In other words, the first scandal of the George W. Bush White House is at least Republican to the core it's been privatized.
Which has obvious positive implications for the administration. Peppered as it is with Enron-connected staffers aside form Lay buddies Bush and Cheney, Karl Rove was a big stockholder, Larry Lindsey and Robert Zoellick were board members, Marc Racicot was a lobbyist until Tuesday and Secretary of the Army Thomas White Jr. was an former executive they all seem to have successfully washed their hands before Enron went radioactive.
Yes, Dick Cheney met with Enron officials six times behind doors that were very tightly closed during his energy-policy formulations, but that was when Enron was on top of the energy-trading world. Mostly, the company simply wanted that world to grow bigger with increased deregulation a greater economic good of whose merits Bush and Cheney, at least, hardly needed to be convinced.
But it wasn't until late October and early November that the White House phones really started to light up. Wall Street had already lopped off more than half of the stock's value and the debt-rating agencies were about to consign the company to the junk heap. And that was when Kenneth Lay started rifling through his big black book, dialing Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and even Alan Greenspan (who doesn't take campaign contributions) about the company's financial woes. Enron President Lawrence "Greg" Whalley also telephoned Treasury's undersecretary for domestic finance, Peter Fischer, six or eight times in the same period.
And although Lay claims that he was merely notifying his government about a meltdown with some pretty big potential ripples, administration officials do say that Lay told Evans that he would welcome any support in helping the company deal with the bond-rating firms and maybe get a credit extension from the host of banks about to be referred to bankruptcy court. And Greenspan's rep says there were plenty of helpful mentions of the 1998 meltdown of hedge fund Long-Term Capital Management, a bailout of whom Greenspan helped organize.
If the Administration was going to do a favor for an old friend with a big checkbook, this would have been the time. But by all accounts (and by the evidence of the subsequent chapters of the Enron story) the Bushies treated him just like they had Argentina, another self-made failure. They listened. They looked at the potential consequences. And they turned Lay down flat.
Enron was going to be held accountable for its own follies (and its own accountants), and the private sector would have to fill in the abhorrent vacuum. It's like something right out of the Reaganomics textbook and that's the way it's gone down. Rival energy traders like Dynegy have picked up Enron's former clients, UBS will reintroduce EnronOnline as its own platform, and economically, at least, the ripples have not materialized.
Now Bush has to worry about the Democrats. Because as successful a small-government, reap-what-you-sow philosophy was in handling the real-time crisis (and not coincidentally, scandal-proofing the Administration administering it), the fallout is likely to prove Democrats right about one thing that Big Business can be miserable at policing itself.
Enron's executives left rich while their investors were left busted. The accountants at Arthur Andersen, whose industry is "self-regulated" by a toothless oversight board appointed by the Big Five firms themselves, seem to have gotten confused yet again by the conflict-ridden task of auditing a firm for which they also did much-more-lucrative consulting work. And then there's the matter of the frozen and then vaporized 401(k) accounts. Not exactly a force for turning Social Security over to the mutual-fund people.
This time, the real scandal isn't in the government, it's in the private sector, and if the Democrats really want to make some political hay out of this they'll leave the political connections out of it and center on the philosophical ones. Because while the story of Kenneth Lay, Arthur Andersen and the energy giant they brought low may have had a proper capitalist ending, it's also in every free-marketeer's interest to close the disclosure gap between the big players and the small investors that gives the Enron story its tragic bite.
And that may require some serious government intervention.