How Enron tore down the walls of democracy and made a killing in the market – with a little help from their friends in government. By James Sandrolini

The unfortunate thing about Democratic scandals is that everyone knows exactly what happened. Be it JFK or Bill Clinton, let's face it: a sex scandal is a no-brainer. The juicy details are easy to digest. And though we won't admit it, most Americans swarm to a good sex scandal like bees to honey.

But Republican scandals are another thing altogether. How many of us still remember exactly what Watergate was all about? How many can easily sum it up? What about Iran-Contra? Recall how many countries were involved in that epic conspiracy? Most people weren't convinced of Ronald Reagan and George Bush, Sr.'s innocence in this fiasco, but after a while, as court hearings went on endlessly, most Americans pretty much tuned out.

"I Think We've Hit the Jackpot"

In 1982, Ronald Reagan offered this heartening bit of wisdom upon signing the Garn-St.Germain Act, which essentially rewrote the book on S&L (savings and loans) regulations across the land. Reagan called Garn-St.Germain "the most important legislation for financial institutions in 50 years." What he failed to explain to American voters was what this legislation would do to them. Years later, we would find out. Few beyond financial page reporters picked up on this gargantuan scandal and its startling implications – the S&L crisis cost US taxpayers over $1.4 trillion dollars. We're still paying for it today.

Keeping with family traditions, Bush Sr., then Vice President, helped stir S&L waves into a tsunami of fiscal devastation and corporate plundering. Greedy bankers and businessmen could not achieve this level of graft all by themselves. They needed some assistance from the public sector. In the late 1980s, Bush Sr. chaired the Presidential Task Force on Deregulation, and so began the grand era of government-approved robbery.

The task force immediately set out to pick apart US business and banking regulations as if they were hacking away at the Berlin Wall. Inside Job co-author Mary Fricker says Bush Sr. and the task force "set the tone" for massive banking deregulation. These deregulators opposed everything from regulation of lead in gasoline to mandating nonflammable pajamas for kids. They couldn't bear to give up millions of dollars in profits just so Americans could live and breath in greater safety.

The S&L scandal bears close resemblance to the current Enron scandal. The S&L aftermath and a recession may have cost Bush Sr. a second term in the Oval Office. Now his son, who also has a highly popular war to add to his resume, appears to be drifting in the tide of a major deregulation scandal.

There's no guarantee, though, that mainstream media and the American voter will pay sufficient attention to Enron to bring about sweeping political reform. Where were the financial experts and columnists last year when this whole mess was brewing? What of our representatives in Congress? Did they know? Considering that 212 members of Congress accepted Enron money, chances are quite good that they did.

Deregulation Nation

Bush Sr. and Reagan acted as early role models of deregulation banditry. But the current Enron scandal originated in the free-market-infested frenzy of 1994's so-called "Republican Revolution" with its crazed Captain Ahab in Newt Gingrich. Strict federal regulations were Gingrich's arch nemesis and he wouldn't stop stabbing away at the beast until it expired – even if it took him down with it.

The Clinton administration, although quite permissive in other areas of deregulation – for example, the Telecommunication Act of 1996 – stood up against Gingrich, Trent Lott and many other Republicans who just couldn't pass up the chance to pay back their corporate donors in spades. Never mind that it eroded democratic principles or put millions of lives in danger via reduced safety measures.

Enron's chairman Kenneth Lay was particularly aggressive in getting his various paid spokesmen in Congress to relax energy industry rules to barely a pulse. Enron avoided all taxes for four of the last five years by setting up some 2,832 offshore subsidiaries, 700 in the Cayman Islands alone. Thanks to these exotic tax shelters, Enron was able to stow one-third of its assets in order to conceal a company loss of $1.2 billion dollars.

Company of Wolves

If it's true that you can tell a lot about a man by the company he keeps, then George W. Bush is in a lot more trouble than the press is willing to let on. So far, William Safire of the New York Times and various Wall Street Journal editorials are trying to convince the American public that Enron is merely a massive financial scandal and not a political one – yet.

According to many mainstream media accounts, no one in the Bush administration, or even Enron or Andersen, actually did anything illegal that we know of – at least not yet. Sure, they accepted millions in Enron influence peddling. But the White House broke no rules. In fact, they claim they didn't even raise a finger to help their old buddies at Enron – or any of the thousands of soon-to-be-broke employees and shareholders of the company. Corporate crime watchdog Michael Moore has compared this "see-no-evil, hear-no-evil" approach by the administration to watching an arsonist set a house ablaze and doing nothing to deter him. Simply turning away from a crime is tantamount to committing a crime.

The horrendous bilking of 12,000 Enron employees of their jobs, their 401(k) savings, and for many, their life savings, could not have been so easily accomplished were it not for important friends in very high places. Hundreds of thousands of investors lost multiple millions, thanks to the astonishing greed of Kenneth Lay, Jeffrey Skilling and their top 28 executives who all plundered like bandits between 1999 and November of 2001.

The wartime mainstream media has done a soft-shoe on the political implications of the Enron fiasco and how much of it leads to the White House and Congress. William Safire shakes his fist at the vultures who ran Enron's crooked operation but opines, "the scandal I see in this corporate debacle is non-political; it's professional." If it were so, none of us need worry about political reform or any elected officials losing office. Then the nation can get back to the business at hand: cleansing the world of evil.

Washington Post reporter Paul Farhi waves away the Enron mess as just another "Incomprehensible Washington Scandal." Farhi explains that Americans "just won't understand the Enron scandal" and will ultimately tune out. Americans have a rather short attention span when it comes to political scandals – Watergate, Iran-Contra, the S&L debacle, and stuff that doesn't involve sex and naughty presidents. Some newspapers and television outlets are mildly complaining that the Enron scandal lacks salacious quotes, embarrassing photos, or anything viewers can really sink their teeth into. A ratings non-starter. Let's change the channel.

But why should we? This may be a complex financial scandal, but all it boils down to is this: the Bush White House early on gave access to Enron in order to keep the millions funneling into administration coffers. Enron also had access to Bill Clinton and most Congressional Republicans and Democrats. Chairman Lay had unprecedented access to the White House and Dick Cheney's energy task force – access never granted to environmentalists and consumer advocates.

Do Americans really have trouble comprehending why Lay and his henchmen cashed in their stock as Enron slid into bankruptcy? Is it hard to appreciate how thousands of employees were robbed of job and savings because the company chairman kept reassuring them that everything was fine? Is it difficult to understand that Enron executives prevented employees from selling their stocks even after the company went into a free-fall? What of the millions of shareholders who lost their money in this fixed corporate casino?

Last year, Vice President Cheney gave the Los Angeles Times a call to "suggest" that price caps were the wrong way to solve California's energy problems. This was the day after Ken Lay paid Cheney a visit in Washington to discuss energy matters in California. Enron lobbyists had a major role in seeing California knock down energy regulations a few years back. Enron had everything to gain from this regulatory scalping.

Next page...