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How the Gramm Cracker Crumbled

“Caesar’s wife must be above suspicion.” (Julius Caesar)

Report: 

Although Federal officials' wives have been linked to scandals such as Hilary Clinton’s involvement in Whitewater or Elizabeth Dole's mishandling of the Red Cross, few have ever been handed a subpoena to answer questions regarding possible influence peddling and mishandling of financial records.  Such is the case with Wendy Gramm, wife of Texas Senator Phil Gramm, who was recently served with a subpoena (1) by Senator Carl Levin (D-MI). Senator Levin heads the Permanent Subcommittee on Investigation, and is widely respected by members of both parties.  

Bush family friend Wendy Gramm's story dates back to George Bush Senior's administration, when the Elder Bush appointed Ms. Gramm as chairwoman of the Commodity Futures Trading Commission to serve her 5-year term (1988-1993) (2). Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as “an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency protects market participants against manipulation, abusive trade practices and fraud. Through effective oversight and regulation, the CFTC enables the markets to serve better their important functions in the nation's economy--providing a mechanism for price discovery and a means of offsetting price risk”. (3) 

It is important to remember this CFTC mission statement in light of recent events. In a speech released by Congressman Bernie Saunders (I-VT) on Dec 12, 2001 regarding the Enron Bankruptcy case, the Congressman (who took no money from Enron or Andersen) made this brief statement:  

“In 1992, a key regulatory ruling was made by Wendy Gramm, the wife of Texas Senator Phil Gramm. The ruling made Enron exempt from federal scrutiny and thereby allowed it to hide huge amounts of speculative debt behind nonexistent profits. Wendy Gramm went on to become a member of the companie’s [sic] board of directors”.  (4).

Whereas Ms. Gramm’s responsibility on the CFTC was to monitor trade practices, she appears to have disabled it for Enron. While Ms. Gramm was in charge of the CFTC, she gave Enron a special exemption in trading energy derivatives and exempted future energy contracts from regulation as well (5). This kind of laissez-faire approach towards the energy futures market was approved by the same agency whose purpose is to monitor those kinds of trading activities.   Nonetheless, this policy shift towards Enron was backed with the full faith and guarantee of the regulatory agency that the Elder Bush charged Ms. Gramm with overseeing.

Enron awarded Ms. Gramm’s loyalty to their agenda with an invitation to become a board member of Enron, where she would be closely involved with their auditing procedures. Making this transition from the CFTC to Enron,  allowed one of her hands to permit Enron to skirt certain CFTC regulations that were vital to Enron’s own interest, while the other hand put new non-regulated practices into motion as an Enron executive. 

Here, it should be noted that her term on the Enron board began about a  month after she left the CFTC. (2)

 Ms. Gramm replied that she sold the stock to fend off any conflict of interest allegation, since her husband headed the Senate Banking Committee. However, her "conflict of interest" perception was not troubled when Senator Phil Gramm mightily pushed through a 1998 law exempting Enron from several more federal regulations, over the objections of President Clinton, and in 2000 when her husband championed a bill through Congress that "exempted" energy commodity trading from "public disclosure"  (2).

Ms. Gramm is also a director of the George Mason University regulatory studies program. The program received a $50,000 boost from Enron, since the program teaches its students Enron’s brand of deregulation (5).

Around the time it became known to insiders that Enron was truly heading to hell in a hand basket, based on its nefarious accounting procedures, the ever popular Senator Phil Gramm surprised his constituents by announcing on Sept. 4, 2001 that he was not seeking another term of office. This was a stunning announcement, since analysts generally agree he would have won. In fact, the 2001 fund raising he had done prior to making the announcement had added $1.15 million dollars to a war chest of past campaign leftover funds, bringing the total to $3.27 million -- afforded plenty of money on which to run a successful reelection campaign. (7)

Further, Gramm declared just nine months before in January of 2001 that he had every intention of keeping  his senate seat for another 6 years. As his spokesman, Larry Neal, gloated: “[W]e are where we want to be, that's out at the front of the pack.” (8)

Prior to Gramm's decision, Neal also mentioned that President Bush was planning on attending a Gramm fundraiser in November of 2001, with the  aim of raising further funds for the Senator's 4^th term in congress. Neal added as proof of the senator's future commitment that Gramm  notified his Texas constituents in 1999 that he had every intention of running for re-election (8).

Gramm's reelection intention was sounded as a call to arms prior to the Senator’s official political welfare request for corporate quid-pro-quo handouts in his quest for another term in office. This is notable when we consider that once the Enron probe began in public, Senator Gramm said he would return portions of his latest round of unspent corporate contributions to their previous owners.

One must wonder if Phil Gramm’s true intent in returning some or most of his non-spent political contributions has to do with the notion that he suddenly wants to distance himself from being labeled a corporate hack senator-- or, more realistically, does his change of heart merely stem from a dutiful wish to return some of the cash meant for his now defunct re-election?

 The payouts, quid pro favors and character flaws of the Gramm's go above and beyond the current Enron probe. In fact they range from the Gramm-Stiles Savings and Loans relationship and its subsequent FBI/Senate investigation, to his untruthful claims that he supported issues where documents show otherwise. The latter occurred often enough that a term was coined for it:  "Grammstanding" (meaning to take credit for something that was successful, even though you actually opposed it). 

The Gramm's nexus with narcissism continues on and on, ad naseum. What is certain is that both Gramms teamed up with  other hired guns and they all allowed themselves to be willing toadies for Enron and Andersen. One can say some of the activities under investigation are perfectly legal, since insiders such as the Gramm’s allowed it to become legal. So, we must wonder about the true intentions behind a regulatory agency that gave special exemptions to a smoke and mirrors corporation, as well as the true intentions of a legislative and executive branch that acted in the same vein. 

What we know is government insiders who have a vested interest in the two large corporations under investigation created an environment which made it possible for these same corporations to cheat and deceive their employees and shareholders.          We also know that, currently, Enron is reported to have  "created ...874 subsidiaries—more than 30 percent of the company’s total 2,832 —registered in the Cayman Islands and other nations with weak bank disclosure laws. These offshore subsidiaries have enabled Enron to hide potentially billions of dollars from American government officials, shareholders and credit rating companies at a time when Enron is being sued by shareholders and investigated for possible fraudulent accounting practices" (9).

Will we ever find out how and why the books were cooked with Enron Energy?  Perhaps not. Too many crooks spoil the truth.  

RadioRote®2001

      Sources:                                                                                                   Each source is given a specific number which can be used to readily identify it.

1. Benjamin, Mark and Horrok, Nicholas  "Sen. Gramm's wife gets Enron Subpoena" UPI  1/13/2002

2. Herbert, Bob.  "Enron and the Gramms" New York Times 1/17/2002

3. "The CFTC Mission" http://www.cftc.gov/cftc/cftcglan.htm

4. Statement of Congressman Sanders on 12/6/2001 regarding: Enron Bankruptcy Case.  http://bernie.house.gov/statements/20011206181633.asp?print

5. Schemers, Robert.   "Enron is a Cancer on the Presidency."  The Nation.  1/02/2002

6. "Amalgamated Bank slaps suit on Enron top brass".                  Reuters. 12/06/01 

7.  GAMBOA, SUZANNE  "Gramm's election cash pile at or near top among senators seeking re-election" Abilene Press 08/02/01

8. Lindell, Chuck.  "Gramm's staff busy dousing  rumors About A&M  Post". Abilene Reporter-News   08/30/01            

9. "Evidence Indicates That O’Neill Helped Enron Hide Financial Condition" Public Citizen  1/18/02          Http://www.citizen.org/pressroom/release.cfm?ID=1000

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