Congress yesterday turned its attention to the role banking giants Citigroup and JP Morgan Chase played in the Enron scandal.
Citigroup and JP Morgan Chase shares went into free fall as congressional investigators showed how the two biggest US banks made $200 million in fees for transactions that helped Enron and other energy companies boost their cash flow and hide debt.
Congressional investigators Tuesday laid out evidence that the banks were knowing participants in Enron’s efforts to make its debts appear as trades through the use of “prepaid” energy contracts.
Senior executives from both banks defended their actions, telling the congressional inquiry that “prepay” transactions were legitimate financing structures used widely on Wall Street.
But the chairman of the subcommittee on investigations Senator Carl Levin said the banks “knew what Enron was doing, assisted Enron in the deceptions, and profited from their actions”.
- Charlie Cray, director of the Corporate Reform Campaign at Citizen Works.
- Dean Baker, co-director of the Center for Economic and Policy Research.