Letter: Fed regulations must protect us from cheats

Friday, Dec. 21, 2001 | 4:11 a.m.

On Nov. 30, a Friday, Enron Corporation filed for Chapter 11 bankruptcy protection and a $10 billion lawsuit against Dynegy Inc. for scrapping a proposed buyout. This is the third largest U.S. bankruptcy since 1980.

There are 12 Enron subsidiaries affected by the bankruptcy, as well as over 25,000 workers worldwide. On the New York Stock Exchange, the stocks closed at 26 cents that Friday from a year-ago price of $85 per share.

Enron is an energy giant that was created through politics and philosophy not to produce or deliver power, but to trade it. Many investors didn't sell until too late and lost their savings, whereas the executives were in "on the know" and sold their stocks earlier. They then froze the stocks of their workers. The task for both society and the market is to prevent such happenings in the future.

The company's chairman, Kenneth Lay, was one of President Bush's biggest donors and was an energy adviser to Vice President Dick Cheney. Lay's power over the Bush administration was so great that he has been credited with forcing the nation's chief energy regulator out of his job because the regulator disagreed with him.

The price gouging in California and other parts of the country that were considering deregulation would also fall into the pattern of greed and more greed. Enron managed to conceal mistakes, playing accounting games to hide problems and shift money from book to book to maintain the illusion of success. Enron used deregulation to make money out of nothing, simply by adding cost to the product electricity from power plant to home.

This proves that society needs rules and limits to protect the public from cheats and unscrupulous manipulators. Federal regulators must protect us from deceit and greed in other fields as well.

JOSEPH RULNICK