They Say: Enron, Gramm, Cox and the New York Times
Excerpted from a Feb. 5 National Review Online story by Ramesh Ponnuru
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 Jan. 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.”
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. 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.
On Feb. 3, 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 was California Republican congressman Chris Cox. 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.”
