ustxtxb_obs_2002_03_15_50_00003-00000_000.pdf

11111.11111111111 Find Another Aggie Texas Observer NI1111111 EDITORIAL VOLUME 94, NO. 5 A Journal of Free Voices Since 1954 hil Gramm met his wife Wendy in the halls of Texas A&M, where both taught economics in the 1960s, so the two have an understandable attachment to the school. Wendy currently serves on the Texas A&M Board of Regents, courtesy of an appointment by Governor Rick Perry. Now, after 23 years in Congress, Phil is rumored to be headed back to A&M, this time as University President, following his planned retirement next January. In the wake of the Enron scandal, it’s time for both Phil and Wendy to retire from public service for good. If Enron sticks to anyone, it should stick to these two, yet comparatively little ink has yet been spilled on their involvement in the scandal, perhaps because Phil Gramm is a now a lame duck. But for those who question whether Enron actually got anything for its campaign largesse, look no further than the Gramm family. As Public Citizen and others have thoroughly documented, their fingerprints are all over this billion-dollar debacle. Leave aside for the moment the fact that Wendy Gramm served on the audit committee of Enron’s Board of Directors, and therefore is particularly culpable for failing to alert investors about the off-balance sheet hijinks that resulted in the largest bankruptcy in American history. In fact, Wendy and Phil helped create this disaster in the first place. As chairwoman of the Commodity Futures Trading Commission, a federal regulatory agency,Wendy Gramm exempted Enron’s energy derivative contracts from regulation in the fall of 1992, setting the stage for the company to become a huge player in the wholesale energy market. That was one of her last official acts; Enron hired her a few days later to serve on their board, where she would earn at least $900,000 over the next eight years. After Wendy joined the board, Enron quickly became Phil Gramm’s top corporate contributor. It paid off. In December 2000 Phil Gramm pushed throughover the objection of regulatorsa bill deregulating energy commodity trading, which set the stage for Enron’s online trading operation and ensuing dominance of the California energy market. That bill was a disaster for California ratepayers and a bonanza for Enron. Unfortunately, Enron was at the same time hemorrhaging huge amounts of cash on ill-advised overseas investments in power plants, public water utilities, pipelines, and other capital-intensive enterprises. As head of the Senate Committee on Banking, Gramm helped them hide those losses, fighting banking reforms that would have made transactions in offshore tax havens much more transparent. Enron had hundreds of subsidiaries in the Cayman Islands whose primary reason for existence seems to have been to deceive investors and Wall Street analysts. Gramm announced his decision to retire on September 4, shortly before Enron made its stunning restatement of earnings and Wall Street’s favorite cookie began to crumble. Coincidence? With his wife on the audit committee, privy to inside information that nobody on Wall Street had seen, he was uniquely positioned to know that things were about to get ugly. That being the case, Texas A&M might have appreciated a call from their former profthe university, along with various state pension funds, was among the public entities in Texas that lost money on Enron investments. Texas has joined a class-action suit to try to recover those losses. According to Phil, there was never any Enron-related pillowtalk at the Gramm residence. “We talk about my taking out the garbage and continued on page 31 Founding Editor: Ronnie Dugger Editor: Nate Blakeslee Managing Editor: Barbara Belejack Associate Editor: Jake Bernstein Managing Publisher: Jim Ball Circulation Manager: Candace Carpenter Art Director: Julia Austin Poetry Editor: Naomi Shihab Nye Copy Editor: Roxanne Bogucka Development Director: Susan Morris Interns: Sandra Spicher, Emily Rapp Seitz Contributing Writers: Gabriela Bocagrande, Robert Bryce, Louis Dubose, Michael Erard, James K. Galbraith, Dagoberto Gilb, Steven G. Kellman, Lucius Lomax, Char Miller, Debbie Nathan, ohn Ross. Staff Photographers: Alan Pogue, Jana Birchum. Contributing Artists: Sam Hurt, Kevin Kreneck, Michael Krone, Gary Oliver, Ben Sargent, Penny Van Horn, Gail Woods. Editorial Advisory Board: David Anderson, Chandler Davidson, Dave Denison, Sissy Farenthold, John Kenneth Galbraith, Lawrence Goodwyn, Jim Hightower, Maury Maverick Jr., Kaye Northcott, Susan Reid. In Memoriam: Bob Eckhardt, 1913-2001 Cliff Olofson, 1931-1995 Texas Democracy Foundation Board: Ronnie Dugger, Molly Ivins, D’Ann Johnson, Jim Marston, Bernard Rapoport, Geoffrey Rips, Gilberto Ocatias. The Texas Observer entire contents copyrighted 02002, is published biweekly except every three weeks during January and August \(24 issues profit foundation, 307 West 7th Street, Austin,Texas 78701. Telephone: E-mail: [email protected] World Wide Web DownHome page: wwwtexasobserver.org . Periodicals Postage Paid at Austin, Texas. Subscriptions: One year $32, two years $59, three years $84. Full-time students $18 per year; add $13/year for foreign subs. Back issues $3 prepaid. Airmail, foreign, group, and bulk rates on request. Microfilm available from University Microfilms Intl., 300 N. Zeeb Road, Ann Arbor, MI 48106. Indexes: The Texas Observer is indexed in Access:The Supplementary Index to Periodicals; Texas Index and, for the years 1954 through 1981, 77w Texas Observer Index. POSTMASTER: Send address changes to: The Texas Observer, 307 West 7th Street, Austin,Texas 78701. The Books & the Culture section is partially funded through grants .from the City of Austin under the auspices of the Austin Arts Commission and ‘the Writer’s League of Texas, both in cooperation with the Texas Commission on the Arts. 3/15/02 THE TEXAS OBSERVER 3