Enron: The Smartest Guys in the Room (2005) Edit

A balance sheet or a cash flow statement with their earnings

A billion dollars of their stock in the preceding several months.

A certain kind of accounting known as mark to market.

A core cadre of Enron guys used to go on

A couple of Texas oilmen shared his views

A Democratic Senate forced FERC to impose regional price caps.

A flurry of buy outs in the corporate world...

A hundred and thirty two million dollars is what he made.

A little later today I will.

A lot of people around Washington D.C.

A lot of them were former nerds and including Jeff Skilling.

A new corporate vision.

A new way to deliver energy.

A pall fell over the table.

A reporter with Fortune magazine,

A thousand dollars?

A top executive at one of America's biggest power

A veteran trader, Mike Muckleroy,

About a million dollars or less in liquidity.

About all the ways that the fund is gonna profit.

About Enron the week before.

About is we're wheeling power out of California.

About September the eleventh.

About the president of the company,

About the risks that were taken.

About the traders' behavior.

About the ways human nature is steered by greed

About what the objectives of the company are

About who the guy was who led them there.

Absolutely. Don't you guys agree?

Absolutely. Don't you guys agree?

According to published reports,

Advantage of the government's decision

After Enron's best interests or their limited partners.

After he got a divorce from his wife,

After Skilling resigned, Enron's chairman,

After Valhalla Ken Lay maintained that

Afternoon or evening. And it was scary.

Again over the next year to eighteen months.

Ah, it was to sell energy services to end users,

Ah... at this time there has been a suicide note located.

Alan, with our sincere thanks and admiration,

All of a sudden began to play in the stock market,

All of the Enron executives were saying,

All sorts of questionable things;

All that money you guys stole from those

All the makings of a gigantic scandal.

All the various lies and artifices

All through the summer, the stock continued to decline.

All too easy.

Almost all of the Wall Street analysts

Almost everyone knew the story.

Almost heralding a new era of... of corporate enterprise.

Almost meek individual that maybe these...

Alright, we're down to questions.

Also know as the Valhalla Scandal.

Amanda Martin was one of the first executives hired

America's oldest accounting firm fell along with Enron

Americans are making a lot of money in stocks.

Amounts of consternation all across Wall Street

An arbitrage opportunity has been defined to me

An attorney from Vinson & Elkins,

An established way throughout the 1990's.

An experimental subject and a real experimental subject.

Analysts in April, 2001.

Analysts were routinely getting large bonuses

And a creative trader is a trader

And a trail that led from the company's treasurer,

And about mid way through the session...

And affected everything about how Enron did business.

And afterwards,

And all the guys that were buyin' all this Enron,

And all the top people were movin' their money then.

And all the trinkets

And all the trophies of the world,

And all we know is, they're always good.'

And America's major banks put up as much as $25 million each.

And Andy Fastow turned around and looked at my editor and me,

And Andy Fastow were at working Wall Street,

And Andy is William Hurt.

And appropriate manner possible.

And as a consequence get a five million dollar bonus.

And as a result the price of electricity is

And as a result,

And as long as Enron continued,

And as such he spent hours poring over the new rules

And as that culture emerged,

And as the head of these funds.

And at that point it was no longer

And Barbara's too, that's what really matters.

And before long,

And by necessity,

And Causey and everybody,

And clearly had in mind that things could be better...

And clearly with a company that size

And Cliff came over to my house

And Cliff's issue had nothing to do

And come up with a reason to go down.

And competition in the service of passing on our genes.

And conspiracy to defraud investors.

And convened a meeting of friends

And decided to change himself.

And delivered it herself.

And end of year cash flows.'

And estimated how much they, the two rogue executives made

And everybody on Wall Street was looking for the next big thing.

And everything will turn out fine.

And Fastow had good reasons for not wanting to look bad.

And file workers were frozen.

And find you no matter where you go.

And fixated on a massive public relations campaign

And had a lunch meeting.

And had gone up over 50 percent the year before that.

And had no clue

And he busted a lip and required a bunch of stitches.

And he certainly wanted to please the boss.

And he didn't even have to be that smart,

And he helped promote Lay as

And he idolized Jeff Skilling.

And he just kept saying to me,

And he just took the piece of paper

And he knew that we were in a massive hole.

And he liked other people he thought of as visionaries.

And he looked back at me and he said,

And he looked out the window

And he pushed aggressively in Washington to change all of that.

And he said 'They're calling us child molesters.'

And he said,

And he says,

And he started working out, lost a lot of weight.

And he talks about the informational advantages

And he usually brought some of the traders along with him.

And he was a wonderful, wonderful man.

And he was ordained a Baptist minister

And he would do whatever it took to get them.

And he, throughout his life, worked several jobs as a kid

And help her understand the questions that she was asking.

And here you had Enron,

And high above each with a private staircase,

And his answer was, 'One word, California.'

And how completely artificial

And how different it could be from the way

And how you fit with those objectives.

And I believe we have it ready to go.

And I can't get into the details.

And I don't see that it's at all inconsistent that

And I don't want us to ever be satisfied

And I doubt that's what you're focusing on.

And I feel like I'm being consumed by this company.'

And I guess he had a little more foresight than we did.

And I guess they,

And I had come over to talk about whether or not

And I have to believe that,

And I kept pointing out, well,

And I often think about how clear my memory was about that event.

And I remember I made the comment to him,

And I remember saying to an investor

And I said, 'if you do that,

And I said, 'Jeff, you've got a real problem.

And I spill a little gasoline on myself

And I think it was the battle of holding these

And I think that's something that Enron knew better

And I think the flags

And I thought we didn't have to take over every plant,

And I told him that one of two things was going to happen.

And I want to show you a tape.

And I was concerned about the energy crisis

And I was probably too naive to suspect that it was anything...

And I was trying in the early days

And I'll never forget this.

And I'm excited.

And I'm not an accountant.'

And I'm saying, 'with all due... due respect,

And if deregulation were to collapse,

And if I had done enough homework,

And if I had questions, I didn't ask them,

And if I step on somebody's throat on the way

And if that meant leaving bodies behind him,

And if they came to this administration looking for help

And if they were fired what he could lose.

And if we had anything to do with this,

And in the middle of all this,

And it can happen again.

And it couldn't have just been a few executives

And it fed the whole macho culture of the place.

And it kills the scent.'

And it was all glass enclosed, and you would walk by there,

And it was appropriate?

And it was driven, very clearly,

And it was just almost all the time it was empty.

And it was just... it was very eerie.

And it was that he be allowed to use

And it was... it wasn't anything close to that.

And it wasn't clear from Enron's financial statements that

And it went lower and lower and lower.

And it would allow Fastow to conjure

And it's really a human tragedy.

And its banks for 20 billion dollars.

And its shareholders or with common sense

And Jeff Skilling one day kinda woke up

And Jeff Skilling was a person with the biggest ideas of all.

And Jeff understood those rules better than,

And let them just have a quote free market

And looking at it in a mirror and seeing

And looking, you know, it was, to me,

And Lou Pai dispatched his enemies

And Lou said, 'oh, I've got a secret'.

And M Smart, well so that's Maxwell Smart.

And managed to save the company.

And most were performing terribly.

And nobody there,

And now it's time we terminate Gray Davis.

And of course all hell broke loose.

And of course, as... as you said,

And once in place,

And one of them, as an example, was India.

And our chief accounting officer

And over that time,

And over time they became victims of their own hubris,

And Pai is out in Hawaii somewhere,

And pensions and then it peaked.

And people in far inferior positions to you

And pointing at the gun, the gun, the gun.

And Portland General's position on the west coast

And pour over maps of the western energy grid.

And probably gambling way beyond their limits.

And put it back on line.

And realize that you may have seen your shadow.

And regulations of government.

And roughly ten percent of people had to be a five.

And rumored as a possible replacement for Davis,

And said, 'I don't care what you write about the company,

And she had this wonderful article saying,

And she said, 'well, that's fine.

And so he set up this experiment.

And so it's like taking so much promise and possibility

And so when you're being evaluated by that group,

And some friends a bonus,

And sooner or later, I'll get you.'

And strongly argued against the imposition of

And that I was not ethical

And that in and of itself,

And that is, if it looks too good to be true,

And that made me angry.

And that took everyone by surprise.

And that was the beginning of a major cog

And that we were all being let go.

And that when you came up with an idea,

And that whole time since then, I put the maximum

And that's of course the suicide of Cliff Baxter.

And the best way we can is to be good citizens.

And the business is doing great.

And the captain of the ship was?

And the dancers and the tap dancing

And the deal with Blockbuster soon collapsed.

And the Enron traders never seemed to step back and say,

And the erratic behavior of its CEO

And the fact that he'd been sued civilly

And the internet technology stocks,

And the last lifeboats had long gone

And the maestro of all that at Enron was Andy Fastow.

And the next day we sat in this small,

And the other of feeling like it was all crumbling away.

And the people who were working

And the price for electricity went through the roof.'

And the reason he gave was that this was

And the representations of the company's management.

And the scientist only says

And the shocks increased with the number

And the technology works.

And the way he was doing it

And the West Coast traders made

And the world's sixth largest economy.

And then a week later someone else does it up

And then cash in their multi million dollar options.

And then deciding not to drink it himself.

And then he said, 'asshole'.

And then hollered up and said,

And then it just started going down,

And then Jeff Skilling took questions.

And then quite audibly

And then the next day...

And then they still keep full speed going.

And then, of course, we had a leader who imbued us

And there was no other explanation.

And there was no way anybody could prove that

And there were about a dozen assets that had been hedged

And there were all sorts of other problems

And there were plenty of them.

And there's a long office.

And there's this competition with the news...

And there's twenty minutes to get out.

And these were disclosed

And they are looking at the corporate culture itself

And they believed it was appropriate.

And they bump into a couple of icebergs,

And they did it, and they did it,

And they did it. And they made so much money.

And they should be.

And they took a particularly memorable trip to the Baja

And they were saying that we're going to sell

And thirty eight billion dollar budget deficit,

And this emperor was pretty powerful.

And this just caused unbelievable

And those people were supposed to be fired.

And to be reviewed and to be superior...

And to Skilling's future.

And to start a business from scratch.

And tucked it under the pile of papers on his desk.

And turned it into an ideology.

And twenty nine thousand people lost their jobs.

And very... it left it open to manipulation.

And wanted things to be better.

And was her article critical?

And was the guy out selling deals to energy companies.

And was the sole agent of the apocalypse,

And was very excited but within a year

And was very reliable was all of a sudden

And we all had some really nice looking 401ks

And we could not access it.

And We had got Mark to market accounting treatment.

And we were just now on the sinking ship.

And we're fucking making half a billion dollars for Enron.

And we've been absolutely upfront with the analysts.

And we've really pulled out all the stops.

And what came out later that was so bad,

And what can we do to prevent this sort of thing

And what's he have to show, at the end day,

And wiliness could out think the way

And yet it was reporting profits.

And you can take the videotape to mean

And you can tell from the response of the stock market

And you have to cheat a little more to

And you know I didn't ask myself why enough;

And you make appointments to the Federal Deregulatory Commission.

And you mentioned he was your best friend

And you really can lose your soul in the midst of this.

And you want us to believe

And you were gonna do whatever you had to do to stay there.

And you're going to go far, my boy.

Andersen shredded more than one ton of paper.

Andy as Chief Financial Officer of Enron,

Andy Fastow pled guilty to conspiracy to commit wire fraud.

Andy Fastow was Enron's chief financial officer.

Andy Fastow would go; Ken Rice would go.

Andy Fastow would not have put his hands

Andy Fastow, that betrayed that trust

Andy has operated in the most ethical

Andy put me in charge of this asset listing.

Andy was very young.

Andy, in many ways,

Andy, in many ways,

Announcement was going to take place.

Another day, another record.

Any analyst who didn't buy the company line

Anything could be accomplished And then the bottom line

Anything Enron told them.

Anything more than that.

Apparently we have all been wrong,

Appeals for federal price controls.

Appeared in a conference call with

Are not the most tightly controlled,

Arnold Schwarzenegger.

Arthur Andersen and our lawyers

Arthur Andersen had signed off on it.

Arthur Andersen signed off, and the SEC approved it.

Arthur Andersen,

Arthur Andersen,

Articles revealing Fastow's murky deals.

As a financial services company in effect,

As a result of deregulation?

As any opportunity to make abnormal profits.

As being a very stable place

As collateral for a lot of these things.

As doubts began to surface about the company

As Enron legend... has it,

As far as I was concerned.

As far as integrity and truthfulness.

As far as the operation's concerned.

As I said from the very beginning of my administration,

As I understand it, you called him an asshole.

As long as a company met or exceeded

As long as you can keep the perception going on,

As soon as the numbers got high enough.

As the fraud is perpetuated,

As the prime place to experiment

As Web based trading boosted its wholesale energy business.

As you can see foresee,

As you would expect,

Asked by the Bush administration to join his administration.

Asked him a very important question,

Assiduously stayed away from.

At a company called Enron Oil?"

At both the wholesale and retail level nationwide."

At Enron that made this happen.

At Enron,

At Enron.

At Lay and Skilling and Fastow

At least reported profits at the company.

At least when the Titanic went down,

At the board meeting,

At the end of it he says 'Well,

At the peak I had about 348 thousand.

At the right fuckin' price.

At the same time.

At the time, Gray Davis was a likely candidate

At the very moment Ken Lay was talking to employees,

Auditors were brought in as well,

August fourteenth 2001,

Back that Enron,

Baddest house in town.

Based on the protection afforded me

Baxter was a very bright guy,

Became an enemy of Enron.

Because a free market is God

Because all it had to do was do nothing

Because Enron needs the capital, number one.

Because he needs to go to Hollywood.

Because he sold all his stock in Enron

Because he understood that

Because he was mentioned in my memos

Because he'd cashed in for about

Because I didn't want to know the answer.

Because I had informed the company

Because I had told him myself.

Because I hadn't done enough homework.

Because I think people lost their sense of morality.

Because I thought,

Because it was all too easy;

Because it's all about the rationalization

Because it's going to be a long time

Because Ken Lay did in fact know about this thing.

Because like most things that end terribly,

Because Lou Pai was not a man to trifle with.

Because no human being should be put in a situation where,

Because nobody could fail.

Because otherwise some lesser man was taking the profits

Because people perceive it as a story

Because people thought,

Because stock prices were just going up and up and up.

Because the numbers just didn't add up.

Because they thought it was this traditional and,

Because this LJM partnership existed

Because this was,

Because you know. I mean, that's what we do.

Because you make money by taking risk.

Become the largest marketer of electricity and natural gas

Before he died,

Before I have to be in a meeting.

Before scruples rather than reacting

Before we trust you again.'

Began the unraveling of Fastow's complex partnerships.

Begin to cheat a little bit.

Begin to convince the ringmaster,

Behind Fastow's partnerships

Being CFO of Enron.

Belden's strategies to game the California market

Best thing that could happen is fucking an earthquake.

Between a sidewinder and a timber rattlesnake.

Between legislators and free market advocates.

Beyond the financial issues,

Blame the energy crisis on Gray Davis?

Bonuses to executives based

Borget and Mastroeni were summoned to Houston.

Borget was convicted of fraud, and spent one year in jail.

Boy, I didn't expect that.

Broad based economic progress in the shortest period of time

Brought them together at the Peninsula Hotel

Burn, baby, burn.

But a lot of who Cliff was tied up in how

But as far as any other indications of why

But at times designed, advanced and profited from them.

But Enron had failed to see something basic.

But Enron managed to disguise that fact.

But Enron Oil always seemed to win,

But for the second day in a row,

But he had one specific condition

But he really did remake himself

But he took another 30 million out,

But he was a manic depressive.

But he's also a guy who is radically different

But how do you keep your wife

But I can tell you that there isn't a legislator alive

But I didn't mention them in the story I wrote,

But in other places in the world, in India,

But in reality it's a story about people

But in reality, profits weren't going up;

But in the case there was at least one,

But in the end, I couldn't prove that

But it made them feel good as men.

But it will finally put these issues to rest.

But Jim Chanos mentioned to me that I should take a closer

But Ken Lay had a trump card.

But Ken Lay had known all along

But Mr. Skilling you don't believe that.

But no one who was supposed to say no said no.

But now we do.

But one investor saw something in Enron's numbers

But people who knew him said he became

But regrettably,

But thank you.

But that wasn't the case at all.

But that's got all the earmarks of being a run.

But the real money was made by betting

But then a question was asked to Tom White,

But then it was arrogance,

But then somehow, miraculously,

But then the next quarter comes along

But then their luck changed.

But there isn't any doubt

But there was one episode, early on,

But they don't have to show the debt on the balance sheet.'

But they pitch it almost as a new economic religion.

But to sit down with the reporter on that story,

But two rolling blackouts.

But we all thought that Ken Lay was leaving

But we couldn't.

But we know that Ken Lay's pitch was

But we're managing them.

But what was clear is that something didn't add up.

But when they do survive, it's when they come clean.

But while he was governor of Texas

But with the magic of mark to market Enron

But within a week I was meeting with Ken Lay.

But you don't see anything wrong.

But you have to be willing to say

But you have to take a long, cold look at yourself and say,

Buy recommendation and loves us at the same time

By acting fast, Muckleroy bluffed the market,

By all accounts, Enron was soaring.

By and large, the analysts admitted to us,

By Enron's collapse, Ken Rice had sold 53 million.

By Fortune magazine as the most innovative company in America.

By giving Jeff a call,

By hiding the fact that Enron was

By Jeff Skilling and became part of his inner circle.

By making wild bets on the market.

By pretending to purchase an existing Enron asset

By the employees. I mean, this was, you know,

By the end of the quarter.

By the end of the year 2000,

By the end, the traders ran Enron.

By the Enron bankruptcy than Ken Lay.

By the name of Andy Fastow.

By the now Democratic controlled Senate where here...

By the profits every single quarter.

By the time they agreed to meet our price,

By the way, everything is going to be just fine.

California was selected by Enron

California, it never deregulated.

California's deregulated system was a bizarre compromise

California's Electric Utilities

California's system was little more than a joke.

Calling Cliff Baxter or yourself or anybody

Calling publicly an investor an asshole? '

Calls Ken Lay, Kenny Boy?

Can you believe that?

Can you bring it back up in 3 or 4 hours?

Capitulating to the demands of the energy

Captains of a ship too powerful to ever go down.

CEO's generally,

Charting the futures of energy and power.

Cliff and Andy have had a... they didn't like each other.

Cliff Baxter 35 million.

Cliff Baxter committed suicide.

Clique that even the principal doesn't dare to reign in.

Come work for us.

Commit they did. And why not?

Committee will come to order.

Companies and utility companies, needs to put his foot down.

Companies rarely get away with cooking the books.

Companies received a raucous welcome in San Francisco tonight.

Compare that to the lineman who worked for a staid,

Consumers in California are angry.

Control's rotating attitudes are being implemented.

Could I predict a phony energy crisis

Could just yank the California economy

Could not release a balance sheet

Could once again near collapse.

Could see cracks in the walls,

Could we have a word with you real quickly?

Damn expensive to the customers.

Dark, windowless conference room for about three hours,

Dave, old buddy, let me just tell you.

Denigrating or tainting you,

Deregulation's Ambassador at Large.

Despite the rumors, despite the speculation,

Despite what the people of California

Details didn't interest Lou Pai.

Did Ken Lay and George Bush have a political agenda to

Did nearly as well.

Did you convert stock worth 66 million dollars?

Did you have any knowledge that this was happening?

Did you have many conversations with him?

Different, innovative;

Do deals with himself.

Do really bad things?

Do the new cheating to make up for the old cheating.

Do the weather guys get punished here

Do you believe that he didn't know?"

Do you like best, Jeff? '

Doesn't your wife then think

Don't just resign out of the blue

Don't look now but there's something funny going on

Drawn down 90 million dollars in the previous five days.

Dreaming about the world of business

Due to a classic run on the bank.

During his appearance at Commonwealth Club.

During the height of Wednesday's blackout,

Dynergy and Reliant stole from us and get it back to you.

Early on, George Bush, Sr.

EES was headed for a crash landing.

Effect the price of power? '

Effort called Enron Energy Services.

Either one of the trading partners

Either you get somebody who is on board with us as a strong

Enough to circle the Earth.

Enron and that he had been

Enron announced massive financial restatements.

Enron announcing a buy out of Portland General.

Enron declared bankruptcy.

Enron did it, and did it in a big way.

Enron essentially was losing money on a cash basis,

Enron had been the largest corporate contributor

Enron had vast natural gas operations all over the world.

Enron has found a way to stay ahead of the curve.

Enron hit the National psyche.

Enron is a big winner today

Enron is a company...

Enron is sort of a black box...

Enron is using its knowledge of trading gas

Enron itself was a house of cards

Enron loved analysts' strong buy recommendations.

Enron made sure that the joke would be on California.

Enron mounted a campaign to capture

Enron on line will change the markets

Enron on line, a fabulous, fabulous story.

Enron paid its advisers well.

Enron paid out multi million dollar

Enron posted a 30 percent jump in second quarter profits,

Enron should not be viewed as an aberration,

Enron was especially a big deal by the end

Enron was just recently chosen, again,

Enron was running out of ways to make

Enron was the nation's seventh largest corporation,

Enron would actually go bankrupt.

Enron would become a kind of stock market for natural gas.

Enron, buy stock today.

Enron, I'd never heard of 'em until they were gonna buy us.

Enron's accounting firm.

Enron's CFO, Andy Fastow,

Enron's law firm, Vinson & Elkins,

Enron's plant produced.

Enron's shareholders are suing Enron

Enron's stock began to fall.

Enron's traders were like the super powerful high school

Enron's traders who had erupted in cheers

Even ran a note up to Skilling, telling him to apologize.

Even the person with very little disposable income

Every day people call saying

Every week you have to come up with new ideas.

Every year, every day,

Everyone had a huge stake in seeing the stock price go up.

Everyone had their hand out at the table.

Everyone was on the bandwagon.

Fabric swatches for the new G5 45 million dollar corporate

Faces possible recall.

Facing 500 million in losses,

Failure was not an option.

Fastow can be seen selling LJM

Fastow created hundreds of special companies

Fastow had gambled Enron's future

Fastow had to figure out a way to keep the stock price up

Fastow knew what kind of deal he was offering as Enron's CFO.

Fastow was letting them gamble with Enron's chips.

Fastow was using Enron's stock

Federal price caps in California.

Federal Regulators are being pressured to act

Feel the tremors, feel the windows rattling,

FERC, the federal agency which regulates energy in America,

Fifty percent of the subjects were

Fighting against this. And it'd be alright.'

Finally. Great. Good to see you.

Financial condition.

Financial statements,

Fire crews had to free people trapped in elevators.

First raised questions about Enron's financial condition.

First, they presented falsified bank records to Enron.

Flew to New York at Enron's expense, to sit down,

For a small group of friends and customers.

For any of us involved.'

For any values except one, making money.

For awhile he was located on the 7th floor.

For decades kept all their money in the company

For Enron International.

For his years of hard and decent labor?

For maintenance on a single day

For many many commodities.

For Pai, it was all about the numbers.

For the deregulation of California's energy industry,

For the sixth year in a row

For weeks before a quarterly report

For X dollars per kilowatt.

Forget about this pipeline stuff,

Forty five dollar range.

Forty five thousand megawatts.

From 7 PM to 7 AM we're paying for bandwith that

From a hundred to a hundred and fifteen dollars a share.

From a seemingly legitimate source.

From about 10 billion of assets to

From choice and competition.

From Enron over the last four years.

From happening again.

From his LJM partnerships.

From several hundred million dollars down to

From smelling the strippers' perfume on you?

From the fraud and put it in their pockets.

From the idea that some greater man

From the investment banking departments to bring

From the standpoint of all the money

From the standpoint of Enron stock,

From when it was frozen to when it opened up,

Fueling wildfires and fears that California's strained power grid

Gained more than 100 points to close at 7895.81,

Gas in and gas out.

Gave Enron access to the newly deregulated market of California.

George W. Bush was only too happy to

George W. Bush, became president

Get out of here.

Get out. Go to jail.

Get rid of them and you know what,

Getting rich? Trying to.

Getting them off of Enron's books,

Go after him.'

Going through the various aspects of the company's business.

Good morning. How are you?

Good.

Got only 30 million in stock proceeds from Enron,

Government is not the solution to our problem.

Government is the problem.

Governor Pete Wilson and the California legislature

Gray Davis has terminated opportunities

Gray Davis, beset by an ailing economy

Great quarter and a great year in India.

Had a harder time admitting things were wrong.

Had been built over a pool of gasoline

Had built their own plush staterooms.

Had come up with in the past.

Had gambled so recklessly.

Had his eye on John Olson