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I.
Phil Gramm
You may have
heard that Phil Gramm, Republican senator from Texas, had done some
of Enron's bidding in 2000. Numerous newspapers, relying on a report
by the Naderite group Public Citizen, reported that Gramm had slipped
through a provision exempting some of Enron's business from regulation.
As New York Times columnist Bob Herbert put it on January
17, "In December 2000 Mr. Gramm was one of the ringleaders
who engineered the stealthlike approval of a bill that exempted
energy commodity trading from government regulation and public disclosure.
It was a gift tied with a bright ribbon for Enron." This was
Herbert's first example in a column dedicated to the proposition
that "When Senator Phil Gramm and his wife Wendy danced, it
was most often to Enron's tune."
Public Citizen
had Gramm "muscling through" the offending provision.
In fact, Gramm had almost nothing to do with it. He didn't write
it: It came to the Senate from the House, where it was part of a
bill that passed by a large margin. He didn't usher it through the
Senate: It was considered by the Agriculture Committee, of which
he was not a member, rather than the Banking Committee, which he
chaired. Indeed, Gramm blocked the bill that included the provision
for several months because he objected to other provisions. He did,
however, eventually vote for the bill, like most congressmen. It
included the offending provision, which had hardly been altered
during the legislative process.
Several publications
have had to print corrections for linking Gramm to the provision
— notably the Washington Post, the Philadelphia Inquirer,
and the Atlanta Journal-Constitution. Herbert's column has
not been corrected, but the day after it ran the New York Times
ran a story by Jeff Gerth and Richard Oppel that noted the inconvenient
truth: "[In late 2000] Senator Gramm, for reasons unrelated
to Enron, was single-handedly blocking a futures trading bill the
company had dearly prized."
II.
Chris Cox
This Sunday,
the New York Times ran a story suggesting that "part
of Newt Gingrich's Contract with America, the Private Securities
Litigation Reform Act of 1995, may prove to be an obstacle to investors
as they try to recover tens of billions of dollars from Enron."
Times writer Stephen Labaton describes this act as special-interest
legislation. He does not mention the bill's author, California Republican
congressman Chris Cox; and Cox says that Labaton never contacted
him.
Cox says the
Enron debacle underscores the case for the law he got enacted. "It
is a very healthy and happy thing amidst this veil of tears that
Enron shareholders have these new protections." Before the
act became law, the first lawyers who filed got to represent the
whole class of plaintiffs in class-action suits. "There was
a race to file, and of course the ambulance chasers were there first,"
says Cox. Now the court appoints the class representative.
The act also
gives courts the power to supervise attorney fees in class actions
— which will be good for plaintiffs if not for their lawyers.
Finally, one
section of the law imposed new responsibilities for auditors to
uncover and report illegal acts by the companies they are auditing.
That might be good for both plaintiffs and their lawyers, notes
Cox: "Andersen remains a deep pocket, where Enron probably
isn't."
Since the act
passed, the number of securities-fraud lawsuits has increased, as
has the average award in such cases. So the act isn't deterring
meritorious suits, and may be weeding out the weak ones.
Cox warns that
even with his reforms, lawyers will probably get cash that should
go to their clients: "The looting at Enron is not over. It's
now the lawyers' turns."
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