Top Ten Things You Need to Know About Enron

In a nation where more than half of all households are invested in the stock market, the largest corporate bankruptcy in U.S. history of the United States should put the fear of God in us. Primarily, it seems to have fueled fears about our retirements.

America is surprisingly unmoved by the Enron meltdown, according to pollsters at Gallup. "Even before the Enron crisis moved to the nation's front pages," Gallup tells us, "Americans had relatively low opinions of the honesty and ethics of business executives, did not have a great deal of confidence in business as an institution, and felt that business already has too much influence in society."

America trusts no one, except maybe its firefighters. America just wants to retire in peace and security. Or so they tell us over at Gallup.

Granted, in a match between firefighters and corporate leaders, only a fool would put money on the integrity of the execs. But the Enron scandal deserves our outrage. It serves as an indictment of our entire financial and political system. It can and should be a catalyst for change.

It's true the Enron scandal is mind-boggling and complicated. Kenneth Lay, the former chairman and CEO of Enron (and former buddy of President Bush), said that all those partnerships and inflated profits were too hard for him to understand; in August, Lay said it was all "way over my head." Lay has a kind, grandfatherly reputation, which he seems to be trying to resurrect. But he understood enough to make off with $200 million dollars in just under three years. Maybe he should have spent less time in his five -- yes, five -- ski houses in Aspen, Colorado, and more time boning up on the company he was supposedly running.

We could, of course, wait for the inevitable Hollywood epic to tackle Enron's collapse and to digest its lessons for us -- to tar the villains and to lionize those few who tried to blow the whistle. But before Miramax or HBO gets to it, even the most financially uneducated layperson can understand enough about Enron to see that change is necessary.

The problems brought to light by Enron color both the public and private sector. In a country that takes its world-class transparency and accountability for granted, our private safeguards failed us shamefully. The analysts, investment bankers, accountants, and conventional bankers all stood to profit from buying into Enron, so they opted not to call it out on its lies. As long as people were buying into the bottom of the pyramid, everyone who might have spoken out preferred cashing out at the top. The business press, for the most part, was too fawning and wrapped up in the game to look at the hard facts or to take note when the initial alarms were sounded.

In the public sector, politicians and government regulators were too indebted to the private sector to oversee it. The problems cut across party lines. Politicians from both parties took money from Enron: 212 of the 248 members of congress investigating the affair, to be precise. Clinton's administration was not exempt. Enron was generous with the government, and Enron got what it wanted from the government, in a startling number of cases.

What follows is an imaginary conversation, intended as a kind of primer -- not only ten things you might want to know about Enron, but ten things that bear repeating about Enron. Enron's collapse is symptomatic of a deep-seated disease. All of our retirements are at stake.

What the hell happened?

Enron traded energy, at first. It was good at trading energy. It created an online commodities market for energy, which basically meant it created a marketplace where people could buy and sell energy. Enron also produced energy. Its commodities market was a big change from the rule of state-regulated monopolies. Trading energy was a fine business idea, possibly even a groundbreaking one. It was not, as Enron had us believing for a while, the be-all end-all of corporate creativity.