lieberman and Senator John McCain, the Arizona Republican, said on the
C85 News prograr "Face the Nation” that the government's response =o news of
Earon’s troubles might nave been shapec by its concern that the Sush-Cheney
campaign and inaugural committee had received hundreds of thousands of dollars
from Enron and Mr. Lay.

"We're all tainted by the millions and millions of dollars that were
contributed by Enron executives," Mr, McCain said. He ecknowledged receiving
$9,590 in donations from Enron ir two campaigns.

Nearly half of the curcent members of the House of Representatives and almost
three-quarters of the Senate have received contributions from Enron, according
to campaign finance records.

Enron nas contributed a total of $5,7 million te both political parties since
1989, 73 percent of it to Republicans, according to the Center for Responsive
Politics. Mr. Lay and cther Enron employees are Mr. Bush's Larcest political
benefactors, having contributed $623,000 over the course of his political
career, according *o another group that favors an overhaul of campaign finarce,
the Center for Public Integrity.

0800000000192


Meany questions remain unanswered, but one thing is certain: As a result of
Enren's successful lobbying, Washington waa largely out of the business of
regulating those products the company sold.

tf she regulaters in Wash=ngton were asleep, it was because the company had
made their beds and turned off the lights. The company's financial successes
were in no small part the Syproduct of its political and regulatory campaigns to
deregulate the marketplace. created what one executive last yoar referred to
an a “regulatory black hole.”

But there were still traditional corporate mechanisms and institutions in
place that shozld have raised alarms and kept executives in check,

"The fact that things declined s0 fast strongly suggests a breakdown of basic
corporate governance,” said David Ruder, a former chairman of the Securities and
Exchange Commission who teaches at Northwestern University School of Law.

Auditors who had multiple and potentially conflicting roles did not raise
alarms abeut improper finan: 1 statements. Directors did not closely question
Ranagement and the accountants and thus failed to ferret out the accounting
trregula: les, Lawyers set up partnerships that concealed the true financial
pligne cf company. Aatings agencies yielded to the entreaties of management
and only reluctantly downgraded credit ratings. And some Wall Street analysts
like Davic Fleischer cf Goldman Sacns continually recommended the stock, even as
it plumretes.

Experts said the newness of Enron*s trading products and techniques might
have ultimately confounded executives and auditors who were supposed to
supervise the enterprise,

“Thin appears to be a board that, like other companies that have gotten into
trouble, was composec of people interested in solidifying relationships rather
tnan meaningful review and oversight, id James DB. Cox, an authority on
cerperate law and accounting at Duke University School of Law.

For ali the blame now being assigned, Professor Cox and other experts say the
bigsest failure -- at st based on what has become public so far == appears to
rest with the company's auditors, Arthur Andersen.

"It appeared that the accounting firm was reviewing a financial product which
they didn*t understand,” Professor Cox said.

While Andersen executives have said that they were misled by their client,
Mr. Cox and other experts said that auditors had to be aggressive in questioning
managerent.

"The job of the auditers is to ask tough questions and net to just blithely
rely on what they hear from the executives,” said Jocl Seligman, dean of the
Washington University School of Law.

With the disclossre last week that Andersen enployees had destroyed larce
nurbers of documents relatea te the firm's audits of Enron, investigators will
be aiming many of their toughes= questions at the accountants.

A Bush Connection
Financial Bonds Ans New Questions

Beginning in the early 2990's, Enron pursued its campaigns for erergy
deregulation by hiring dozens of Washington's mest influential lobbyists and
soowering Democrats and Republicans on Capitol Hill with large campaign
contributions,

But Enron anc its chairman, Mr. Lay, forged their deepest financial boards
with two presidents; George H, W. Bush and, more recently, his son Geerge W.
Bush,

0800000000205


From: ex.mail."Jmazun@worldbank.org”

To: ex.mail(terawford @worldbank.org”),om13.DOPOR(SIL...
Date: 11/19/09 11:44am

Subject: Re: OR Power Project

Enron's Washington rep (John Hardy) called this office this moming to say that
the 10 day notice they gave the OR for a shut down of operations at their plant
takes effect today. He expects there to be big problems and reminded me that the
last time the police attempted to take over the plant. Evidently the OR ts $40
milion in arrears to Enron and the total debt to all the IPPs is about $130
milion. Payment has always been a problem but this summer, afer the
privatization, the government told COU it would no longer make the subsidy
payments which had kept things afloat.

He wanted us to know about the shut down and to discuss the efforts Enron is
making to attempt to bring about a cessation of energy investments in the DR by
both the World Bank and the IDB, | told him that policy matters like that are
handled at Treasury and he indicated that he would be making calls and setting
up meetings.

Janice L. Mazur

Executive Director's Assistant

Office of the United States Executive Duector
(202) 456-0118

(202) 477-2967

cc: ex, mail(Bruce_Juba%iadb@jworldbank.org”,"William_S..,

00500000001212


According to tae White feuse, Mr. Lay had specifically raised the comparison
to ong Term Capital when he spoke to Mr. O'Neill on Oct. 28. Mz. O'Neill then
ised the issue with Mr. Fisher, who respondec that the comparison was “not
apt,“ Mr. Fleischer said.

As under secretary for domestic finance, Mr. Fisher has the responsibility of
keeping tabs on the financtal markets and cn developments thet might create
proelems for banks. During the period that Mr, Whalley was caliing him about
Enron's condi nm. Mr. Fisher was in regular contact with investment firms about
wnether Enroa'’s problems would affect the financial system, administration
officials and Wall Street executives said.

Enron‘s credit rating was downgraded on Oct, 2%, The Securities and Exchange
Commission announced on Oct. 31 that it had cpened a full-fledged investigation
into whether it had misled investors, Enron was trying to arrange a nerger and a
line ef credit from banks to keep it solvent in the meantine.

Goleman Sachs Group and Morgan Stanley were among the firms contacted by
Treasury Department officials weighing the potential implications of Enron's
troubles, people at those firms saic. Mr. Fisher spoke regularly throughout
Enron's disintegration to Lioyd C. Blankfein, a senior executive who oversees
Goldman's tradins of bends and commodities, including energy.

Other Treasury officials checked in with credit and trading managers at
Morgan Stanley.

But people familiar with those conversations cescrihed them fairly routine
and informal and said they did not involve Morgan Stanley's chief executive,
Philip Purcell, or Goldman's co-president John A. Thain. The discussions were
about the firms’ trading positions and financial exposure to Enron, not about 2
tailout ef che company, these people said.

Mr, Blankfein declined to comment.

Mr. Fisher was also in contact with Dine Kos, the executive vice president
and manager of the Federal Open Market Cesk at the Federal Reserve Bank of New
York, who serves as the Fed's eyes and ears on Wall Street.

“Every dey Peter Fisher ts in touch with people in the market gauging their
cencerns about what happening in the world,” Ms. Davis said. “It's a routine
function of his job."

But Mr, Fisher's role in the affair is sure to come under additional
sctutiny. According to fis financial disclosure form and Treasury officials, Mr.
Fisher has @ small, indirect investment in Enron through a trust set up by his
parents. Ms. Davis said the Enron stock in the trust was worth less than $5,900
at the beginning of the fourth quarter, putting it below the level at which it
would subject Mr. Fisher to government conflict of interest regulations.

The administration disclosed a number of other contacts with Mr. Lay today.
Enerqy Secretary Spencer Abraham called Mr. Lay on Nov. 2 to ask about the
situation. And Mr. Evans said through his spokesman, James Dyke, that ne had
spoxen +o Mz. Lay in mid-November to discuss a power plant that Enron operates
in India

But the administration also continued its efforts to play down its
Enron. In ar interview with The Associated Press, Hari Rove, Mr. Bua!
political adviser, said of Mr. Lay: "The president knows him. He is triend.
But the idea that he ls a friend in the sense that this is a guy who's a close
intimate as just ludicrous."

beip://www. nytimes.com

SSAFHIC: Photo: Peter 3. Fisher, an under secretary of the Treasury, was
contacted by Enron before its collapse. (Bloomberg News) (pg. C4)

”

0800000000231


4 of 4

[OUTSIDE SCOPE]

00100000000765


eas @ culture cf greed and errogance that bred excessive secrecy. As some of the
company’s secrets began to be revealed last fall -- stunning Wall Street with
tales of mystericus partnerships tnat had been used to pretty up zmron’s hooks
-- the stage was set for disaster.

Shispers in the energy markets and the company’s growing financlal weakness
set off a swift Loss of confidence among traders and bankers. Sources of
financing evaporated, « merger desl collapsed and, finally, Enron hobbled into
“kraptcy court. As creditors quarrel over ita renains, investigators in
ngress, the Justice Department and the Securities and Exchange Commission are
gemarcing anawers.

Enron executives had hoped to make the company a new model for American
incustry. And indeed, the t of the company’s rapid rise and astonishing
collapse will be studied for years -- but as an object lesson in the dangers of
telying on financial juggling for big profits, and the hazards of a business
that corporete executives and directors, Wall Street analysts and government
regulators barely understood.

“Tne woods were filled with smart peopie at Enron, but there were really no
“ise peeple, or people who could say ‘this is enough,* “ said John Olson, a
veteran energy industry analyst with the investment firm Sanders Morris Harris.
“Giver an adrenaline-driven culture, given an absession with 15 percent a year
or better earnings growth, you hac this situaticn develop where Enron was set to
metastasize.”

Transforming Itself
A Company Thrives, Then Pays the Price

it started in the heacy takeover days of the 1960's.

After his pipeline company, Heuston Natural Gas, successfully fended off a
hostile takeover, Kenneth L. Lay, a onetize naval officer with a dectorate in
economics, realized that the key to the company’s survival was to take itself
tee big te cevour.

So in 1985 Mr. Lay orchestrated the sale of his company to one of the largest
pipeline companies in the world, Internerth of Nebreska. The merged company,
wath Mr. Lay in charge, announced plans to chance its name te Enteron -- until
company executives cearned that this was also another word for the digestive
t t. Someone struck a few letters out of the new name, and Enron was born,

jhe cempany. with headquarters in Houston, faced enormous challenges. Beyond
being sadcied with huge debts brought on by the merger, Enron was in a rougher,
deregulated marketplace.

Enron decided to transterm itself. No longer would it simply be in the
cusiness of roving and selling gas: instead, it would become part of the
commodities-trading world, buying and selling electricity and natural gas as if
they wore pork belly futures.

Te accompiiah the transformation, Mr. Lay nad as Ala protege Jeffrey x.
Skicling, a consultant with McKinsey 4 Company. Mr. Skilling brought a new
dynastic te the once-staid business. Mr. Skilling was able to understand how the
markets be used to liberate Enron from its reliance on the old world of
herd

Business boomed, and in 1990 Mr, Skilling left McKinsey to run the Enron
Finance Corporation, a civisien that the growing company had created just for
hain.

fy 1995, Enron had becore the biggest participant in the natural gas
business, controlling one-fifth of the North American market. In 1997, Mr.
Skilling was mamed president and chief operating officer of Enron.

Things took off from there. Ideas that made millions in one commodity, the
Encen executives reasoned, could work equally well with any other. Electricity,

0800000000202


Christepher Shays (R-Corn.}), who called on the GAO to proceed. Earlier this
menth, the White House disclosed that its energy task force met six times with
Enron officials Sut said the company's finances were not discussed,

Matalin said the administration position om releasing the information was
anged. “If they want +o know wnat we discussed, read the first energy policy
a generation,” she seid. The House Energy and Commerce Committee asked
yesterday for hundreds cf new records from Enron*’s auditor, Arthur Andersen LLP,
udirg the personal files of Devid Duncan and five other Ancersen partners
tevolved in the auéit of the conpany, The committee believes many of the
destroyed documents were e-mails sent to and from execut-ves, committee
spokesman Ken Johnson said.

The Senate's Permanent Subcommittee on Investigations issced §1 subpoenas to
Erron and Andersen yesterday. Its chairman, Sen. Car= Levin (D-Mich.), said, “We
are going to be leoking into the circumstances surrounding the board members’
Erzen stock ard option trades, the conduct of the board's audit committee, the
conduct of the board with respect to both internal and external audits.”

While congressional committees pursued their investigations, political party
officials tried to taint each other with donations received from the company.
$i: 1989, Enron has made $ 5.8 million in campaign donations -- 73 percent to
Republicans and 27 percent te Democrats.

The Republican National Committee pointed out that a large number of top
Democrats received Enron contributions, including Lieberman, Senate Majority
Leader Thomas A. Daschle (S.D.} and House Minority Leader Richard A. Gepharcat
(Mo.!. The RNC also pointed out that the Democratic National Committee had
received $ 285,000 in Enron contributions in 2000. But Rep. Thomas M. Oavis III
(R-¥a.) saic yesterday the National Republican Congressional Committee will
return € 190,000 donated by Enron lest year and called fer bipartisan
investigation inte the company's bankruptcy and requests for government help.

"It anybody else wants to focus on politics, that’s their prerogative, but
the president's focus is on getting to the botton of this fully,” Fleischer
said. As a political issue, he said, “this dog won't hunt.”

er, the Treasury official asked to intervene with Enron's lenders, is 4
He was previously with the Federal Reserve Bank of New York and helped
“@ private-sector bailout for Long-Term Capital Management, a $ 4
billicn hedge fund.

His current Job is te monitor the financial marke-s. He kept in contact with
big players on Wall Street, constantly asking if they sensed any fallout

om Enron's market condition, Michelle Davis said Fisher “politely cemarred"
hen he sensed ne waa being asked to contact the banks. Rebert Bennett, an
attorney for Enron, said Whalley called Fisher whenever there was bad news to
report, but suggested his conments were less sinister than the Treasury
Department indicated. According to Bennett, Whalley told Fisher, “It would be
nice if you could get these banks to lend us some mcney. But I should teli you,
cur credit is not good.” Bennett said Whalley then laughed.

tn addition to calling O'Neill and Evans, Lay called Federal Reserve
Chairman Alan Greenspan on Ost. 2€, "We will not characterize the conversaticn,”
a Fed spokeswoman said. "The chairman did nothing in response to the eall
because it would have been inappropriate.”

Karen Denne, spokeswoman for Enron, sald: "Mr. Lay does not believe he asked
for anything. He wanted to provide information.”

Staff writers John M. Berry, Glenn Kessler and Spencer Hsu contributed to
this report.

6

0800000000238


American Bonefita Council, said that even theugh Enren employees had
opportunities at certain tines to diversify their savings, many s ill chose to
invest heavily in the company’s stock because of their loyalty to Enron and its

past succe.

Sonetines, colleagues’ confidence is enough. “Some employees felt social
pressures to put even their own money into company stock,” Ms. Madrian said.
These workers, she said, suffered the most when Enron's value crumbled.

Legislation has intensified such trends. according to Mr. Iwry. He cited tax
deductions en dividend payments for shares bought through employee stock
ewunezship plans, Such

000240


McGivern, Tom

oe

From: Denise,C Dittrich@frb.gov

Sent: Monday, December 03, 2001 12:56 PM
To: Tom. McGivern@do.treas.gov

Subject; Re;

I found the filings on Enron's website. Thanks anyway.

Tom.McGivernedo

-treas.gov To: denise.c.dittrich@Frb.Gov
ce:

12/03/01 11:47 Subject:

AM

I haven't found the filing anywhere yet, but the best place to look may be
the following web sites:

http://wew.nysb.uscourts.gov/ - this is the bankruptcy court for the
Southern District of NY, where the case was filed, but it may be that you
get nothing from this site because it looks like you have to be registered
on the PACER system to get acc . The Fed probably could make a pretty
decent argument that it should be registered. See the privacy statement on
the site.

http://wew.abiworld.org - the American Bankruptcy Institute site generally
is very good about getting info before others

01000000001180


cid not mention Lay's phone call to them,

Sen. Joseph I. Lieberman (0-Conn.), casirman of the Governmental Affairs
Conmittes, said his panel's investigation into Enron's collapse would also Leok
é= the administrat-on's actions.

“We know that Ms. Lay and other executives of Enron were right in the middle
formulation of the Bush administration energy policy ard energy

rtments that were made," Liebernan said on CBS's “Face the Nation.” "But we
know enough to know whether any of that influence in any way stopped the
acdzinistration or agencies of our federal government from protecting average
shareholders who lost their life savings when Enron collapsed.”

But Evans said it would have heen an “egregicus abuse of the office” for him
to have scted.

O'tleil:, appearing on “Fox News Sunday,” said it was Enron's duty to alert
shareholders and employees to the condition cf the company anc "not a federal
government responsibility." O'Neill said the collapse was not surprising.

“Companies come and go," he said. "Part of the genius of capitalism is

people get to make good decisions or bad decisions, and they get to pay the
corsequences or to enjoy the fruits of their decisions.”

LOAD-DATE: Jenuary 14, 2002
8 of 33 DOCUMENTS
Copyright 2002 The Washington Post
The Washington Fost
January 14, 2002, Monday, Final Edition
SECTION: A SECTION; Pg. Al5; IN THE LOOP AL KAMEN
LENSTH: 852 worcs
HREAQLINE: The SOS That Bounced
BYLINE: AL Kamen
BODY:
Ar important lesson for mega-contributors seems to be omerging from the
still-develoging !’affaire Enron: Money can‘*t buy you love.
Tne unfortunate company, though merrily shafcing its loyal employees, was
nething if nct generous to politicians, especially to the Bush folks. In the

2000 election cycle, Enron gave $ 2.44 million in all, $ 1.76 million to
President Bush and his Sellow Republicans.

Sure, the company was said to have gotten its friends placec in key
government places. But when push came to shove, when the great shell of Enron
was sinking, when 6 lifeline was desperately needed, where were their friends in
the Bush adminiatration?

Chairman Kernneta L. Lay, whom the president himself had honored with the
nickname "Xenny Boy,” called Commerce Secretary Donald L. Evans and Treasury
Secretary Paul H. O'Neill and got, as far as we know, nothing.

All that money, all those fundraisers, all that tedious hebnaboing, and for
what? The money made sure Lay could pick up the phone and Cabinet people would
be on the other end. But so what?

R

(0080000000199


Click
For
Audio

ISI INTERNATIONAL STRATEGY & INVESTMENT Summary

MORNING POLITICAL REPORT] FRI

Tom Gallagher Andy Laperriere
202/872-5260 202/872-5261 1 of 4 DEC
igallagher@isigrp.com alaperriere@isigrp.com

Fax: 202/530-5804 28

[OUTSIDE SCOPE]

00100000000762


Harvey, Reavie

From: Nancy Lavar [nlazar@isigrp.com)
Sent: Friday, December 28, 2001 9:10 AM
To: ISI Reader
Subject: ISI Morning Political Report with Audio
Importance: High

ew ot

In today's POLITICAL REPORT:

The Fed And Productivity Growth

Presidential Cycle Says Next Year Should Be Good For Stocks
fnron Update

India-Pakistan Step Back, For Now

Please let us know if you have any questions.

All the beat,

Nancy Lazar
212/446-5633

00100000000761


Davis, Michele

one ton January 14, 2002 3:00 PM

To: Davis, Kichele” ,

Ce: ‘Lee, Sharon

Subject: FW: LexisNexis(TM) Email Request (948,0;43732062)

Michel

I've consclidated my init search using the terms enron and t ury a8 you requested
and came up with 32 articles (located below}. I hope this helps you. However, let me
know if there was something more specific I should have searched for. Thanks.

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

om: LexisNexia Print Delivery (mailto: lexisnexis@prod. lexisnexis.com)
Sent: Monday, January 14, 2002 2:53 PM

To: sharon. lee@dce.treas.gov

Subject: LexisNexis(TM) Email Request {946:0:43732062)

110WDe

Prirt Request: Selected Documentis): 1,2.3,4,5,6,7,8-9,10,11,12,13,15,16
17, 18,19, 20,21, 22,23, 24,25, 26, 27,28, 29, 30, 31, 32,33

Time of Request: January 14, 2002 02:52 pm EST

Number of Lines: 3664

Job Number: 948:0:43732062

Client I0/Project Name:

1 of 33 DOCUMENTS
Copyright 2002 The New York Times Company
The New York Times
January 14, 2002, Monday, Late Edition - Final

SECTION: Section C; Page 1; Column i: Business/Financial Desk
LENGTH: $63 words
READLINE; BUSINESS DIGEST
BODY:

Wall Street Role Examined In the Rise and Fall of Enron
The collapse of the Enron Corporation promises to keep investors, lawmakers anc
corporate executives mesmerized for months to come,

While the spotlight is now trained on the nation’s capitol, the story of
Enron's rise and almost instantaneous fall inevitably leads back to Wall Street
and the obsession with stock market gains that characterized the late 1990's.
News Analysis. Section A.

A Vision of the Office of the Future
1,8.M. end Steel je, the furniture company, will introduce today their sodel

“smart office.” Called BlueSpace, the office features BlueScreen, left, a touch
screen that controls the office environment and some communications. The

n

00800000000188


3 of 4
ENRON UPDATE

While most of Congress’ attention (and our own) was focused on the stimulus and terrorism
insurance bills earlier this month, the House Financial Services and the Senate Commerce
committees held hearings on the collapse of Enron, While it is too early to tell if any new laws
will be passed as a result of the Enron fiasco, below we highlight the issues on which members
of Congress have so far focused.

Congress will return to the Enron issue in early February, when Ken Lay is expected to testify,
You can be sure Democrats will be pointing out that Lay was a major fundraiser for President
Bush and congressional Republicans.

+ Wall Street Research. The House Financial Services Committee had already been
holding hearings on this issue, but it was a major focus of key Republican and
Democratic members of the committee. The Chairman of the Committee, Mike Oxley
(R-OH), observed in his opening statement that when Enron's stock dropped below a $1,
half of Wall Street analysts still had a “buy” rating on the company.

« Employee Retirement Plans. Enron employees, many of whom had a significant
amount of their 401(k) retirement plans in Enron stock, were prohibited from selling it
during several critical weeks. In addition to this limitation on selling, there is
congressional interest in prohibiting employee retirement plans from being concentrated
in the stock of their employer. Senators John Corzine (D-NJ) and Barbara Boxer (D-CA)
have introduced legislation requiring that employee retirement plans be diversified.

* Regulation of Energy Trading. Senator Byron Dorgan (D-ND) suggested at the
Commerce Committee hearing that more regulation of energy trading may be required,
although we think this has little chance of passing Congress. Oxley pointedly stated in
his opening remarks at the House hearing that he wouldn't let Enron’s collapse be used
“as a vehicle to make big-government arguments against electricity markets.”

* Restrictions on Special-Purpose Entities. Special-purpose entities (SPEs) are the
partnerships and other off-balance sheet financing entities created by Enron and other
companies. Senator Hollings, the Chairman of the Senate Commerce Committee,
suggested that Congress should consider prohibiting SPEs. We think that is a very
unlikely outcome. More likely would be accounting rule changes (by FASB, not
Congress) that would require more disclosure of the details of these financing tools.

12/28/01 ISI GROUP

00100000000764


secresaries, without even consulting the president, decided not te mix in.

Than Fobert Rubin, now a head of Citigroup, called a high official at
Treasury. It was consistent for the man who, as Clinton Treasury secretary,
arrcangec the bailout of Mexico to ask for government help in shoring up the
credit rating of a customer that owed his bank $400 million.

Again, nothing was done by the Bush administration to intervene. Enron went
down the crein -= but the capital markets survived, Many investors and employees
learned the hard way that capitalism is a risky business, but if the taxpayer
were to assume all such risk there would be no market punishment for any
management inefficiency oz corruption.

As a card-serrying scandalmonger, I am movec to ask; Where's the scandal?
Democratic Representative Henry Waxman, after eight years with his eyes tightly
shut, apparently thinks it scandalous that Bush's men -- at the first cell from
Mr. Lay ~~ did not promptly step in te save the company from the consequences of
the greed or precations of its managers. Bush is thus damned for what he did not
do.

But at the same time, other scandalmongers are camming Bush for what he may
possibly have don such as getting briefed by anybody on his staff and
thereby “knowing,” by having taken political contributions from today's
villain back when Lay was a Houston hero,

The dezen or so investigations may turn up something to embarrass the White
House, espectally if Bush pulls another “executive privilege" when Congress
wants facts. But the scandal I see in this corporate debacle is non-political;
it's professional.

This etfair shows the acceunting protessicn all too often to be in bed with
the oldest profession. Accounting standards have been frequently prostituted by
the new Urian Heeps: these are executives in ever-merging firms afraid to
challenge <heir clients" phony numbers and secret self-dealing becau:
might lo: fees in the lucrative consulting business they run on th

These mo-account accountants to forget thi the "p" in C.P.A. means
"public." Tne Big Five are silent about Andersengate because they are eager to
become the 3ig Four by carving up thels competitor's carcass. That’s why it's
narder to find a major bean-counter willing to condemn publicly the failures of
Arthur Andersen & Co. than to find a top Muslim cleric willing to criticize
Osama bin Laden.

Although Andersen executives may try to cop a plea by ratting on the client
they so supinely and profitably enabled, they must explain why, as the biggest
bankruptcy in history loomec, their supervisors were so eager to remind those
working on the Enron account te destroy records.

Self{-dealings ssset-hiding; insider stock-dumping -- a1] these were
supposedly beyond je ken of an audit conmmitt: and legal counsel blindly
reliant on the ethics and standards of “professional” accountants. It’s a
scandal, all right, and wrongdeers should pay in heavy civil damages if not jail
zine.

But based on what we mow know, it’s not a political scandal. Bush's people,
including former employees or consultants of Enron, did right by refusing to
bail @ campaign comtriputcr cut of its mess at public expense cr by misleading
investors. Texpayers should be grateful.

hetp: //waw. nytimes.com

LOAD-DATE: January 14, 2002
6 of 33 DOCUMENTS

Copyright 2002 The New York Times Company

v


1998-SE-013737

Kenneth L. Lay
Chief Executive Officer

%, Enron Corp.
P.O. Bos 1188
Houston, TX 77251-1185

December 3, 1998 (713) 853-6773
Fax (713) 853-5313

The Honorable Robert E. Rubin
Secretary of the Treasury
Department of the Treasury
1500 Pennsytvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Rubin:

The City of Houston was designated as an Enhanced Enterprise
Community in 1994 with an emphasis on delivering social services and
affordable housing. We have done a good job with this designation and now we
would like to be named as an Empowerment Zone.

With the increase in business in the Central Business District (CBD),
Houston is making progress in improving its unemployment rates and raising its
education levels. Enron has been very active in helping to create jobs in our
inner city and we have worked to improve our educational system. We strongly

the construction of a new baseball stadium and the bond election for
our local schoo! district for badly needed facilities. As one of the largest
employers in Houston, we support the City’s efforts to provide job creation,
capital formation, and business assistance.

An Empowerment Zone would be extremely helpful in our efforts to
diversify our economic base and to recover from a decline in oil and energy-
related industries.

| urge you to approve Houston's application for an Empowerment Zone.

Sincerely,

ae

Natural gas. Electricity. Endless possibilities.

00100000000540


Hoping te return te the GOP's gced graces, the company in April 2001 nAlred
the Washington lobbying firm of Quinn & Gillespie. Its senior partner, Ed
Gillespie, had been a top campaign adviser to the new president, Bush.

for the first half of the year, the firm collected $ 525,000 in fees from
Enron, @ hefty sum but well worth it, according to a former Enron employee.

“It was iddie [Gillespie], not Ken Lay, who got us to people in the White
House ard Congress,” the employee saic.

LOAD-DATE: January 23, 2002
13 of 32 DOCUMENTS
Copyright 2002 The Washington Post
The Washingten Post
Sanuary 13, 2002, Sunday, Final Edition
SECTION: A SECTION; Pg. ADL
LENGTH: 1505 words

HEADLINE: Economic Collapse, Political Fallout; Critics Zere In on
Acninistretion Silence on Contacts

BYLINE: Glenn Kessler anc Mike Allen, Washington Post Staff Writers

BODY:

On Oct. 23, as the Bush administration's economic brain trust gathered for
its weekly lunchecn, Commerce Secretary Denald L. Evans pulled Treasury
Secretary Paul H. O'Neill aside. Evans related a phone call he had received shat
day from Kenneth L. Lay, chaizman of Enron Corp., the once highflying Texas
energy firm that was suddenly in deep financial trouble.

Lay and other executives had been among Pr

tackers over his political ca: ind Evans was chairman of Bush's presidential

Lay wanted help, Ev. aid. It turned out that O'Neill had received a

1 the day before, In a brief conversation, O'Neill and Evans decided
“no way" they were going to de anything to help Enron.

ident Bush's biggest financial

Then they sat down fer lunch, not saying a word to the other attendees, even
though one -- Lawrence B. Lindsey, head of the National Economic Council -- had
been a $ 50,000-a-year consultant to Enron. And they waited 73 days to tell Bush
about the calls.

That was the chronolegy presented by the administration last week as part of
@ cascace of disclosures about the extert of the edministration's contact with
Enren executives in the weeks before the energy giant filed for bankruptcy court
protection on Dec. 2. As the revelations cf contacts between Bush Cabinet
officials ard Enren executives reverberated in the nation's capital, the
countzy*s largest corporate bankruptcy spread from a major economic debacle cto a
full-fledged political skirmish between the White flouse and Capitol Hill.

Tr the coming months, as Justice Department and congressional investigators
swarm over Enron's corporate wreckage, the credibility of the
administracion's account will come under scrutiny. Investigators also will press
Enron executives for their version of events, sometimes under oath and the
threat of criminal prosecution,

Congressional investigators said the speed of the collapse is one reason
40

0800000000217


Click

For

Audio me
ISI INTERNATIONAL STRATEGY & INVESTMENT Pemmary

MORNING POLITICAL REPORT] MON

Tom Gallagher Andy Laperriere
202/872-5260 202/872-5261 1 of 6 DEC
tgallagher@isigrp.com alaperricre@isigrp.com

Fax: 202/530-5804 3

I
TERRORISM INSURANCE BILLS INTRODUCED IN SENATE; :
CHANCE OF PASSAGE LESS THAN 50/50 s
Three key players in the Senate introduced terrorism insurance bills last week, but none of the 1
bills apparently has the support of Senate Majority Leader Tom Daschle (D-SD), who has s
indicated he won't bring up legislation in the Senate until there is a consensus bill. The big |
problem: liability reforms. The GOP insists that taxpayers not be liable for punitive damages §
awards resulting from a terrorist attack and Democrats insist there be no changes to liability I
laws. While it is a close call, at this point we believe it is more likely the terrorism 5
insurance bill will die in the Senate over the liability issue than become law. i
Terrorism Insurance Bills s
Sponsor Summary Deductible | Repayment Liability 1
to Taxpayers Reforms Ss
Gramm Based on original agreement | $10 billion. No. Bans punitive I
(bill number | between Administration, damages, Ss
not Sarbanes (D-MD) and I
available) himself. Government would
pay 90% of damages above s
industry-wide deductible. 1
Hollings Creates a national fund paid | Once losses No, but industry | None. Ss
(S. 1743) for by assessments on equal 10% of pays a premium I
industry. Also creates a premiums for equal to 3% of
temporary fund for next three | an individual gross s
years similar to other bills. company. premiums. 1
Government pays 90% of s
losses in first year, 80% in I
years 2 and 3.
McCain Would pay 80% of damages | NA. Yes. Caps punitive Ss
(S. 1744) _ | that exceed individual damages. i
companies’ reserves. s
House- Government would pay 90% | $100 million, Yes. Bans punitive 1
passed of damages once industry- damages, limits s
(H.R. 3210) | Wide deductible reached. non-economic I
damages and caps
lawyer fees. )
I
s
1

00100000000771


Harvey, Reavie

From: Nancy Lazar [nlazar@isigrp.com)
Sent: Monday, December 03, 2001 10:40 AM
To: ISI Reader
Subject: ISI Morning Political Report with Audio
Importance: High

Rowe

In today's POLITICAL REPORT:

Terrorism Insurance Bills Introduced in Senate
Bnron Likely to Engage Washington on Many Fronts
Pivotal House Trade Vote Set for Thursday
Central Bank Watch

This Week in Congress

Senate Confirms Fed Governors

Please let us know if you have any questions.

All the best,

Nancy Lazar
212/446-5633

00100000000770


chairman, Kenneth L. Lay, a major cempeign contributors te President Bush, hac
gontactes Treasury Secretary Paul H. O'Neill and Commerce Secretary Donald Lb.
Evans, and had sought Mr. Evans"s help in dealing with a possible cowngrading of
the company's credit ratings. Mr. Evans said he decided that it would be
inappropriate te help.

The company’s bankruptcy filing in December was a high-profiie bookend to the
go-go years of the 1990's. It has set cff cria. 1 investigations into doth
Enron ard its auditor, Arthur Andersen & Company, inquirles into how regulators
did not expose the problems in Enron‘s elaborate financial structure, and
government reviews of how Enron employees lost much of their retirement savings
by loading their 401(k%) accounts with company stock.

Sut cver the last few days, Enron‘s contacts with administration officials as
it sought to avert bantruptcy also become a case study in whether big
campaign contribetors get preferential treatment.

Administration officials said Enron did not get any special help from them,
But Democrats in Congress are gearing up for hearings inte the close ties
betwoen Enror and Mr. Bush’s administration.

rn a letter sent to Mr. O'Neill and Mr. Evans today, Representative Henry A.
Waxman of California, the senior Democrat on the House Committee on Governaent
Reform, asked whether the administration’s contacts with Enron had given ther
early warnings of the company’s financial trouble that coule have helped avert
big losses for shareholders and employees.

"The purpose cf the request,” Mr. Waxman's letter said, “is to determine why
the administration apparently did nothing to mitigate the hara of the Enron
bankruptcy to thoesands of its enployees and shareholders."

Administration officials said Enron had aot provided Mr. O'Neill, Mr. Fisher
or Mr. Evans any information that was not already in the newspapers. Asked about
the politics) implications of the case, Ari Fleischer, the #hite House
spokesman, said today, “This dog won't hunt,”

Mr. Fleischer said the president's focus was on "getting to the bottom of
this fully, throwgh a criminal invest fon and a thorough policy review.”

But today's cisclosure of additional contacts between the company and
aeministration officials suggested the depth and complexity of Enron's dealings
with the federal government and che scrutiny the company's failure could bring
to both parzies.

Even before its financial problema started to become apparent last summer,
Enron was wiceiy viewed as having considerable influence in Washington, and with
the Bush edrinistratien tn particular. Mr. Lay had been one of Mr. Bush's
biggest contributers and had worked closely with Mr. Evans in raising money fron
pusiness executives.

In one example of Enron's influence, Hr. Lay went to the Federal Fnergy
Regulatory Commission's new chairman, Curtis Hebert Jr., earlier this year.
According to an account Mr. Hebert gave to The New York Times and the PBS series
Frontiine, Mr. Lay offered te contiaue to support him in his new job i: ne would
change his views on electricity cGeregulation.

Mr. Hebert said he refused the offer. He was late: replaced. Mr. Lay recalled
the conversation differently, saying that Mr. Hebert had sought Enron's support
at the White douse.

In contacting Mr. Fisher in the fall, Enron was in touch with an official who
knew as well as any the sensitivity of government involvement in bailing out <
company in difficulty, In 1998, while a tep official of the Federal Reserve Jank
of New York, Mr. Fisher ned played a major role in organizing a rescue by the
anvestrent industry of Long Term Capital Management, whose collapse was
threatening to ripple through the entire financial system,

33

0800000000230


worker's inability to perform certain manual tasks at an automobile assembly
lent because of pal tunnel syndrome. The court ruled that the impairment
2ione did nor quality the worker as disabled under the ADA.

"To b@ substantially limited in performing manual tasks, an individusl must
have an impairment that prevents or severely restricts the individual from doing
stivities that are of central importance to most people's daily lives,“
O*Cennor wrete. “The impairment's impact must also be permanent or long-term.”

~~ Eaward Walan

The nuzber of people being treated for depression has increased dramatically
in the United States in the past decade, marking a profound shift in how
A@oericans cope with the common emotional disorder, the most comprehensive study
to date shows.

Orugs such as Prozac have become the mainstay for most of those being
reated, even as doctors spend less time with patients and offer comparatively
% psychotherapy, researchers said in reporting the results of the study.

The sea change probably does not stem from an increase in depression,
experts said. Instead, it is mos= likely connected to the destigmatization of
mental sealth problems in general and depression in particular, the rise of
managed-care insurance plans, and the arrival of powerful drugs, including
Prozac, accompanied by multimillion-dollar marketing campaigns.

Between 2967 and 1997, the percentage of Americans being treated for
Gepression more than tripled nationwide, from 0.7 percent to 2.3 percent.

Medicines, which were prescribed to about a third of patients in 1987, were
given elmcst three-quarters a decade later,

Simultaneously, patient visits to doctors for depression fell by a third,
from about 12 visits per patient to eight, with ge numbers being treated by
primary care physicians and others outside the field of mental health,

=~ Shankar Vedantem

A tedera. appeals court tossed out the convictions of two black men in the
1991 slaying of a Jewish rabbinical stucent in the Crown Heights neighborhood in

Brocklyn, criticizing the trial judge's “improper and race-conscious” attempt to
create @ racially balanced jury.

The 2nd U.S. Circult Court of Appeals erdered a new trial for Lemrick Nelson
Ir. and Charles Price, who were convicted in 1997 of violating the victim's
civil rights, It was one of the most explosive and racially charged cases in
recent New York history.

The neighborhood is predominantly black and West Indian but has a sizable
Orthedex Jewish community. Rioting started after a black child was killed by a
car being driven by a menber of the ultra-Orthodox Lubavitch community. The
rasbinical student was stabbed during the rioting.

U.S. Oistrict Judge David Trager had tried to balance the jury between
blacks anc Jews, declaring his intent at the time to pick “a moral jury that
renders a verdict that has moral integrity.”

Specifically, when a black juror was excused before the trial, Trager chose
not to replace him, as required, with the first alternate, who was white,

0800000000213


Estrada, alse Hispanic, on to a similer iaunching court.

Paul Hoffman, former Wyoming state director for then-Rep. Richard 8. Cheney
and more recently executive director of the Cody County Chamber of Commerce in
Cecy, WyS., Aas Deen nanved deputy assistant secretary of the interior for fish,
wiidiife and parks,

At che Securities and Exchange Commission, Chairman Harvey L, Pitt last week
beefec up and reorganized his public affairs and legislative operations. Casey
Carter, whe ned been acting director of the Office of Congressional and
Intergoversmental Affairs, will head the renamed Office of Legislative Affairs.

Christi Karian, longtime reporter, former Senate banking committee
spokeswoman and, more recently, director of external affairs at the Federal
Emergency Management Agency, has been named director of the SEC's Office of
Public Affairs, formerly knewn as the Office af Public Affairs, Policy
Evaluation and Research. Michael W. Rogers was named three months ago to head
that office.

LOAD-DATE: January 14, 2092
9 of 33 DOCUMENTS
Cepyright 2002 The New York Times Company
The New York Times
January 13, 2002, Sunday, Late Edition - Final
SECTION: Section 1; Page 1; Column 1; National Cesk
LENGTH: 3891 words

HEADLINE: ENRON'S COLLAPSE;
Audacious Climb to Success Endec in a Dizzying Plunge

SYLINE: By KURT ELCHENWALD
bop:

Not leng ago. the Enron Corporation's name was part cf the lexicon of
cerporate and political power. The company’s contacts and influence in the White

Eeuse and Congress bred envy among competitors. It was a driving force behind 3
tadical shift Lm tne nation’s erergy policy, ane its fortune seemed guaranteed
for years.

But in a matter of weeks, Enron has been transformed into shorthand for a
corporate scandal, one that haa engulfed company executives and Wall Street
accountants, raised questicns for politicians and regulators in Washington, and
cost employees and other shareholders tens of billions of dollars as the company
tumbled inte bankruptcy protection.

Yet cuch about Enron -- how the business operated and how it failed -- has
remalned largely unknown. How could America's seventh-bigqest corporaticn, run
and staffed by So many smart people, evaporate virtually overnight? Who got rich
off the ceals that eventually crippled the company, leaving thousands suffering?
Was this downfall the result of crime or spectacular blunders?

And finally, whe in industry and government xnew what, and when?

Compezitors end analysts said the ultimate cause of Enron's brutal collapse
u

0800000000201


they are so interested in exactly wnat Enron exacutives said to administration
officials. Lay "dees not believe he askec for anything -- he wanted to provide
informatics Enron spokeswoman Karen Denne aaid.

Robert Kennett, a prominent lawyer hired by Enron, said Lay believed he had
an obligation to tell government offictais about Enron*s plummeting financial
eenditien. But, according to Bennett, Lay added, “If they concluded they wanted
te give help to me and my company, IT was not going to turn them down.”

Yas Enron -- a orash, eggresslve company that nearly rewrote the nation's
rales om energy distribution -- really so reserved when it came to seeking help
from the White House? Did O'Neill and Evans really give no sign to their
lunchecr, colleagues, alone the president, about the phone calls from a
politically active company headed for a spectacular implosion?

Some Democratic lawmakers believe they can attack the White House coming and
going: If anything was done to help a political intimate, Bush can be filleted
ior breaking his promise to restore honor and integrity to the White House. If
nothing was done in response to the calis, seme Democrats plan to argue the
administration should have dore something to protect shareholders and employees.

One ef the mest sensitive questions for the administration is the role Enron
played an develcoing the administration's energy policy. After refusing last
year to reveal whom Vice President Choney and his energy task force had met with
in developing the policy, the administration disclosed in a Jan. 3 letter to
Congress thet Cheney had met with Lay and that his scafi had met with Enron
representatives five times.

"It is now clear the White House had knowledge that Enron was likely to
collapse bur did nothing to pretect innocent employees and shareholders who
ultimately lost their life savings,” said Rep. Henry A. Waxnan [D-Calif.),
ranking minority member of the House Committee on Government Reform. “I an
deeply troubled that the White House stood by and let this happen to thousands
of families.”

In response, the White House pointed to a Dec. 5 news reie fron the Labor
Department, announcing “an investigation into questions raised by Enron's
handling of its workers’ retirement benefit plans.” Labor Secretary Elaine L.
Chao said Enron's employees “have gotten the short end cf the stick in the
sudden collapse of this company, and we are committed to doing everything we can
te help them.”

On ¥riday, Waxtan sent a five-page letter to Evans and O'Neill asking each
to respond te 10 questions, including, “Why did it take so long for the public
to leart about your contacts with Enron prier te ite bankruptcy filling?”

Waxman also has asked the White House to “inmediately make a full disclosure
ef all contacts administration officials have had with Enron representatives.”

A senior administration official said the White House “will fully cooperate
with all requests that ere relevant and specific,” but added, “If people are
asking for every contact that anyone may have had with anyone for any reason,
that's a fishing expedition.”

The reve-a

tion Friday that former Clinton treasury secretary Robert £. Rubin
utive at Citigreup, one of Enron's main creditors -- also sought
he Bush administration in intervening may broaden the spotlight
from the links between Bush and Enron. Aubin, according to a source, contacted
the Treasury Department en Nov. 8 because he thought "an Enron bankruptcy was an
economic event ef national importance." Bush officials say they saw few national
ramifications.

“In mo other country in the world would you have the seventh-largest company
one with these alleged political connections, and the government would
simply .et at happen,” Lindsey said last week on “Fox News Sunday.” “This ls a

tribute te American capitalisa."

a

0080000000218


's Lay as Shakespeare's Owen Glendower in “Henry IV, Part I *I can
summon spirits trom the vasty deep,” Glendower brags to young Hotspur.

"Well, so can I, or so can any man,” the unimpressed Hotspur cracks. “But do
they come when you de call them?"

Alas.

Next time someone from the Bush administration yi S about the huge
financial hit he is taking because of government service, point out the number
of top off:cials who have done well by doing good. As is often reported, there
were several top officials who were forced by ethics rules to sell Enron stock
back when it was still worth something.

And Vice President Cheney, a former head of Halliburton Co., was forced to
sell his shares of stock in company. He finished the sell-off in December
2000, during the transition. That was when it traded for about $ 40 @ share.
Friday it closed at $ 10.95.

Last woek was a pretty good one for Washington attorney John G. Roberts Jr.,
Bush's nominee for a seat on the U.S. Court of Appeals here. No, neither he nor
tellow D.C. federal appeals court nominee Miguel A. Estrada got a green light
from the Senate Judiciary Committee for a hearing on their nominations pending
since spring.

But Roberts, a former deputy solicitor general, did win a big Supreme Court
ruling for Teyota that reduced the scope of the Americans With Disabilities Act.

Working to undercut workers’ rights likely won't win organized labor votes,
but the fact that it was a 9 to O ruling written by Justice Sandra Day O'Connor
may take out some of the ating.

Much more helpfully, Roberts, a former clerk for Chief Justice Williar H.
Rennquist, last week argued a high court case for the enviros. The case pitted
homeowners and developers against Lake Tahoe planning authorit<es, who wantec to
put a moratorium on development in the lake area.

The usual suspects took up sides: the property rights folks, the National
Association of Home Builders, the American Farm Bureau, the Pacific Legal
Foundation and the Washington Legal Foundation against the moratorium; the
tational Audubon Society, the Natural Resources Defe! Council, the National
Wildlife Federation and the Sierra Club for the halt to development.

Roberts was joined by Solicitor General Theodore 8. Olson in arguing ‘or the
moretoriun.

But Reperts, according to those present, missed a key opportunity: He failed
te point out the similarities between Lake Tahoe and the even more beaut! ful,
more spectacular, Lake Champlain, conveniently located in Vermont, home of
Senate Judiciary Cemmitree Chairman Patrick J. Leahy (0).

Meanwhile, wags have taken te calling Estrada the "Sonia Sotonayor of his
generation,” r nding people of the GOP-contrelled Senate's stall of
then-President Bill Clinton's nomination of federal Judge Sonia Sotomayor tc an
appeals cours.

Republicans feared the Hispanic Sotomayor would then be on 4 t-track to
the Supremes. Now some Oerocrats worry about putting the staunchly conservative

~  00800000000200


*o alc Eraron, But some Democrats, including Rep. Henry Waxman [0-Calit.), said
the administration should have tried to protect Enron workers and pensioners
ter learning the compaay was about to declare bankruptcy.

The Treasury Oepartment’s statements about Kubin showed Enron's political
reach and the administration's determination to point out that the company had
contacts with prominent Demecrats as well as Republicans,

According to the Treasury statement, Rubin inquired Nov. @ whether the
governnen> could encourage the bond agencies to work with Enron's lenders +o
“see af there is an alternative to an immediate downgrade” of Enron's credit
rating. The downgrade likely would have forced the company into bankruptcy.

A source close to Rubin said the Treasury statement was "largely accurate,”
but that Rubin prefaced the call by telling Fisher, "This is probably not a good
‘eea."” The source saic that a potential merger between Enron and its Houston
neighbor, Dynegy Inc., was in trouble and that Rubin was "trying to hold it all
together.”

Citigroup is one of Enron's two principal bankers, along with J.P. Morgan.
The banks were side by side with Enror in November as it struggled to keep alive
the Dynegy deal. The banks have taken the lead in trying to raise as muck as 5
2.5 billion so help Enron through its bankruptcy reorganization effort.

Tae Treasury Department also said that in one of his telephone calls to
fisher during late October and early Nevenber, Whalley suggested Fisher help
Enron secure a credit extension. Enron yesterday suggested the comment was made
ir. jest. Fisher declined to ask for the extension, Tr ury spokeswoman Michele
Davis said, but he did talk to banks about whether Enron's collapse would so
roil the banking system or capital markets that the government would be forced
to intervene. The answer Fisher received, Mavis said, was that the banks and
markets could absorb the loss.

The digclosures portray more intensive contact between the administration
and Enren than the White House had indicated on Thursday. The administration
said then that Lay had two conversations with Treasury Secretary Faul H. O'Neill
and one with Commerce Secretary Donald L. Evans.

Lay suggested to Evans that it would be helpful for Evans to try to persuade
@ private credit-rating agency not to downgrade Enron's debt, and Evans
declined, according to the Commerce Department.

Tne ecministration said nebedy intervened to aid Enron. White House
spokesmen Ari Pleischer and Mary Matalin, senior aide to Cheney, id they do
not believe any White House officials, including Sush and Cheney, heard of the
approaches from Enron officials until Thursday.

Congressicnal aides sald yesterday that senior Democratic senators were
preparing a letter to the investigative arm of Congress, the General Accounting
Office, encoursging it to proceed with efforts te obtain records of meetings by
chi energy task force, which drew up the administration's energy policy
test spring. Tae GAO has said it would decide within a month whether to filea
lawsuit to obtain the records, which the Waite House has said it would not
provide. Corgressional officials said GAO acticn is likely to come soon, but the
agency is waiting for a guarantee of support from lawnakers. Senate aides said
Sen, Byron Dorgan {D-N.D.}, who heads a Commerce subcommittee examining Enron,
has been working on a letter of support to the GAO, possibly to be joined by
others.

& spokeswoman for Sen. Joseph I. Lieberman (D-Conn.), chairman of the Senate
Governzental Affairs Commi said he believes “Congress has 4 right to the
informataon" and hopes the nistration will turn it over without a lawsuit.

Some Republican lawmakers have also called on the White House to provide the
records of its energy task force, “It $s just basic information that should be


2 of 4

[OUTSIDE SCOPE]

12/28/01 ISI GROUP

00100000000763


I guess it was Mr. Lay, Mr. Skilling and other top Enron executives who mace
the geod decisions, because they sure reaped the benefits. You night say they
made cut like bandits. And it must have been the rank-and-file employees and the
ordinary investors who made the bad decisions, because they're the ones paying
the consequences.

Bush administration officials are making a big deal out of the fact that
calls fron Mr. Lay did not res in a bailout or, presumably, any other
assistance to Enron. The truth is that Enron had already gotten just about
everything it wanted from the federal government. It walked right into the heart
sf the Bash administration anc helped shape its national energy policy, even as
consumer representati ang environmertal advocates were largely frozen out.

And by systematically flocding public officials -- Republicans and Demccrats
alike -- with encrmous quantities of campaign cash and lots of other booty, it
got the people who should have been looking out for the public's interest to
look the cther way,

The amount of looting at Enron was astonis
huge it’s herd to get your arms around it,”
Waxran's chie! of stats.

ig. maybe unprececented, "It's so
6 Philip Schiliro, Representative

Enron was the best-connected company in Washington, not just with the white
House but also with the movers and shakers on Capitol Hill. What it wanted was
to be able to operate in the dark, and it got what it wanted, And that’s how the
few at the top were able to milk the company of so auch cash,

http://www. nytimes.com

LOAD-DATE: January 14, 2002
3 of 33 DOCUMENTS
Copyright 2002 The New York Times Corpany
Tne New York Times
January 14, 2002, Monday, Late Edition - Final
SECTION: Section A; Page 12; Column 6; National Desk
MENGTH: 761 words

MEADLINE: ENRON'S COLLAPSE: THE ADMINISTRATION;
Aides Deny Any Outy To Tell Bush Of Enron Calis

BYt

By CON VAN NATTA Jr,
DATELINE: WASHINGTON, Jan. 23
BODY:

Two cabinet members said today that they were not obligated te inform
President Bush or the public about telephone cails from executives of the Enron
Corporation last fall as it hurtledc toward bankruptcy.

The officials, Treasury Secretary Paul #. O'Neill and Commerce Secretary
Donald L. Evans, said they had done nothing to help Enron, the Houston enercy
trading conglomerate with ties to the administration.

Me. O'Neill saica the Treasury Cepartment had offered no assistance to Enron
after its president asked a senior Treasury official to help arrange bank loans
in hate October and early November. Mr. O'Neill said he received two calls -~
one at his heme on Sunday, Oct. 28, the other at his office on Nov. 8 or 9 ——
from Konmeth tL, Lay, Enron's cheirman and chief executive. Mr, Lay provided "4
neacs up" about the corporation's worsening health but asked for nothing, Mr.
O'Neill sala.

“

0800000000191


as he teies to figure cut now to handle the backwash from the collapse of
Enron, Gaorge #. Sush has a great advantage. Having watched whet happened to bis
pradecessor, ne should uncerstand the importance of simply making everyone tell
the truth right away.

It is going too far at the moment to call the collapse of Enron 4 scandal for
the Bush administration. The head of Enron was one of the president's biggest
catpaign donors, and we now know that he called two cabinet officers last fall
to warn them that the company was in terrible trouble. Sut none of that was
ET arily improper, and there is no indicaticn that those calis or other
207 ations between Enren executives and administration officials led to any
action by the government.

Thet has fet stopped Mr. Bush from trying to sidestep the Enron connections
te his administration. He implausibly claimed this week that Enron's chiet
executive, Kenneth Lay, a longtime friend and financia.
an associate he hag somehow inherited fron his Democratic predecessor
qovernor of Texas, Ann Richards. Treasury Secretary Paul O*Neill’s
that Mz. Lay never asked fer federal help sounds peculiar now that a top aide to
Mr. O'Nelll nas reported getting many such requests from Enron.

Thore are plenty ef things Mr. Bush can co to inoculate himself against any
seint from the Faron disaster, He should embrace campaign finance reform, cenand
3 severing of ties between Enron and those around him and cocperate with all
Congressional investigations on the issue.

Enron might seem less threatening to Mr. Bush if his presidential carpaign
Aad not received huge contributions from the company and its top officials. The
be way for Mr. Bush to minimize such taint is to work with Congress to ban
guiated party Gonations by corporations, unions and rich individuals, known
soft nerey.

Mr. Bush should follow the example of a predecessor he edmires. After 1904
President Theodore Roosevelt ciscovered that corperationa had been squeerted for
donations to his campaign by his former commerce secretary, and he responded by
calling for a ban on corporate Gonations. It was enacted in 1907.

Mz. Bush can take other steps on his own. ie should ask his hand-picked
ge for chairman of tne Republican National Committee, former Gov. Marc
cot of Montara. to withdraw from the party job or resign from a law firm
that hae lobbied on behalf of Enron and other clients.

The president can alse prevent any taint from spreading by ordering
inistration members to cooperate with all relevant investigations inte Enron
and the extent to which it has influenced administration e: policies. Enron
officials were frequently consulted by Vice President Dick Cheney's energy task
ferce in crafting an administration policy and en energy bill that conformed
with Enror‘s financial interests, particularly on energy regulation. Mz. Cheney
should immediately turn over all records on those consultations to Congressional
committees and the General Accounting Office.

The president should recognize that secret consultations en energy have
undercut the legislation that the administration backs in Congre That is the
nature ¢f secrecy and campaign money, Mr. Bush can get rid of the problem if he
acts boldly to disclose everything and place tight restrictions on the influence
of money in politics.

http? //wew.nytimes.com
LOAD-DATE: January 12, 2002
20 of 33 DOCUMENTS
Copyright 2C02 The New York Times Company

The New York Times

ss

0800000000228


Ari Fleischer, the white House press secretary. "But the president's focts is on
getting to the bottom of tnis fully” by supporting ¢ thorough criminal
investigation and policy review.

Asked if the Enron affair and the resulting investigations could dog the
= throughout the year, Mr ‘leischer said: “This dog won't hunt, That's
nce ta the politics of it.

Yet the unfelding Enron case has already set off 4 frenzy of finger-pointing
azong Republicans, some whom have raised questions about the role of Paul H-
O'Neill, the Treasury secretary, and Denald L. Evans, tha Commerce secretary.

Ore seaice adviser to the White House said: "The administration wantec this
to be the week cf the president's bipartisan education bill and continued
gucecess in the war in Afghanistan and beginning of a pivot to the State of the
Union. I don't think the Sunday shows are going to spend a lot of time talking
about the education bill. Ds you? It’s all Enron all the time now.”

Anotner adviser so the White House said that while the accusations from some
Democrats were overheated, he feared that “nothing is going to keep people from
frothing about this, and it gets the president off message and makes him
reactive.”

Some Deroerats who worked in the Clinton administration and endured yoars of
scandals were privately celebrating the latest turn for Mr. Bush.

Geoffrey Garin, a Democratic pollster, said the Enron case could be
beneficial as his party's candicates mace the case this fall that Republicans
aze a party of special interests and big business.

“This is a story ebeut ¢ powerful and well-connected corporation hurting
average people and it goes to the heart of how voters see the differences
between Republicans and Demecrats,* Mr. Garin said. He conducted a nationwide
poll last week, he said, which found that “already over 60 percent of the
electorate know about the Enron situation.”

An element of tne Denccrats" strategy is to depict the Democrats as the only
party willing to pass laws to protect workers at companies like Enron.

Gov, Ceanne Shaheen of New Hampshire, a Democrat, framed it a5 an economic
a potentially bic issue,” she said. “Zveryone who has watched
jf happened to the employees of Enron who have lost all their retirement
savings while management cashed cut is very concerned.”

Tom Coie, a former chief of ataff for the Republican Party, put forth his
concern: "The real question is, was there something given to Enron that was
inappropriate? I don't have the answer to that.”

But, Mr. Cole added, "If Whitewater didn't help us, I don't think Enron's
going to help tnem. The politics of scandal have not been successful in tipping
the partisan balance of power in Washington during the Clinton administration
And particularly in the wake of Sept, 11, this stuf= seems pretty teivial."

hrtpi. /www. nytimes.com

GRAPHIC: Photes: Many Democrets see Enron's ties to the Sush administration as a
potent political weaper. to use against the Republican Party in midter= elections
this year. Gut Enron also contributed heavily to the campaigns of many
Democrats, including, from left, Senator Jeff Bingaman of New Mexico, Senator
Caaries E. Schuner of New York and Representative John D, Dingell of Michigan.
As @ result, some Republicans said they would portray the company’s influence as
cipartisan. (Susana Saab for The New York Times); {Associated Press}:
{Associated Press) (pq. C5)

LOAD-JATE: January 12, 2002

0800000000235


"There's en overwhelming sadness about the way Enron has destroyea so many

tives,” Ms. Leibman said, "I know people who worked there 20 years anc they've
lost everything.”

Ms. Leibman said she was particularly troubled by recent disclosures about
che destruction of records by the firm’s accountants, and retenticn honuses of

tp to $5 million paid to high-ranking executives shortly before the company went
bankrupt.

“it's beginning to sound like a schn Grishem novel,” she said.

herp: //wwe. nytimes.com

GRAPAIC: Photo: Kenneth L. Lay, the chairman and chief executive of tne Enron
Corporation. (Agence France-Presse) (pg. 27)

Chart: “How Enron Fell”

For a decade, Enron and its chief executive, Xenneth L. Lay, were powerful
forces behind Washington's deregulation of the nation's energy markets. But as
problems began to surface at the company, it was unable to use its influence to
save itself, As investigators delve into Enron's collapse, questions are being
raised about what senior executives, directors and goverrnent officials knew of
tae company’s woes.

1 -- Growing Influence

EARLY AUGUST 2060

California energy shortage causes sporadic blackouts; prices soar. Enron is
witinately accused of being cne of the culprits in the energy crisis.

TAN, 29, 2001
George W. Bush is sworn in as president. Enron and Kenneth L. Lay, Enron's chiet
executive, each contribute $190,000 to help pay for the inaugura. vents.

22

Mr. Lay and other Enron officials meet with Vice President Dick Cheney's energy
task force at the White House.

HABCH 7
Mr. Lay and other Enron officials meet agair with the energy task force staff.

APRIL 17
Mr. Lay and other Enron officials meet with Mr. Cheney,

MAY 17
The energy task force issues its report, which endorses many but not all
preposals favored by Enron.

2 -- Insiders Trading

Kenneth L. Lay

Chief executive

Sol 27,090 shares in small blocks
Dates: Nov. 1, 2000, to July 31, 2001

Jetirey K, Skilling
Former chies executive
Sold: 500,0C0

Cate: Sept.17, 2001

Jin Derrick

General counsel

Sold: 160,000

Dates: June § to June 15, 2001

“au Pal
Mu


Chief executive of NewPower heldings, an Enron unit
Sold: 1 million
Dates: May .& to June 7, 2001

Ken Rice

ief executive of Broadpand Services
Sold: 3€6,000

Bate: July 13, 2001

3 =~ Appeals for Help and a ®nite Knight

4, 2301
Only six months after becoming chief executive, Jeffrey K. Skilling resigns. ite
is succeeded by Mr. Lay.

OCT. 16
Enron reports a third-quarter loss of $618 million.

ocT. 17
Enren reduces shereholder equity by $1.2 billion to account for transactions

invelving limited partnerships controlled by Ancrew S. Fastow, the company's
chief financia: officer.

The compeny freezes the asseta in its 401(k) retirement plan to allow for

acministrative changes, Gy the time employees can sell shares, the stock has
collapsed.

OCT, 22

ron discloses that the Securities and Exchange Commission has cpened an
inquiry into the limited partnerships.

oct. 23
Mr. Lay reassures investors in a conference call.

oct. 24
Mr. Fastew is forced out.

Oct. 26

Mz, Ley calls the Federal Reserve chairman, Alan Greenspan, abeut Enron's
problems.

ocr. 28

Mr. Lay talks to Paul H, O'Me.ll, the Treasury secretary. Secretary O'Neil! asks
Under Secretary Peter R, Fisher to loot inta the condition of Enron. Mr. Fisher
Taiks with Sreg @halley, Enron's president, six to eight times over the next few
days. According to Mr, Fisher, Mr. Whalley hints that he would like Mr. Fisher

=o call Enron's crediters and ask them to extend Enron's credit. Mr. Fisher said
he rade no such calis,

ocT. 29

according to Commerce Secretary Donald L. Evans, Mr. Ley calls to request help,
parts arly with an impencing credit zating review by Moody’s investors
Service. cretery Evans said he did nothing. Mocdy'’s downgrades Enron's rating.

mov. 3

According tc Secretary O'Neill, Mr, Lay in a phone call draws a parallel between
Enron's proolems and those of Long Term Capital, the giant hedge fund the
goverment telped rescue in 1998.

Enron adrits that it overstated profits for the previous five years by $536
million.

nov. 9
Dynegy egress te buy Enron for about $9 billion,

4 -- The Mercer Fails, Enron Collapses


kKmart's Credit Rating Is Cur Again

Moody's Investors Service downgraded Keart's credit ing for the second time
in less than a Forth, citing concerns about the operating performance of the
retailer and uncertainty about the success of its business strategy. C2.

Stocks Dip After Greenspan Talk

The major stock indexes dropped after Federal Reserve Chairman Alan Greenspan
warned that the economy still faced some significant risks. The Standard é
Feor’s 50C-stoce index fell 10.95 points, or 1 percent, to 1,145,606; the Nasdaq
composite index lost 24.78 points, or 1.2 percent, to 2,022.46; and the Dow
Jones incuscria: average declined 80.33 points, or 0.8 percent, to 9,987.53.
cé.

Japan's Leacer Visits is Neighbors

Prine Minister Junichiro Koizumi, who winds up a tour cf Southeast Asia on
Monday, is finding taat Japan is no longer greeted as a leader. Mr. Koizumi had
hoped to promote segional cooperation and ide liberalization, but instead has
beer coaftrerted with questions about Japan's attempts to contain its troubles by
letting the yen fall in value. ¢2.

Wholesale Prices Fell in December
Producer prices declined an unexpected C.? percent last month, resulting in a
drcp of 1.& percent fer the year. C16.

SainlerChrysler Raises Some Cash

DainlerChrysler has forced Deutsche Telekom to buy out its interest in Debis
Systemhaus, a softwaro joint venture, for 4.6 billicn euros [$4.1 billien) in
cash, two years earlier than planned. C2.

AngloGold Extends Tender Offer

Cne of the sost crawn-out over battles in the mining industry wes extended
atter the board of AngloGeld gave shareholcers of Normandy Mining, Australia's
dacgest golc producer, another week to consider its plan. 2.

Regulators Close a Miam: Bank

Federal regulators have closed Hamiiton Bank, @ Miami-based bank with rcots
among Cuban-Americans, citing worries about its financial soundness, Harilton,
witn about $1.3 billion in ts and $1.2 billion in deposits, specializes in
cing trade deals among companies in the United States, Central America, the
sboean end South America, C6,

Polarcid Withdraws Pay Pian

Polaroid has withdrawn a controversial executive compensation plan from the
agenda of 4 bankruptcy hearing next week and says it ds reworking the plen after
eriticism trom retirees and workers. Cé,

http: //www.nytines.com

GRAPHIC: Photo

Chart: “YESTERDAY”

Dow industrials == 9,987.53 down 80,33
Nasdaq comocsite -- 2,022.46 down 24.78
l0eyr. Treasury yield == 4.86% down 0,11
The euro ~~ $0.8925 up 0.0008

The doliar == 132.24 yen down 0.45

Grapn nows daily closing share prices of Ford from January-December 2961.
{Scurce: Bloomberg Firancial Markets}

“OAD-DATE: January 12, 2002
18 of 33 DOCUMENTS

Cepyright 2002 The New York Times Company
ar

00800000000224


The succesa of “Seinfeld” has not been auspicicus for its co-stars whe have
tried their own sitcoms. "The Michae: Richards Show” died efter nine episodes
ard Jasen Alexander's “Sot Patterson" lasted five. Next up is “Watching Ellie,”
starring Julia touis-Oreyfus as a lounge ger. But even before its prenie
some U3C executives are nervous about hs and about its cost,
estimated to be as much as $1.5 million an episode. El

OBITUARIES 36-7

Cyrus R. Vance

The secretary of state who resigned in protest over President Jinmy Carter's
decision to try a military rescue of hostages in Iran, an action that he
considered i111 advised and futile, was 64. 56

Burton I. Edelson
The leader in satellite communications who helped start and oversee some of
NASA's most popular science progrems was 75, 37

BUSINESS DAY Ci-10

Raytheon Deal Expected

L-3 Communications plans te announce that it has agreed to acquire a military
equipment subsidiary of Raytheon for $1.13 billion, beating out bigger rivals
like Northrop Grumman and British Aerospace. cl

Surge Reported in Book Sal
Authors, editers and literary agents breathed a sigh of relief as Barnes & Noble
and Borders reported unexpectedly strong sales in the holiday season, a sign of
recovery after months of dismal bock sales. C7

Wao Wants to Se Mistaken

ABC executives acknowledged that they made major miscalculations in the last two
years that resulted in
The network's main mi: » an executive said, was developing an ove.
on "Who Wants to Be a Millionaire,“ which has lost much of its popularity, ca

Business Digest ci
SPORTSMONDAY 01-6

Redskins Reach for New Coach

The Washington Redskins fired Coach Marty Schottenheimer and offered Steve
Spurrier, the former University of Florida coach, a multiyear contract worth $4
million to $5 million a year, National Football Leaque executives said, OL

EDITORIAL Al4é-15

Fditorieis: A failure te account; Spencer Abraham's dream car; billion-dollar
gimmick.

Columns; William Sefire and Bob Herbert.
Bridge &6
Tv Listings £10
Crossword £8
Weather B12

http://www, nytimes.com
GRAPHIC: Photos
LOAD-DATE: January 14, 2002

7 of 33 DOCUMENTS

Copyright 2002 The Washington Fost
20

0800000000197


w. A. Criswell

a minister who lea the conservative movement now in control cf the Southern
Peptists and a former pastor of the First Baptist Church of Dallas, one of the
cerominazion’s tirst megachurches, he wos 92. C18

BUSINESS DAY 1-16

Exron’s Calls te Treasury

Enron's president, Greg Whalley, repeatedly called a senior Treasury Department
official, Peter 2. Fisher, to seek help Last fall in arranging bank loans for
the energy company as it scrambled to avoid collapse, At

Concern taat the escalating Enron inquiry could ensnare the White House hes
rattled some Republicans in Congress, who nonetheless are warning Democrats
against trying to use the case for partisan adventage. Al

Sweeping Cutbacks at Ford

Ford cut 35,900 workers, closed five plants, including ene in Sdison, N.J., and
dropped four models, including the Lincoln Continental and the Ford Escort, 45
it sceled back North American production by 4 million cars and trucks a

year. AL

Caution From Greenspan

Alan Greenspen, the Federal Reserve cheirman, said the economy was mot yet out
of danger, injecting a powerful voice of caution into a growing consensus on
@all Street that a recovery was imminent or already under way. cr

Setback for Microsoft

A tederal judge in Baltimore rejected a settlement of more than 100 private
class-action suits agains+ Microsoft involving the contention that the compeny
had overcharged for Windows, the operating syster on 95 percen= of all OC's
sold. Cc.

Business Digest Cl

EDITORTAL A14-15

Editerials: Minimizing the Enron taint; nuclear weapons subtraction: the Crown
Heights saga, cent'd,

Column: Bill Xeller.
Bridge ali
Tv Listings 820
Crossword = B17
Weather DS
http: //wew.nytines.com

LOAD=DATE: Jancary 12, 2002

19 of 33 DOCUMENTS

Copyright 2002 The New York Times Company
The New York Times
January 12, 2992, turday, Late Edition - Final

SECTION: Section A: Page 14; Column 1; Editorial Desk
LENGTH: 368 words
HEADLINZ: Minimizing the Enron Taint

BODY:

00800000000227


22 of 33 DOCUMENTS
Copyright 2002 The Washington Post
The Washington Post
January 12, 2002, Saturdey, Final Edition

SECTION: A SECTION; Pg. AC
LENGTH: L712 words
HEADLINE: 2ubin Asked Treasury About Aid to Enron
BYLINE: Dana Milbank and Susan Schmidt, Washington Post Staff Writers

BODY:

Former Clinton Treasury secretary Robert £. Rubin telephoned a top Treasury
official last fall to explore whether the Bush administration could intervene on
benalf of Enron Corp. as the giant energy company neared collapse, officials
said yesterday.

Rubin, chairman of the executive committee at Citigroup, one of Enron's main
creditors, called feter Fisher, Treasury undersecretary for domestic finance,
ard asked “what he thought of the idea" cf calling bond-rating agencies to help
stall a crippling reduction in Enron's credit rating, according to a
statement released by the Treasury Department.

sher told Rubin that he didn’t think it was advisable, end did not make 4
call, Treasury said.

The news of Rubin's efforts concluded another day of cisclosures at the
Treescry Department, on Capitol Hill and elsewhere about the extent of
governsent contact wita Enron executives in the weeks before the company’s
#iling for bankruptcy court protection.

developments included the Treasury Department‘s disclosure that
Lawrence “Greg” Whalley had “six te eight” conversations last
ex, including ene in which he asked Fisher te call Enron's lenders
es they cecided whether to extenc credit to the company.

Yesterday’
Enron Presice:

Also yesterday, Congress moved closer to filing a lawsuit against Vice
President Cheney to force the release of information on administration meetings
with energy industry executives last spring. Congressional Democrats want to
now how much influence the executives may have had on aGministration energy

policy.

Enron's Dec. 2 filing for bankruptcy law protection was the largest in 0.5.
history, wiping out the pensions of thousands of workers. The Justice Department
cpened @ criminal investigation inte the collapse, and President Bush on
Thursday created tas< forces to examine changes to the law te protect pensioners
in bankruptcies.

That same day, Enron's auditer acknowledged it had destroyed thousands of
decuments: two Bush Cabinet secretaries said they had received calls from
Snaron*s chiof executive, Kenneth L. Lay, as the company neared collapse; and
Attorney General John D, Ashcroft recused himself from the government's crininal
probe because he had received contributions from Enron for his 2000 atorial
campaign.

Aw lawmakers and the administration tried to sort out the legs) and
Political consequences of tae growing controversy, the administration arqued
forcefully that there was no wrongdoing because its officials did not intervene

0800000000236


“y

~~ 00100000000557


gach a5 Enron coula use the transmission lines of requlated utility companies to
al. Dloce ef electricity to private customers,

In 1994, the Washington-based Expoct-Import Bank approved a $ 302 milfion
loan to promote Enron's investment in a power pliant in Dabhel, India, According
tc 4.1993 article in Tine magazine, Clinton took s personal interest in the
protect, depatizing his chief of staff, thomas "Mack" McLarty Iii, to monttor
it. McLarty later became a pald adviser to Enron.

A Melerty side explainec yesterday that the White House involvement was part
of a troader administration effort to help U.S. companies take advantage of new
opportunities abroad.

=n 1996, the Federal Energy Regulatory Commission, stocked with Clinton
appointees, helped Enron with a series of orders that weakened the monopoly of
nuclear and coal-burning utilities. In July of that year, Enron gave 3 100,000
te che Demecratic Party.

The Clintor, ad=inistration'’s interest in an international agreement to
combat global warring also dovetailed with Enron's basiness Plans. Enron
officials envisioned the company et the center of a new trading system, im «which
industries worldwide could buy and sell credits to emit carbon dioxide es part
of a strategy to reduce greenhouse gases. Such 6 system would curtail the use of
lnefticcent coal-fired power plants that emitted large amounts of carbon
dioxide, wnile encouraging new investments in gas-fired plants and pipelines --
precisey Enron's line of business.

But the effort facea powerful opposition from automakers, oil companies and
utilities. In early 1997 the Senate unanimously instructed the atministration
not te agree to any cartion-reducing strategy that would harm the U,5, economy.

On Aug. 6, 1997, Day and seven other energy executives met with Clinton,
Gore, Rubin and other tep officials at the White House to discuss the U.S.
pesiticr at the upcoming conference on global warming in Kyoto, Japan. Lay, in a
memo to Enron employees, said there was broad consensus in faver of an
erissions-trading systen.

Enron officials later expressed elation at the results of the Kyote
conterence, An internal memo d the Kyoto agreement, if implemented, would “do
more te promote Enren’s du: than almost any other regulatory initistive
outside ef restructuring the energy and natural gas industries in Europe and the
United States.”

At Lay's meeting with Pen a om Feb. 20, 13998, he spoke ef restructuring the
U.S. electricity market in ways that would benefit Enron. Lay pressed the
administr. on to propose legislation that would assert federal authority over a
national electricity market.

According to a company version of the meeting, Lay and Pen a agreed that a
go-siow approach to deregulation, advocated by Senate Energy Committee Chairman
Frank 4H. Murkowski (R-Alamka!, was unacceptable. Pen a askec Enron officials to
keop Energy Cepartzent staffers posted on developments in Congress, and
solicited comments on the administration's draft of its Comprehensive National
Energy Strategy, an Enron decument said, Lay fel= the draft was *hoaded in tho
right direction” except for a few points, the document said.

The 2000 presidential election posed a dilemma for the company, sources say,
Wnile Lay supported George W. Bush, some officials in Enron's Houston and
Kashington offices backed Gore and Lieberman. Lay personally contributed $
225,000 in soft money te GO? campaign orgenizations that year, and gave no soft
money to Democratic groups. After the electicn, Lay chipped in § 100,000 to the
Bush inaugural festivities,

On the eve of the 2000 election, Enron hired # Demecratic official from the
Treasury Department to run the company's Washington office. Sources say the move
infuriatec GOr House leaders, who retaliated by shutting Enron representatives
out ef several key strategy meetings cn electricity legisiation.

0800000000216


Trager removed a white juroz from the panel and filled the two new
as with a black and a Jew.

vacanc

Tne appeals court said Trager’s actions, howew well intended, ignored a
foundation stone of the U.S. legal system: the commitment te a colorblind
process.

No new trial Gate was set. Nelson, 27, and Price, 47, were sentenced in
1998.

=" Michael Powell

Archbishop of Canterbury George Carey, who struggled successfuliy to hold
the official Church of England together after the first female priests were
erdained in 1994, said he will step down Oct. 31 as head of the church and
spiritual leader of 79 million Anglicans worldwide.

The genial 66-year-old, who turned from Royal Aiz Force radio operator to
assistant curate in 1962, has served 11 years in the post, in which he is a
guiding figure for independent Anglican churches in 160 countries. They include
the United States" Episcopal Church, with about 2.3 million acrbers.

It has been a crying cecace for Carey, marked by declining church membership
in England and gloomy parish finances. But the Anglican church has grown
significent:y in Africa during his tencre.

-- T.A. Reid

LOAD-DATE: January 13, 2002
12 of 33 DOCUMENTS
Copyright 2002 The Washington Post
The Washington Post
January 13, 2002, Sunday, Final Edition
SECTION: A SECTION: Pg. AOL
LENGTH: 1466 words

HEADLINE; Enron Also Courted Democrats; Chairman Pushed Firm's Agenda With
Clinton White House

BYLINE: Dan Morgen, Washington Post Steff Writer
Sooy¥:

Democrats are savoring the chance to use embattled Enron Corp.‘s Republican
rass the Bush administration at upcoming congressional hearings.
Sut Republicans might turn the tables, to some extent at 1
has courted and supported prominent Democrats as well,

According to internal Enron Gocuments and the recollections of former
employees, Chairman Kenneth L. Lay had the ear of top Democrats in the 1980s and
‘SOs, Ke and his colleagues used that access to promote the company’s interests
with the Clinten administration and key congressional Democrats.

in @ White douse meeting in August 1997, for example, Lay urged Presicent
”

(0080000000214


LOAD-DATE: January 12, 2002
23 of 23 DOCUMENTS
Copyright 2302 The New York Times Company
Tha New York Times
January 11, 2002, Friday, Late Edition - Final
SECTION: Section C: Page 4; Column 1; Business/Financial Cesk
LENGTH: $27 words

HEADLINE: ENRON'S COLLAPSE: THE PENSIONS;
Bush Promises a Look at Employee Risks, but Experts Say Solutions Won't Be Zasy

BYLINE: By DANIEL ALTMAN
BopY:

Reacting te the destruction cf the retirement savings of thousands of
employees of the Enren Corporation, President Bush said yestercay that the
administration would start locking at ways “to make sure that people are not
exposed to losing their life savings as a result of a bankruptcy.”

But without changes in law and corporate behavior, the White House may have a
hard time reaching thet goal.

Many Enron employees lost their retirement savings because the savings were
tied up almost exciusively in company securities. Over half the funds in Enron's
401(k) plans for employees were invested in Enron's own shares,

That situation is by no means unique, said J. Mark Iwey, a former benefits
tax counsel at the Tr: Department. Survey data suggest that more than 30
percent cf assets are invested in company stock at those companies that allaw
thelr stock tc be included in their 401(k) plana. And in companies like Enron,
where management has some inflcence over how employee savings ere invested,
slightly over half she assets on average are in company stock.

Why, given the seemingly obvious benefits of diversification, would workers
still end up putting so many nest eggs in the same basket?

By law, companies must offer several options fer 40i(k) plans. But uniike
traditional pension plans, which cannet put more than 10 percent of their assets
in any one company, the rules governing 401(k) plans do not set limits. And many
companies give their employees big incentives to buy shares with their 401(k)
contributions. Companies often match employee contributions only with stock and
impose limits cn how soon the sha can be sold.

Secretary of the Treasury Paul H. O*Neill sald yesterday that he would

consider ways 0 give American workers, more than 40 million of whom have money
in 401{«! plans, more freedom to make investment decisions.

But Brigitte Madrian, 4 professor of economics at the University of Chicago,
said holders cf 401{(k} plans g ally show lite initiative. Most people stick
with the default 401ik) ¢ t up by their company, even if that plan invests
solely in the scmpany’s shares. And employees are unlikely to keep close tabs on
thete retirement savings, despite the possibility of a sudden collapse like
Earon “Most people aren't in the habit of tracking their $0l(k) investments
ona ly basis,” she sad.

The reasons employees buy their own companies’ shares may go beyond company
rules, 2ecple may simply be nore confident in their employers than in the rest
of the market. James Delaplane, vice president for retirement policy at the

0800000000239


4 of 6
CENTRAL BANK WATCH

Central Bank Next 2 tlook
~ Key Rate Meetings ou

Federal Reserve 12/11 We think the Fed will cut rates by a quarter-point cut in
— 2.00% target 1/30-31 | December. The Fed's calculation of the real fed funds rate

Fed funds (using core PCE deflator) and Japan's experience lead us to
(% point cut think the Fed will cut rates next week. A January rate cutis
on 11/6) possible if the data come in weaker than we expect.

Bank of Japan 12/18-19 | The outlook for an improvement in the policy mix in
~above ¥6 trillion 1115-16 Japan is poor. BOJ meets again this week. There is

in bank reserves increased pressure on BOJ to ease further, either by buying
(approx. 0% more JGBs or by buying foreign-currency denominated
overnight call bonds. Neither option is likely soon, and BOJ wants to wait
rate) for a stronger bad debt approach by the government.
European 12/6 The ECB is done for the year, but we expect more
Central Bank 12/20 _ | easing early next year. Weaker data in France and
- 3.25% Germany point to more easing, but probably next year, not
refinancing rate next month,
(% point cut on
11/8)
CENTRAL BANK CALENDAR

Mon (3) | Greenspan speaks on “The Challenges of Globalization” in Washington,
Fed — Moskow speaks in Chicago.

ECB — Padoa-Schioppa speaks in Rome,

ECB — Liebscher speaks in Vienna.

ECB — Welteke speaks in Frankfurt.

BOJ releases minutes from the Oct 29 monetary policy meeting,

Tue (4") | BOE meets.

Wed (5") | Fed — Meyer speaks in Swarthmore, Pennsylvania.
ECB — Council member Welteke speaks in Frankfurt.
ECB — Domingo Solans speaks in Frankfurt.

BOE announces interest rate decision.

Thu (6") | Fed — McDonough speaks in New York.
ECB meets.
ECB President Duisenberg briefs the press after interest rate decision.

=—NK NK NKNKNKKHKGHKVKNKVKKNHKNKVvenen=—Veun=-vn—-vNe-wnr

Fri (7") ECB and the Bundesbank hold a press conference about EU accession in Berlin.

12/3/01 ISI GROUP

00100000000774


Man Gui in Fatal Beating At Son's Hockey Practice

A jury Cambridge, Mass., convicted Thomas Junta, 44, of involuntary
manslaughter: in the beating death of Michael Costin after an argument about
rough play at a summer youth hockey practice game. He is expected to receive
three to five years, AL

Weighing Capital Punishment

The Suprere Court agreed to decide 4 potentially far-reaching challenge to the
censtitutionality of death penalty laws in nine states where judges rather than
jurles determine whether 4 killer is sentenced to death.  Al10

Inmate Tells of Bomb Plot
A Florida inmate told the authorit that there was a plot to bomb Gov. Jeb
Bush, but law enforcement officials said none of the inmate’s information had
been substantiated. Ag

Antibiotic Sales Prompt Suit

Florida and Washington State have sued the Aprescribe.com online pharmacy and a
Plorida physician who prescribed Cipro, a prescription antibiotic that can be
used to treat anthrax, without examining or speaking with the patients. A9

Bush Recess Appointments

President Bush used 4 backdoor procedure to appoint two nominees to high-ranking
positions in the State anc Labor Departrerts without Senate approval. Over the
ebjections of some Senate Cemocrats, Mr. Bush appointed Otto J. Reich as
assistant secretary of state for Western Hemisphere affairs and Eugene Scalia as
Labor Department solicitor. Al0

Religion Cournal Al6é
NEW YORK/REGION 81-5

Ground Zero Tape Secomes Training Tool and Memorial

Firehouses have dee: owing a GO-minute videotape that captures some of the
most striking images and sounds of the chacs at the World Trade Center on Sept.
¢ tape was made by a French filmmaker who happened to be recording firemen
in Lower Manhattan when the first plane struck the north tower. The filamaker
says he wants te turn the tape into a documentary and give it to the families of
the dead. AL

Pataki Health Spending Flan

The governor wants lawrakers on Monday to approve a wide array of new health
care spending, program cuts and taxes that include money for doctors’
walpractice bills, lower payments to pharmacists and a higher cigarette tax.
Farts of the package are already meeting resistance both inside and cutside the
Szate Lecis_ature,. Bl

New Jersey Trooper Chi:
Governor-elect McGree chose Joseph Santiago, 56, who gained a reputation as a
tough, strong-willed leader as director of the Newark Police Cepartment, to lead
the state police. et

Neeciest Cases 62

ARTS & IDEAS 87-20

New Repository for Film Photos

The Museum of Modern Art, rejecting protests from the New York film community,
will move its rich collection of four million still photographs from filma -- a
rare record of cinema history -- to a Pennsylvania storage center for an
indefinite period. 87

SPORTS ti-7

OBiTUARIZS C18


Caart: “DOLLARS AND CENTS: Enron‘s Political Giving”
Erren has been a generous political contributer to both political parties, to
the Bush presidential campaign and to members of Congress.

Soft norey contributions
FROM ENRON CORF,

To Republicans
ZLECTION CYCLE
2999-2000: $643, 2755
2301-2092: 67,252

Te Cemocrats
ELECTION CYCLE
1939-2960: $532,965
2001-2902: $102,950°

FROM ENRON EXECUTIVES
(AL] to Republicans)

Kenneth L. Lay
chairman. Enron Corp.
ELECTION CYCLE
1999-2000: $325,209
2002-2002: 57,710

Jeffrey K. Skilling

Forme: chief executive, Enren Cerp.
ELFCTION CYCLE

1999-2000: $50,990

2031-2002: --

Forres: E. Hoglund

Former chairman anc chief executive, Enron Oil & Gas Co,
ELECTION CYCLE

1999-2900; 3125, 000

2€01-2002: 334,572

Other contributions
Tc Bush presidential campaign by Enzon Corp. PAC and exployees: $34,875
To the Bush-Cheney inaugural cala by Enron, Mr. Lay and his wife, and Mr.

Skslitng: $109,090 each, for a total of $300,000
Mr. Lay was one of the Bush campaign's Pioneers, people who raises at least
$100,009 for the campaign.

Contributions te current members ef Congress (Top 12, 1989-2001)

SENATORS

Kay Hailey iiutchison R, Tex. $99,500
Phil Gramm R, Tex. 97,350

Cenrad Burns R, Mont. 23,200
Charles £. Schumer D, N.¥. 21,933
Michael D. Crapo &, Idaho 18,689
Christopher 5. Bond R, Mo. 28,500
Gordon BK. Sita R, Ore. 18,009
Jeff Birgaman D, N.M. 14,124
Chuck Hage. R, Neb. 23,332

Pote V. Comenici &, N.M. 12,000
Jokn B, Breaux D, La. 11,100
John McCain R, Ariz, 9,500

REPRESENTATIVES

Ken Bentsen D, Tex, $42,750
Sheila Jactson-ee D, Tex. 38,000
Joe &. Barston R, Tex. 28,909

Tom CeLay A, Tex. 28,900

Martin Frost D, Tex. 24,250



6 of 6

SENATE CONFIRMS FED GOVERNORS

Last Tuesday the Senate confirmed Bush's two nominees to the Board of Governors of the
Federal Reserve. Once they are sworn in, the roster of the Board will be as shown. The next
decisions for Bush on the Fed will be filling the vacancies caused by Kelley's expected
retirement and the expiration of Meyer's term.

FEDERAL RESERVE BOARD OF GOVERNORS

Member Term expires Jan 31,
Alan Greenspan (Chairman)’ 2006
Roger W. Ferguson, Jr. (Vice Chairman)” 2014
Laurence H. Meyer 2002
Edward W. Kelley, Jr? 2004
Edward M. Gramlich 2008
Susan Bies* 2012
Mark Olson® 2010

* Term as chairman ends Jun 20, 2004
? Term as Vice Chairman expires Oct 5, 2003.
* Has announced he will retire when a new Board member has been confirmed.
* Confirmed by Senate on Nov 27, 2001,
* Confirmed by Senate on Nov 27, 2001

RKP KN KN KR KD KDKPKENDKNHKHNDKHHKNKRHKHKHKHKHHKH Un

12/3/01 ISI GROUP

00100000000776


1999-SE-007748

.

Kenneth t. Lay
(Chairman and
Chief Executive Officer

Up Enron Corp.
% P.O, Bor 1188
Houston, TX 77251-1158
(713) 853-673
Fax (713) 853-8313
July 16, 1999 Lisy@eriron com

‘The Honorable Charlene Barshefsky

US Trade Representative

Office of United States Trade Representative
600 17th Street, NW

Room 209
Washington, OC 20508
Dear Charlene:

We are actively involved with 28 other companies and associations in promoting energy
services as a significant trade service deserving to be included in the GATTS 2000 negotiations.
lam attaching the list of members.

The Energy Services Coalition was recently established on May 26, 1999. At that time
we forwarded our letter to you announcing its organization, recognizing the key role that the office
of the USTR has played and continues to play in promoting energy services liberalization in
APEC, and the desire of the growing group in the United States for the United States government
to include energy services on the WTO negotiations agenda.

Ihave agreed to deliver 8 speech at the WTO Ministerial Business Forum in Seattle on
December 2, 1999, and will address the broad horizon that energy services covers. Energy
services also Includes energy equipment as a signifcont part of our energy services market.

The United States energy industry because of our continuing Bberalization of market
opportunities has helped create new enterprises which stimulate investment, improve overail
competitiveness and bring to all consumers beneficial choices. This can be done globally with
many WTO members using their entrepreneurial skills to developed and developing economies.
Energy services offers unlimited opportunities for you and benefit to all WTO members.

To assist you in preparing for the Seattle Ministerial, and beyond that in negotiations of
the GATS Round Itself, we look forward as an industry grouping to providing you with definitions
of the scope and breadth of energy services, its impact on the US economy, and barriers faced
by US energy and energy service companies in foreign markets.

yon

Encl. (Matrix)
ce; The Honorable William Daley

The Honorable Bil Richardson
The Honorable Robert Rudin

Natural gas. Electricity. Endless possibilities.

00100000000556


ang turn up the hi om the White House. Republican strategists are worried that
there might be nore revelaticns.

“I'm very worried that we have not gotten to the end of the enion skin here,
there’s more to peel hack,” 3 longtime Republican Strategist seid, "I'm
concerned this will distract the White House frem its domestic agenda.“

Tne Human Cost
Losses Abroad, Devastation at Home

Enron*s collapse has been felt far from Washington as well. In capan, the
company’s woes triggered billions of dollars of withdrawals from money market
funds that had invested heavily in Enron stock. In India, a deal to sell a huge
power plant that was built as part of the corpany's expanding overseas empire
has fallen apart. Enron's energy customers in the United States have had to
scramble to find new suppliers.

But is is the lost jobs anc lost retirement savings that have put a human
face on the collapse.

In Houston, more than 4,000 Enron workers were set adrift in a lecal job
market that has alse experienced layoffs by two of the city's ether largest
employers, Continental Airlines and Compaq Computer.

Out of a job or sti) working, many Enron employees -- and many retirees --
have seen their retirement savings plans, which were overinvested in Enron
stock, plummet in value a4 the stock price has plunged to near nothing.

Charles Prestwood, an Enron retiree from Conroe, Tox., told the Senate
Commerce Committee last ‘month that he lost nearly $1.3 million in savings.

“we, the rank and file, got burned," Mr. Prestwood said, “I thought that
people had to treat us honestiy and deal fairly with us. In my neck of the
weeds, what happened is not right."

Though the espleyees* and retirees’ situation bears some comparison to that
of the investors who chased other kinds of Internet fairy dust -= no one
conplained about retiremont furds being overinvested in Enron stock when it was
at $90 a share -- it has prompted calls for legislaticn to change the rules
governing retirement plans. On Thursday, President Gush instructed his economic
team to develop a plan to protect retirement accounts from similar corporate
failures.

Steve Berman, # lawyer in Seattle who has filed a clas#-action suit against
Enron representing many employees and other investors, said he knew of at least
14,090 employees who participated in the company's 491 (k) stock plan. Many
thousands of others will also probably be affected, he said, as public investors
in Enron stock.

Mr, Serman said many of his clients worked tor, or invested in, old ene y
companies that were then bought by Enron. “They thought they had a safe, Cure,
boring investment that they could retire on or pass on to thelr kids,” he said.

He has clients who have lost $400,000 to $3 million in the collapse, he said.
"Thas’s significant because it tells you that these are people who ware earning
4 lot of cash, thus probably at the midpoint or near the end of their careers.
Now, on the verge cf retirement, they're left with nothing.”

Laca Leibman, 31, of Housten whe lost her job in governmental affairs at
Enror after four and a half years, said today she was wavering between sorrow
and anger.

"I: was a dynamic, exciting place to work, and people there would let you try
new things,” she said. "People cen complain about the corporate culture at
Enron, But that Goesn't represent the employee culture, the thousands of
wonderfe. people who worked there.”

0800000000207


The New York Tines
January 14, 2002, Monday, Late Edition - Final
SECTION: Section A: Page 2; Coluna 3; Metropolitan Desk
LENGTH: 1323 words
HEADLINE: NEWS SUMMARY
BODY:
INTERNATIONAL  A2-7

India Welcomes Terror Ban But Seeks Proof in Action

Indian officials embraced a commitment by Gen. Perver Musharraf, Pakistan's
military ruler, not to allow his country to be usec as a base for terrorist
attacks, but said that India would not scale back its military buildup unless
Pakistan toliowed the promise with deeds. Al

President Bush telephoned the leaders of both nations to urge then to seex a
peaceful resolution, and beth agreed to try, officials said. Aé

Colombia Rebels to Withdraw
The Revolutionary Armed Forces of Colombia, Colombia's largest rebel group,
announced it would peacefully withdraw from five towns the government handed
over in 1998 as a safe haven for peace talks, signaling 4 probable end to
negotiations. Ag

Israelis Criticize Bulldozing

Members of the coalition government criticized the army for sending armored
bulidozers to destroy a neighborhood of Palestinian refugees in the Gaza Strip.
The arey said that it acted to stop gunmen from using houses as cover. AT

Two Arrests in Belfast Shooting
The police arrested two men in the slaying of a Catholic mailman in the
outskirts of Belfast. AS

Turkey Seeks Aid

Prime Minister Bulent Ecevit of Turkey plans to visit Washington this week to
ask for help for his economy, bringing a last-minute offering: a $5 billion bank
patlout. A3

NATION CHALLENGED AS~-9

Crackdown on Kabul Crime Gegins With a Tough Task

Starting today, authorities in Kabul will require that owners register their
guns in a crackdown on the aftermath of Taliban rule. But with as many as
700,000 armed, civilian disarmament is a huge task. Al

A Different Sort of Detainee

dary selection is to begin today in the trial of Wael Abdel Rahman Kishk, an
Egyptian man detained cn charges of falsifying documents and making a false
Statement, Though prosecutors have no evidence connecting him to any terrorist
acts, strong suspicions are a driving force behing the government's case, Ag

Trial Lawyers’ Motives

Since Sept. 11, trial lawyers have been confounding their critics, offering free
services and declaring a national moratorium on terrorism-related liability
suits. But some of their traditional allies are asking whether what seems to be
publle service is really just public relations. Ag

Castro's Nod on Prisoners

Gver its own lengstanding objections te an American presence, the government of
Fidel Castro has publicly signaled its acceptance of the Bush

administration's imprisonment of suspected Al Qaeda members at the Guantanamo
Bay base. as

0800000000195


DEPARTMENT OF THE TREASURY

: | WASHINGTON, D.C. |
i
SECRETARY OF THE TREASURY H
;. March 9, 1999 fe
Mr. Kenneth L. Lay
Chairman and Chief Executive Officer ae
Enron Corporation yr
P.O, Box 1188 | :
Houston, TX 77251 ie
’
. j Dear Ken: i
Thank you for your letter endorsing the City of Houston's opti!
Empowerment Zone application. 1 am pleased to see that ror
| private sector businesses are taking such an active role in their { ‘
i . community’s economic health. Participation of companies such
as yours is critical for the economic vitality of our cities. 3

Once again, thank you for taking the time to write.

F ‘ Sincerely,

eg etre

apangni

eve paisa

00100000000542


The Bush administration has rebutted some bailout requesta but in one case
rushed tc aid key businesses. Immediately aftez the Sept, 11 attacks, Lindsey
received a cali fren the chiet executive of # major airline that was in danger
of losing ita line of credit, according to administration officials. Lindsey
called « snajor bank and suggested it not take eny drastic steps, noting that
Congress would lik =y come to the eid cf the airline industry. The officials
would not name the airline.

But tre administration has treated Enron -- which, along with its
executives, contributed more than $ 220,000 to Bush's campaign -- as radioactive
since the firm disclosed in October that it had overstated profits by $ 566
million over the past four years because of what it called accounting errors.
Lay was one of she Bush “picneers” who raised at least $ 100,900 for the
presidential campaign, but the president and his aides have played dewn any
close friendship.

From 1399 te 2901, Earon made $5 1.9 million in unregulated “soft money”
contributions to Democrats and Republicans, but nearly three-quarters of its
political giving went to GOP candidates, according to the Center for Public
tntegrity, a watchdog group.

Enron’s bankruptcy filing not only led to layoffs but also eviscerated the
retirement nest eggs cf thousands of employees and cost shareholders millions of
dollars in stock losses. Plaintiffs in civil suits contend that senior Enron
executives and directors took advantage of the company's high stock price a year
ago te sel) hundreds of millions of dollars in stock before share prices began
to slide.

Adminiatration officials and Enron executives have been increasingly st odds
over the substance of their conversations in October and November. According to
the administration, Lay told O'Neill on Cet. 28 shat Enron's problems were
similar to the near-collepse in 1998 of the Long-Term Capital Managenent hedge
fund, which required a private-sector rescue organized by the Federal Reserve
Bark of New York.

In the conversation with Evans, the administration says, Lay ked Evans if
he could do anything to influence a decision by Moody's Investors Service to
Gowngrace Enron's credit rating. Evans, according to the Commerce Department,
rejectec the idea as "a no-brainer,” and then confirmed his decision with the
counsel and deputy commerce secretary before mentioning it to ONeill et

White House officials said Buah was in the dark about the conve
more than two months, until Evans and O'Neill mentioned then about
Thursday, toward tne enc of an Oval Office meeting with his economic team.

Reporters were about to be ushered in for a photo opportunity. Sefore such
sessions, White House press secretary Ari Fleischer tells Bush what he is likely
to be askec. "They're geing to ask you about meetings you had with Ken Lay,”
Fleischer said, according te two sources.

Evans and O'Neill then volunteered that they each had received a call from
Lay, anc said they had not taken any action ‘n response.

"You did the right thing,” Bush replied, according to the sources.

LOAD-DATE: January 13, 2902
15 of 33 DOCUMENTS
Copyright 2002 The Washington Post
The Washington Pest

January 13, 2002, Sunday, Final Edition
a2

~ 9080000000021 9


i, aGvertising time on television, insurance against credit

1 became fodder for the rapidly growing Enron finance and trading
expire. fg "he bulk cf its trading te the Internet, Enron was widely
recognizec as the biggest e-commerce company in the world == and carried a
bubble-oera stock price to match. At its peak, Enron had annual revenues of more
than $190 Dillion, and eeployed more than 20,000 people.

Mr, Skilling, dizzy with the profits that accrued as Enron moved into one new
trading market after another, wanted to rid the company ef all its hare assets.
@ut cther exec: ve5 pressed forward with plans to give Enron a global reach. It
bailt power plants around the glebe. It decided to become a force in the global
water business. On the trading side, it splashed its way inte the trendy market
fer higa-speed data anc internet capacity.

Al, told, these efforts represented a collective investment of more than $10
billion, bus they were producing next te nothing in returns.

But few cl Enron's problems were evident to the company's supporters on Wall
Street. Through Enron's chief financial officer, Andrew S. Fastouw, the company
set up a series of limited partnerships, organized in such a way that, by
company executives’ reckoning, they could be treated as separate entities. It
was iike a magic financial elixir that provided the answers to many of Enron’s
growing problems: if there were any assets or debts on the books that the
company dic mot want, they could simply be shed to the partnerships.

But the partnerships were the poison that would finally be the company’s
undoing. Last fall, as Enron's stock was falling, its auditors, Arthur Andersen,
saic that some of the partnerships had to be treated as part of Enron; combining
ther with tne company wiped out more than $1 billion in stockholders’ equity and
contribcted to 4 $616 million third-quarter loss.

Wall Street, long complacent, by now was demanding answera about the
partnerships, The Securities and Exchange Commission opened a formal
investigation. Each t Enron seemed to have proviced every answer, a new
surpri Poppec cut. The markets for the company’s stocks and bonds plummetec,
triggering even more financial demands on Enron, including the acceleration of
payment terms on some debt.

By mid-November, the company had revised its thire-quarter earnings downward
time adding that, because of the debt terms, might have to make a

0m payment in the coming week. next day, the company disclosed
that the financial problems might trigger a -equirerent to immediately repay $4
billion. A delicate cance to sell itself to an archcompetitor, Dynegy, fell
epert amid accusations of deceit.

With the market shaken, other energy tracers began to shun Enron, for fear of
being caugnt up in the company's collapse.

Or Oec, 2, Enron filed for bankruptcy protection. Its dreams of greatness
were over.

A changed Market
An Energy Middleman Creates Its Own Niche

Enron was not merely the largest player in the nation's derequlated energy
markets. It helped create then.

The trading of natural gas and electricity used to be tightly regulated.
Uriilcies built power plants under the guidance of state officials and charged
rates that allowed them to recover their costs plus 4 profit. It was a sonopoly
system that promoted stab: lity but also inefficiency. On the natural cas side,
interstate pipelines, including those owned by Enron, transported gas from
Producess to utilities and other consumers at set prices along fixed delivery
routes.

But atter cil prices collapsed in the mic-1980's, many users of natural gas
a’witchea to cheaper fuel cil, and Enron, led by Mr. Lay, helped convince federal

0800000000203


Administration officials said the chief executive of Enron Corp., one of
Presic¢ent Bush's top canpaign donors, sought help from the administration to
avoid a bankruptcy filing before the giart energy concern collapsed iast year,
wiping cat the pensions of thousands of workers.

The revelation came after the Justice Oepartment began a criminal
investigation of Enron that sour: said is focusing on whet the company
defrauded investors by deliberately concealing crucial information about its
finances,

The Justice action marks a new escalation in a many-siced investigation of
Enron, which made the largest corporate bankruptcy filing in U.S. history on
Dec. Z. Four congressional committe the Securities and Exchange Commission
and the Labor Department heve begun investigations. Additionally, civil suits
have been filed against current and former Enron executives and directors and
its accounting firm, Arthur Andersen LLP, by Enron employees, investors and
retirees who lost billions of dollars when Enron's stock price collapsed.

Andersen informed the government that employees at the accounting firm had
destroyed a “significant” number of Enron-related documents. The SEC said it is
widening its investigation of Enron to include the destruction of records by
Arthar Andersen staffers.

After other Enron executives talked to lowor-ranking Treasury cfficials,
Enron CEO Kenneth L, Lay had conversations about Enron's dire finances with
Treasury Secretary Pevl 4. O'Neill and Commerce Secretary Donald L. Evans. Lay
tole Evans, Bush's former campaign manager, that he would welcome help stopping
Mocey's Investors S$ ice, 4 private credit rating agency, from downgrading
Enron debt. Adminis on officials said Evans did not intervene, and a Moody's
downgrade precipitated Enron's bankruptcy filing.

The administration said that Clinton Treasury secretary Robert Rubin -- now
chairman of the executive committee at Citigroup, a major Enron creditor --
called Treasury Undersecretary Fe Fisher to explore whether the
administration might intervene with rating agencies. The Treasury said Fisher
declined to do sc.

=~ Peter Behr, Sena Milbank

and Den Eggen

The Suprome Court narrowed the scope of the Americans With Disabilities Act,
ruling that an impairment must have a substantial effect on a person's daily
life to qualify as a disability under the law.

Conditions that prevent a worker from performing only 8 specific job-related
task are mot legal disabilities, the court said. “Merely having an impairment
does not make one disabled for purposes of the ADA,” the court declared.
"Claimants also need to demonstrate that the impairment limits a major life
activity."

The unanimous ruling written by Justice Sandra Day O'Connor could affect
millions of workers who suffer from repetitive-strain injuries or other
impairments that affect their jobs. Both sides -- labor and management -- in the
long-running dispute over the scope of the ADA agreed that the ruling will make
it more difficult for workers to prove that they are disabled and therefore
entitled under the lax to an accommodation by their employers.

The ruling was the latest in 4 series of high court decisions that heve
generaliy narrowed the scope of the ALA. Last week's case centered on one

0800000000212


the Washington Post
January 14, 2002, Monday, Final Edition

SECTION: A SECTION; Pq. AQ4
LENGTH: 703 words
HEADLINE: Bush Aice Was Told of Enron's Plea
BYLINE: Dana Milbank, Washington Post Staff Writer
BODY:

President Bush‘s chief of staff was

fer government help before the giant @:
bankruptcy case ever in the United Sta!

told last fall of Enron Corp.‘s request
ergy company collapsed in the largest
os, the administration said yesterday.

Commerce Secretery Donale L. Evans said he told White House Chief of Staff
Andrew #. Card Jr. about a call he received from Enron Chairman Kenneth L. Lay.
In the call, Lay expressed hopes that the government would intervene with a
private credit agency that was threatening to lower its rating on Enron's debt,
seriously jeopardizing the company's financial viability. Evans said the
gcvernment did not intervene.

it was the first indication that, at the tine, officials in the White House
nad been informed of Enron's desi for government intervention. White House
spokesmen had said Bush and Vice President Cheney did not learn of the
cenversations until last week. White House press secretary Ari Fleischer had
said on Thursday that "there's nobody here that I'm aware of" who was consulted.

Evans said he informed Card of the Oct. 29 conversation “several weeks"
later, when Enron was negotiating a merger with Cynegy Inc.

“#ith all the ongoing and continuing activity at Enron and Dynegy, I thought
the White House ought te know,” Evans said yesterday on NBC's “Meet the Press.”
"I was over there one day, and I stepped into Andy Card's office and told him
I'd received this call. He simply listened to me and said, "Thank you very
mech.’ *

Evans said Card did not pass the information on to Bush. Although Evans said
he talked to Bush in November about Enron's plight, the conmerce secretary said
he "never talked to him about the fact that I had received a phone call.”

Evans and Treasury Secretary Paul H. O'Neill both spoke with Lay last fall
about Enron's dire financial condition. Lay had "six to eight” conversations
with Treasury Undersecretary Peter Fisher, who was asked to call Enron's lenders
about extending the firm's credit.

Treasury officials said they talked to lenders about the likely impact of an
Enron cellapse but did not request any action. Former Clinton treasury secretary
Bobers E. Rubin telephoned Fisher about intervening with the bond-rating agency.

Enron's collapse and Dec. 2 bankruptcy fLling wiped out the pensions and
savings of thousands of workers. The Justice Department opened a criminal
investigation into the collapse, and several congressional committees ar
investigating. The company’s auditor, Arthur Andersen, is under investigation
fer destroying thousands of records related to Enron.

Time magazine reported yesterday that Andersen ordered employees in an Oct,
12 remo to destroy all Enron audit material except the most basic “work papers.”

Evans also said that he ked about Enron with Lawrence B. Lindsey,
Bush's top economic adviser and a former Enron consultant, and with Card deputy
Joshua Eolten “from time to time.” But Commerce spokesman Jim Dyke said Evans

a

00800000000198


2 of 6
ENRON LIKELY TO ENGAGE WASHINGTON ON MANY FRONTS

It's too soon to say anything definitive, but Enron's collapse will occupy Washington
policymakers and politicians from many points of view:

« The Fed — The Fed's crisis management skills could be tested depending on how
Enron's positions are unwound, although there's not too much concern evident on that
front now, Discount window lending may take place with affected banks, and at the
margin the unsettling market impact of Enron will be one more reason for the Fed to
ease.

* Accountants — The objectivity of audits will be an especially strong area of inquiry for
Congress. This issue is likely to be the focus of House Energy and Commerce
hearings in the coming weeks. Wall Street research could also get hit in the search for
those who should have wamed about what was going on in Enron's books.

* Disclosure — As in the LTCM aftermath, Washington will most likely demand more
disclosure for companies’ financial transactions, both to the relevant agencies and to
the companies’ creditors.

« Energy markets — So far there's no evidence of disruption, but congressional hearings
will focus on this topic as well. This could be the focus of the Senate Energy
Committee.

* Deregulation — Although one could argue that Enron doesn't relate much to the energy
deregulation debate, and the Bush Administration will continue to push for it, Enron's
collapse has to reduce the incentive for most politicians to engage in that push. A Wall
Street Journal story Friday also said the collapse of the Dynergy-Enron deal cast a bad
light on financial services deregulation (given JP Morgan's and Citigroup's role in the
aborted deal), that strikes us as a very premature judgment in terms of any Washington
action.

* Populism — Given the devastation to the 401(k) plans of many Enron employees, there
is a real potential for a populist reaction by politicians in both parties. Any evidence
that senior executives at the firm took care of themselves would intensify this.

© Politics - There are early signs that Democrats see some advantage in the issue, due
to the close tie between former CEO Ken Lay and Bush and between the company and
the Republican Party. For example, Enron would be a big beneficiary of the House
stimulus bill's refund of corporate AMT credits. But with no help offered by this
Administration to Enron, this will fall well short of a scandal.

AK KNKDKHDKGKHRDHHHK DK HHVHHKHG KH HnK— HHH V-H HDA

12/3/01 ISI GROUP

00100000000772


"This .s counterproductive =o us keeping focused or what we need te keep
tocused on. said Mike McDaniel, chairman of the Republican Party in Indiana.
“We erill have men and women out there putting their lives on the line. Bur the
Demecrats are rapping it up to make it an issue in the campaign.”

Indeed, Denccrats are savoring what some Gescribe as the biggest cpening they
have had te portray Mr. Bush end hia party as pawns of special interests.
Several party leaders said their strategy was to not appear crassly political by
attacking the White House. Instead, they intend to sit back quietly, expressing
aympathy for workers and investors hurt by Enron's collapse as Republicans face
ac ade of questions.

“The strategy going to be te let the investigation take its course and not
te dial it we politically,” said one Democratic Party official. “If your enemy
ts shooting themselves in the foct, you let them."

Terry McAulifte, the Democratic Party chairman, followed just that course in
an interview, saying, “This issue does not neec any fuel from Terry McAuliffe,
It has enecen on its own. So i's going te stay right out of it.”

The Denccrats also could be restrained by the disclosure today that Robert £.
Aubin, the Treasury secretary under President Bill Clinton and now a top
executive at tgroup, had called a senior Treasury official to ask whether he
would consider asking a bond-rating firm to hold off on downgrading Enron's
debt, a move that could cost Citigroup millions of dollars. The Treasury
official, Peter Fisher, a Democrat, said he would not intercede.

Another reason Democrats said they were treading carefully is that Encon was
aiso a generous donor te Democrats, including Senators Charles E. Schumer of New
Yors, Jeff Bingaman of New Mexico and John B. Breaux cf Louisiana and
Representative John 0. Dingell of Michigan. In fact, Republicans pien tc portray
the Enron collapse as a bipartisan disaster.

"It's a tittle difficult for the Democrats to point their fingers," said
former Representative Bill Paxon, a New York Republican who is close te the
White House.

Tad Devine, a top strategist for Al Gore in the 2000 presidential campaign,
qdea: “Our party has to be careful in the way we pursue it, The Republicans
demonstrated in the 90's that if you are overzealous in political persecution,
you'll pay a price."

But Mr. Devine asserted that Enron's donations to Democrats would not ceter
his party from making it campaign issue. "Sure, Democrats receives money from
Enron," Mr. Devine said, “But the locus of support 3ush had, with Enron being
cut of his home state, ceuld make this a very big problem for hia."

Tne White House ts clearly on the de ve. Today, for perhaps the first
time in her tenure as Vice Presicent Dick Cheney's counselor, Mary Matalin was
in full political tiit. She and other Republicans invoked Clinton scandals --
ineludieg his affair with a Waite Fouse intern -- as thay defended their own
presicert,

Appeasing this morning on the Don Imus radio program, Ms. Haotalin saic
critics “act like there's some billing records or some cat scam or some fired
avel cides or some biue dress.”

The president himself has also been on the defensive, putting some cistence
between Nisself and Kenneth L. Lay, the chairman of Enron, by saying that Mr.
Ley had supported Ann Richards, the former Democratic governor of Texas, over
him in the 1994 campaign.

Pesides trying te stoke questions about the Democrats, the White House
approach is to make the point that the president has nothing to hide.

"If anybody else wants to focus on politics, that's their prerogative,” said

00800000000234


BECTION: EDITORIAL? Pg. BOT
LENGTH: 839 words
HEADLINE: Nothing Doing
BYLINE; Cavic ignas-us
BCoY:
The Bush administration got mauled last week for its ties to Enron Corp., the

iepleding dest= star of corporate America. But while it makes for juicy
seadiines, the Bush-Enron “scandal” strikes me, at least so far, as a bum rap.

In fact, rather than intervene to help their pals at Znron avoid bankruptcy,
the Bushies h te have adopted the sane tactic they have used in many other
ratters affecting the financial kets -- namely, do nothing.

This reluctance to intervene in financial crises -- even ones involving
their campaign contributors -- is becoming a halloark of the Bush Treasury
Department. You can see the same studied indifference in the
administration's response to recent financial debacles in Argentina and Japan.
ar. certainly argue that inactlen has been the best policy: Bailing out
8 dendholders would have made no more sense than rescuing Enron's
management and stockholders-

The surprising fact is that the Bush Republicans have been much less
sympathetic te financial worries than the Clinton administration -- which in
retrospect seems one of the most ardently pro-Wall Street administrations in the
nation’s history.

White Heuse spoxesman Ara Fleischer made the Clinton comparison in
discussing the Enzon case Thursday. He noted that as Enron was beginning its
final swan dive, CaO Kenneth Lay had called Treasury Secretary Paul O'Neill anc
warned that nis company might be heading the way of Long-Term Capital
Management, which averted a dangerous bankruptcy in 1998 with assistance from
the Clinton Treasury and the Fed.

Enron pleaded for similar help te O'Neill anc his sides at Treasury, to
Cesmerce Secretary Don Evans anc to Fed Chairman Alan Greenspan. But so far as
we know, they tock no action to avert the looming disaster. indeed, the Bush
acministration basically stood on the sidelines and watched as the biggest
bankruptcy im American history ensued. Over the past year, the company’s stock
fell <scm a high of $ 83 to 67 cents as of Friday.

Deing nething was also the correct response in the case of Argentina. The .
Bush administration did support an extra $ 5 billion for Argentina last August.
But after that <= a8 it became clear that Argentina would default on its bonds
-- the administration iqnored warnings about financial “contagion” and let
Argentina collapse.

And it turned out to be right. Despite the fact that it was the largest
sovereign debt default in history, Argentina's collapse has had little effect on
tne bond prices of emerging-market countries.

“I'm glad to see there is less ‘contagion’ than many people had thought,”
said Jokn Taylor, the undersecretary for international affairs at Treasury, in a
telophore interv.ew Friday. The reason, he said, is that "the markets are paying
qreater attention to the differences between countries.”

The markets have indeed been taught a son -- though less by the Bush
acninistration’s policies than by the brutal experience of the past few years,
whicn burned investors and made them far more careful. A look at bond spreads
shows that during the run-up to the Argentine default, this “contagion factor”
was about half what it had been during the 1997 Asian crisis and the 1998

a

0800000000220


Polacymekers “really nave te be careful. They can Go qood, anc they can do
harm, It is 4 very sensitive system. It's not a system that respends to punches
very well,” said Zric Lofgren, 4 benefits consultant with Watscn Wyatt Worldwide
in Phaledeipnia,

As it seeks to insulate workers from catastrophes like the Enron collapse,
the administration will confrent several long-running tensions of the retirement
world.

First, there is the tension between the government's desire to protect
workers and the employers’ desire to have retirement plans that are cheap and
easy to operate. When policy veers too far to the cheap-and-easy side, workers
may risk losing their savings; when it veers too far to the side of regulated
protection, workers risk losing the retirement plans themselves.

Other than Social Security, the U.S. retirement system remains voluntary,
and employers that find providing retirement benefits too onerous are free to
drop them or switch to some less-regulated alternative.

Second, in today's world of 401ik} plans, there is the tension between the
advice that workers should diversify their investments and the apparent desire
of many workers to make a big bet on their employer. Again, when workers place
all their bets on their employer, they risk disaster. But if workers are forced
te diverslfy, the plans may become more complicated and less attractive to then,
and the risk is a decline in plan participation.

Finally, there is the tension between allowing employers to make
contributions to 401(k) plans in company steck -- which may be cheaper for the
any -- and restricting or forbidding it, perhaps discouraging any employer
seontribution at all.

The last time policymakers faced this sort of crisis was in the early 197Cs,
when bankruptcies of the time revealed that many majer corporations had not
acequately funded their pension plans, When the companies foundered, the
pensions evaporated.

That led to the 1974 Employee Retirement Income Security Act, which created
government insurance for traditional retirement plans, along with 4 host of
rules designed to ensure that the plans would be properly funded and
administerec.

More than a quarter-century later, workers ond retirees with traditional
pensions, ¢ ed defined-benefit plans, are very well protected. But two-thirds
of 411 traditional plans have vanished,

Fundamental changes in today's retirement plans would require legislation,
several experts said, and it's not clear whether Congress could agree on that.
Even minor changes would he contentious.

For example, Enron used its own stock to match employee contributions to its
$01{k) plan. It further forbade workers to sell those shares until age 59,
though they could seil whatever they purchased with their own contributions. One
possible change would be to bar employers from reatricting the sale of such
shares.

But companies use these restrictions to ease the dilutive effect their
satches have on their stock. “A lot of companies wouldn't want to contribute
stock if they knew the employees would just turn around and sell it,” said one
pension expert.

Another area of focus is likely to be Enron's “lockdown” of worker
retirerent accounts last fall. For a period -- whose length is in dispute -= the
coroany barred any transfers by workers. Enron says it was simply changing plan
adeinistrators anc the restrictions had nothing to do with the fact that Enron
stock was sinking fast.

0800000000222


5 of 6
THIS WEEK IN CONGRESS

SECTOR WATCH

Sector Issue Analysis

Energy Oil drilling in | The GOP plans to offer an amendment to allow oil drilling in the
ANWR Artic National Wildlife Refuge (ANWR) in Alaska to a railroad
retirement bill as early as today, The amendment could pass,
but it would likely lead to a filibuster of the bill.

Farm Farm bill The Senate could take up the farm bill as early as this week,
Equipment,
Fertilizer

POLITICAL CALENDAR

Tue (4") | Senate Finance Com markup of trade assistance.

Senate Appropriations subcom hearing on cloning.

Senate Appropriations subcom markup of defense appropriations,

Senate Environment and Public Works Com hearing on bio-contamination.
House Energy and Commerce subcom hearing on marketplace competition.
House Judiciary Com hearing on the video distribution market.

House Ways and Means subcom hearing on the Medicare+Choice Program.

Wed (5") | Senate Commerce, Science and Transportation subcom hearing to examine the
technology sector in times of crisis.

House Energy and Commerce subcom hearing on power plant security.

House International Relations Com hearing on anthrax sources.

House Science Com hearing on bioterrorism preparedness.

Thu (6") Senate Commerce, Science and Transportation Com hearing to examine the
corporate average fuel economy.

Senate Foreign Relations Com hearing on the political future of Afghanistan.
AG John Ashcroft testifies before Senate Judiciary Com hearing on DOJ
oversight.

This LA Times article reflects
Congress Misses Its Chance a shift against the stimulus bill

to Jolt the Economy among the elite. If a bill
LA Times doesn't pass this month, it is

very unlikely to happen next
year.

NSH NK NKDKNKHDKNKENKDKHKHKHHKHKNVKHNeHvnen—VN-—Kv-HE

12/3/01 ISI GROUP

00100000000775