Message-ID: <18024647.1075841138815.JavaMail.evans@thyme> Date: Fri, 28 Dec 2001 12:21:09 -0800 (PST) From: m..schmidt@enron.com Subject: Enron Mentions Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Schmidt, Ann M. X-To: X-cc: X-bcc: X-Folder: \ExMerge - Martin, Thomas A.\Deleted Items X-Origin: MARTIN-T X-FileName: tom martin 6-25-02.PST Trickier Times for Europe's Banks in 2002 --- Drop in Investor Confidence A= nd Rise in Bankruptcies Set to Hurt Earnings The Wall Street Journal, 12/28/01 Great Expectations: Did Greenspan Push High-Tech Optimism On Growth Too Far= ? --- Some He Won Over at Fed Have Second Thoughts; At Stake: Interest Rate= s --- Bank Took `a Bit of a Risk' The Wall Street Journal, 12/28/01 Could've Been Worse The New York Times, 12/28/01 JDS Set the Record, but It May Not Be 2001's Biggest Loser The New York Times, 12/28/01 LETTERS TO THE EDITOR - Power traders necessary for efficiency. Financial Times, 12/28/01 Commentary An Enron Tale of Strange Bedfellows Los Angeles Times, 12/28/01 Despite the Shock, Davis Kept the Lights On Los Angeles Times, 12/28/01 IN BRIEF / ENERGY Enron Bankers Delay Deadline for Financing Los Angeles Times, 12/28/01 USA: Enron stock has rising value for collectors. Reuters English News Service, 12/28/01 USA: Bush says 'deeply concerned' about Enron collapse. Reuters English News Service, 12/28/01 Enron Seeks Bankruptcy Court Approval for Asset Sales by Year-End Dow Jones Business News, 12/28/01 Enron Seeks Court OK For Asset Sales By Year-End Dow Jones News Service, 12/28/01 Enron Wins Court Approval for $309 Mln of Asset Sales (Correct) Bloomberg, 12/28/01 Enron's Woes Cost New York Pension Funds $109 Mln, Paper Says Bloomberg, 12/28/01 Bush `Concerned,' Says Government Must Look Into Enron Collapse Bloomberg, 12/28/01 International Trickier Times for Europe's Banks in 2002 --- Drop in Investor Confidence A= nd Rise in Bankruptcies Set to Hurt Earnings By Marcus Walker Staff Reporter of The Wall Street Journal 12/28/2001 The Wall Street Journal A6 (Copyright (c) 2001, Dow Jones & Company, Inc.) FRANKFURT -- After a tricky 2001, European banks could find life getting to= ugher still in 2002.=20 Banking analysts say a combination of economic stagnation, rising corporate= bankruptcies and low confidence among retail investors is likely to hurt m= any banks' earnings in the coming year. Since mid-2000, when the U.S. economic slowdown spread to Europe -- and in = particular to its largest economy, Germany -- European banks have tried to = reassure investors about their corporate clients' credit-worthiness. Althou= gh banks in the United Kingdom, France and elsewhere have had to set aside = only modest amounts to cover bad loans so far, loan-loss provisions were pa= rtly responsible for quarterly operating losses among some of Germany's big= gest banks. Now the fear is that the German syndrome will spread.=20 "The asset-quality downturn has only just started," says Mark Hoge, an anal= yst at Bank of America in London. So far, he says, the global economic down= turn has pushed only a small number of weak or heavily indebted companies i= nto bankruptcy or financial crisis, such as energy trader Enron Corp. and S= wissair Group. The next stage will be loan defaults by small and midsize co= mpanies, which form the backbone of several European economies, including G= ermany's. "You will get a broad deterioration of the bread-and-butter lendi= ng business next year," he says.=20 European banks have as much as six trillion euros ($5.3 trillion) of loans = outstanding, and next year they are likely to lose about 38 billion euros o= f those assets, or 0.73%, according to Davide Serra, a Morgan Stanley analy= st in London. That is three times as high as in the past three to four year= s, but historically speaking, it is still a low figure. In the recession of= the late 1980s and early 1990s, banks wrote off over 1% of loans. Still, M= r. Serra says the impact of bad loans is severe: Every 0.1% of loans writte= n off reduces European banks' profit by 5% to 6%.=20 Banks could suffer if troubles at indebted large corporations multiply. In = the past year, business fortunes collapsed rapidly at a small number of hig= h-profile companies, including airlines Swissair and Sabena and telecommuni= cations-equipment maker Marconi PLC. German bankers are growing nervous tha= t the heavy debts of Bavarian media company Kirch Group could trigger the n= ext emergency restructuring.=20 The number and impact of large corporate collapses are "a lumpy phenomenon = that you can't forecast in a systematic way," Mr. Serra says. Corporate fai= lures tend to lag behind economic slowdowns by 12 to 18 months -- which mea= ns they are likely to rise in Europe next year, he says.=20 Many of Europe's banks have been trying to reduce their reliance on traditi= onal corporate lending by expanding into asset management and retail broker= age activities. Two years ago, it looked as though Europeans' newfound enth= usiasm for buying stocks, including those in high-profile privatizations an= d technology industries, would give the region's banks the new source of no= nloan revenue they were seeking. But a generation of first-time retail inve= stors learned a lesson in risk when the tech bubble burst earlier this year= .=20 Europe is still expected to develop a U.S.-style equity investing culture o= ver time, driven in particular by the growth of a long-term savings market = as Europeans move to private pension funds. The Jan. 1 introduction of euro= notes and coins will create a pan-European financial-services market over = time. But for the moment, Europeans have fallen out of love with stocks, as= shown by the depressed earnings of brokerage and funds units at most Europ= ean banks in 2001.=20 Analyst don't expect investor confidence to return quickly. John Leonard, a= n analyst at Schroder Salomon Smith Barney in London, compares the situatio= n to the U.S. in the year after the stock-market crash of 1987, when retail= investors' losses made them wary of returning to the fray even after the f= irst signs of recovery.=20 Fear of getting involved in troubled banking markets could also keep the U.= K.'s banks on the sidelines, despite their long search for European partner= s. Lloyds TSB in particular has long talked about a European merger and has= held advanced but inconclusive talks during the past year with the Benelux= -based insurance and banking group Fortis NV and Germany's Deutsche Bank AG= , according to people familiar with the matter. But Lloyds's shareholders a= re likely to be skeptical about a deal that would mix up the banks' relativ= ely robust earnings in the U.K. retail market with the problems spreading a= cross Europe.=20 Opportunities for European deals in the coming year appear scarce. A foreig= n bid for a French bank such as Societe Generale SA would be highly sensiti= ve amid France's presidential election campaign, for example. Germany's fal= tering economy makes its banks unappealing.=20 "You would really need your head examined to be buying into something like = Commerzbank in a recession in Germany when you don't know how long it's goi= ng to last," says Mr. Hoge of Bank of America.=20 --- Bank Books Fundamentals among banks doing business in Europe in 2001 Market % Change Estimated Value in Since 2001 Return Billions Jan. 2001 on Equity HSBC $112 + 8% 16% UBS 67 +35 13 Royal Bank of Scotland 64 +25 15 Lloyds TSB 57 +28 22 Barclays 53 +31 19 Credit Suisse 49 +14 8 ING 47 -20 8 Deutsche Bank 42 + 6 7 HBOS 41 +55 15 BBVA 40 +10 12 Source: Morgan Stanley research estimates Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Great Expectations: Did Greenspan Push High-Tech Optimism On Growth Too Far= ? --- Some He Won Over at Fed Have Second Thoughts; At Stake: Interest Rate= s --- Bank Took `a Bit of a Risk' By Greg Ip and Jacob M. Schlesinger Staff Reporters of The Wall Street Journal 12/28/2001 The Wall Street Journal A1 (Copyright (c) 2001, Dow Jones & Company, Inc.) WASHINGTON -- Five years ago, Alan Greenspan began pushing a reluctant Fede= ral Reserve to embrace his New Economy vision of rapid productivity growth = and rising living standards.=20 Today, Fed policy makers are debating whether they went too far. The answer= could help determine whether the current recession marks a temporary aberr= ation in an era of swift growth, or whether the rapid growth of the late 19= 90s itself was the aberration. Mr. Greenspan hasn't lost the faith. "New capital investment, especially th= e high-tech type, will continue where it left off," he declared in a speech= last month at Rice University in Houston. He ignored the collapse of so ma= ny symbols of the 1990s boom, including Enron Corp., the sponsor of the "di= stinguished public service" award he received that evening. "The long-term = outlook for productivity growth, as far as I'm concerned, remains substanti= ally undiminished," the Fed chairman asserted.=20 But others at the central bank -- many of whom only belatedly embraced thei= r leader's optimistic views at the peak of the boom -- now have re-embraced= a less-sanguine view. During 2001, the Fed's research staff has steadily m= arked down its estimate of the rate at which the economy can grow during th= e next two years without sparking inflation. The economic aftermath of Sept= . 11 has only darkened the picture further, as companies shift resources aw= ay from boosting efficiency and toward improving security.=20 Recent events have "forced a reassessment of the prospects for longer-term = productivity growth," Fed governor Laurence Meyer said in a relatively down= beat speech in St. Louis just two weeks after Mr. Greenspan's sunny comment= s in Houston. Where Mr. Greenspan emphasized the prospect of a healthy rebo= und in computers, Mr. Meyer stressed that the "frenzied pace of investment = in high-tech equipment [in the late 1990s] now appears to have been unsusta= inable."=20 The exchange between Messrs. Greenspan and Meyer signals an intellectual co= ntest at the Fed with huge stakes. If the buoyant Greenspan view prevails, = the Fed might hold down interest rates longer, until strong growth resumes,= not fearing a flare-up of inflation. The gloomier perspective could lead t= he Fed to raise rates more quickly to avoid fueling inflation -- or reinfla= ting a bubble -- with expectations of brisk growth.=20 The Fed's outlook also matters for congressional decisions on taxes and spe= nding. Mr. Greenspan's assurances of a rapid-growth future helped create a = consensus in Washington earlier this year about the inevitability of large = federal budget surpluses -- and the affordability of President Bush's big t= ax cuts.=20 The Fed's growth debate amounts to an argument over what kind of economy Am= erica can look forward to once the recession ends: one of rapidly rising li= ving standards, low inflation, low interest rates, and federal budgets in r= easonable balance -- like that in most of the 1950s and 1960s -- or a much-= less-robust version.=20 Mr. Greenspan's contention -- that since 1995, the U.S. has shown the abili= ty to expand productivity at an accelerated rate, without demand for goods = and services outrunning supply and igniting inflation -- is now so widely a= ccepted as to seem mundane. But just five or six years ago, it was consider= ed revolutionary. Mr. Greenspan was one of the first respected analysts to = make the case.=20 The key to this whole discussion is productivity, which economists define a= s a worker's -- or nation's -- output, divided by the relevant number of ho= urs of labor. The pace of growth in gross domestic product is essentially e= quivalent to the productivity-growth rate added to the rate of expansion of= the labor force (which economists assume to be about 1% a year).=20 As far back as 1993, Mr. Greenspan has said, he noted a surprising surge in= companies' capital-goods orders. He speculated that companies were enjoyin= g unusual gains in productivity, or efficiency, from the new equipment, muc= h of which was high-tech. As his conjecture hardened into conviction, he co= ncluded the greater productivity would permit the economy to grow faster wi= thout demand getting out of sync with supply. The Fed could hold back on ra= ising rates longer without fear of fueling inflation.=20 Alan Blinder, who challenged the central bank's high-rates stance when he j= oined the seven-member Fed board as vice chairman in 1994, was pleasantly s= urprised by Mr. Greenspan's switch to endorsing lower rates in 1995. But Mr= . Blinder was nervous about the chairman's reasoning. At a Fed policy meeti= ng in December 1995, Mr. Blinder backed Mr. Greenspan's bottom line on inte= rest levels -- but "without signing onto your brave new world scenario," ac= cording to official transcripts of the gathering.=20 Mr. Meyer, an economic forecaster and consultant who joined the Fed in 1996= , was uncomfortable with the low-interest-rate approach and the Greenspan n= otion that basic changes in the economy would allow it to grow faster witho= ut sparking inflation. In a January 1998 speech, he branded the prior year'= s growth spurt "unsustainable."=20 The Fed's own research staff had Greenspan doubters. Economist Daniel Siche= l's 1997 book, "The Computer Revolution," punctured tales of companies usin= g new technology to boost workers' productivity to permanently higher level= s. Mr. Sichel crunched numbers to show that for all the attention computers= received in the 1990s, they represented such a tiny portion of the nation'= s capital stock -- 1.1% -- that they couldn't possibly make a big differenc= e.=20 In their internal forecasts during most of the 1990s, the Fed staff argued = that the economy couldn't average overall growth of much more than 2.5% a y= ear without kindling inflation. The problem for the staff and other Greensp= an skeptics was that Commerce Department estimates of actual annual growth = for 1996, 1997 and 1998 were, respectively, 3.6%, 4.4% and 4.3% -- while in= flation remained dormant.=20 Michael Prell, who ran the Fed's research department during this period, tr= ied to explain much of the high overall growth rates as a function of tempo= rary factors, not new efficiencies. Perhaps, he argued to colleagues, compa= nies were coaxing more output from their workers simply because the compani= es couldn't hire quickly enough.=20 A member of the bank's rate-setting committee skeptically attributed a port= ion of the growth rates to employees "running to the elevators": Workers at= companies meeting heavy customer demand were simply exerting themselves mo= re, the official told colleagues. This wasn't a fundamental change, the com= mittee member said. It was a temporary phenomenon that would taper off as t= he economy inevitably cooled.=20 Outsiders also attacked the Greenspan view. At a meeting the chairman hoste= d in April 1999, Paul Romer, a Stanford University economist, displayed a c= hart of productivity during the past 100 years. "People in Silicon Valley a= re talking about hockey-stick growth curves," compared with the 1970s and 1= 980s, Prof. Romer recalls telling the attendees. But in fact, the improveme= nt of the previous three years wasn't such a historical anomaly, he pointed= out. The U.S. had racked up even more impressive growth rates in the 1960s= .=20 Mr. Greenspan didn't confront Mr. Romer at the time. The chairman rarely, i= f ever, engaged doubters directly in debate. Instead, at policy meetings, h= e periodically pointed out how frequently in-house forecasters' projections= in the late 1990s had failed to match subsequent actual growth and inflati= on figures, according to people in attendance.=20 But gradually, current and former Fed governors and staff members say, they= found the views he advocated harder to resist. As Mr. Greenspan's fellow p= olicy makers understood it, his pitch was that the central bank should give= his optimistic perspective a chance. "The question was whether or not we s= hould sort of take a bit of a risk," recalls Fed governor Edward Kelley, wh= o is set to step down at the end of the month, after 14 years with the bank= . The gamble, he explains, was to let the Greenspan theory "run, and see if= this thing is going to be real and have some legs and keep allowing us, fo= r a while at least, to have a very strong [growth rate] and a declining inf= lation rate."=20 The Fed traditionally seeks consensus in fashioning monetary policy. Over t= he four-year period from 1996 through 1999, Mr. Greenspan persuaded his col= leagues, first, not to raise interest rates, and then, when rate increases = became inevitable because of inflation fears, to institute them more slowly= than many would have wanted.=20 Beyond making arguments, Mr. Greenspan helped generate more empirical suppo= rt for his perspective by pushing an effort to adjust official data that mo= st economists agreed had grown obsolete. After getting a private presentati= on in the summer of 1996 from Mr. Greenspan and two of his aides, Commerce = Department officials accelerated their plans to revise output figures for s= ectors such as banking. Until the change, the official numbers hadn't shown= any improvement in efficiency for banks in the 1990s, despite the prolifer= ation of automatic-teller machines that so obviously allowed branches to co= nduct more transactions per worker.=20 In another initiative, Fed staffers in 1998 created their own tech-industry= database, which provided an authoritative account of the accelerating drop= in semiconductor prices, beginning in 1995. Economists interpreted the inf= ormation as a strong sign that chip companies were able to cut prices becau= se they had increased productivity. The new Fed information also suggested = that prices of the machines that use semiconductors -- computers -- were al= so falling, which many economists reasoned would encourage companies to buy= more computers.=20 "When the Fed began to look at these numbers, the scales fell away from eve= rybody's eyes," says Harvard economist Dale Jorgenson. Computers clearly ha= d become more prevalent since the Fed's Mr. Sichel found them to be such a = small fraction of the nation's capital stock. Based on the new data, Mr. Jo= rgenson published in August 2000 one of the first papers by a respected aca= demic recognizing the contribution of computers to higher growth.=20 Mr. Greenspan avidly sought evidence that companies had only barely begun e= mploying new technologies to raise efficiency and pump up productivity. At = meetings and cocktail parties, he would sometimes draw a graph on paper rep= resenting the spread of tech innovations, and then ask business executives = to plot where their companies stood in exploiting these new technologies.= =20 In a meeting at the Fed's headquarters in the summer of 1999, he prodded of= ficials from the National Association of Purchasing Management to include i= n their semiannual survey of executives a question about the remaining pote= ntial for applying new technologies. They did, and the survey repeatedly fo= und that managers thought they had exploited only half of the potential of = high-tech -- a figure Mr. Greenspan then invoked regularly in speeches and = congressional testimony to back his claims.=20 Mr. Greenspan bombarded his colleagues with anecdotes supporting his view t= hat the economy had fundamentally changed. In October 1995, a group of supp= ly managers from various industries visited the Fed to discuss the latest i= n high-efficiency "just-in-time" inventory management. Mr. Kelley, the reti= ring Fed governor and a former businessman, refers to himself as "an old in= ventory manager." He recalls that one of the visiting supply executives des= cribed routing goods to drugstores: "They would load a truck up and without= having orders, send the truck out. The drugstore computer system would cal= l the supplier, which would call the truck on the road and say, `Go to such= -and-such store and deliver the following items.'" To Mr. Kelley, hearing a= bout this slick system "was like going to Mars."=20 By 1999, the official statistics were consistently reflecting the trends th= at Mr. Greenspan had talked about for several years. Inflation stayed calm = even as growth surged. And by then, the bulk of the Fed -- from Mr. Kelley = and other policy makers to the staff -- had been converted to New Economy b= elievers, too.=20 The once-skeptical Mr. Meyer confessed in a speech in September 1999 that "= we can confidently say . . . that, since 1995, actual productivity growth h= as increased." At the time, he suggested that he believed the economy could= annually grow overall by as much as 3% without inciting inflation, up from= his longtime prior estimate of a 2.5% limit. Soon thereafter, he indicated= that perhaps the right number was 3.5% to 4%. Mr. Sichel, the researcher w= ho had cast doubt on the significance of computers to productivity, co-wrot= e a paper published in 2000 that said the prevalence of computers had sharp= ly increased, and they were contributing significantly to productivity grow= th.=20 While the doubters were coming around to Mr. Greenspan's basic point of vie= w -- that the economy's speed limit had risen -- the Fed chairman seemed to= move even farther out on the limb. At an April 2000 White House conference= on the New Economy, he appeared to raise his already-upbeat opinion of how= much better the economy could perform. "I see no reason that productivity = growth cannot remain elevated, or even increase further," he said.=20 Still, Mr. Greenspan is a master politician, as skilled as any Washington f= igure at hedging his bets and covering himself for all eventualities. While= his rhetoric often sounds giddy, he has assiduously avoided ever giving a = concrete number -- even to fellow Fed officials -- for maximum sustainable = growth. He also often qualifies his more-effusive statements to concede tha= t his high-tech growth theory could be wrong. In one speech in January 2000= , he acknowledged that future historians "might well conclude that a good d= eal of what we are currently experiencing was just one of the many euphoric= speculative bubbles that have dotted human history."=20 And yet, so persuaded were Mr. Greenspan and his colleagues of his optimist= ic outlook that they seemed to have trouble accepting the bursting of the h= igh-tech bubble when it happened last year. As business investment weakened= in late 2000, Fed officials told one another that technology had proven so= valuable to companies that they would likely resume higher purchasing leve= ls soon, Fed minutes show.=20 The staff forecast prepared for the December 2000 policy meeting predicted = that consumer spending would slow because of falling stock-market wealth. B= ut "business fixed investment, notably outlays for equipment and software, = was projected to remain relatively robust," according to the minutes. Mr. G= reenspan himself was taken aback in October 2000 by a chart accompanying an= article in The Wall Street Journal that showed a huge gap between the rapi= d growth of fiber-optic capacity and the much-slower growth of demand for t= he technology, a discrepancy that soon led to the collapse of a raft of sta= rt-up broadband companies.=20 Early this year, the Fed was cutting interest rates in an effort to keep gr= owth from stalling, while still issuing upbeat statements about the New Eco= nomy. "To date there is little evidence to suggest that longer-term advance= s in technology and associated gains in productivity are abating," the cent= ral bank's policy makers said after the first rate cut in early January.=20 Some economists now say that because Mr. Greenspan and his colleagues belie= ved so fervently in the fundamental benefits of technology, they didn't rec= ognize that much high-tech spending in the late 1990s was wasted. "Virtuall= y no one, official or outside [the Fed] was talking about the fact that hig= h stock prices were essentially generating too much investment" by business= es in high-tech gear, says Stephen Cecchetti, head of research at the Feder= al Reserve Bank of New York from 1997 to 1999 and now an economics professo= r at Ohio State University.=20 But as capital spending continued to collapse this winter and spring, the F= ed research department's models showed that the economy's potential to grow= over the next two years was slipping to about 3% from its estimate of more= than 4% in early 2000. (The economists made clear this didn't necessarily = affect the longer-run outlook.)=20 At the bank's June 2001 policy meeting, time was set aside for special staf= f presentations on the most recent evidence on productivity and the tech gl= ut. The researchers still agreed with Mr. Greenspan's assertion that produc= tivity was going to be stronger than it had been from 1973 through 1995, bu= t they now said that "how much stronger was an open question," according to= the minutes.=20 As companies have continued to work off excessive inventories for nearly a = year, some Fed officials now believe they placed too much faith in such New= Economy tenets as the idea that better supply management could make long d= ownturns less likely. "It has turned out we have had a more-severe economic= cycle than I thought we would," says Mr. Kelley. "It has so far looked mor= e like the old days," he says, referring to recessions of past decades.=20 In July, it emerged that the statistical foundation of the Greenspan view h= adn't been as impressive as it once seemed. Government statisticians recalc= ulated their official estimates for output and productivity in the late 199= 0s after discovering they had overestimated software sales. For 2000, the o= verall growth rate was knocked down from an eye-popping 5% to 4.1%.=20 The economy's turn-of-the-century performance "was still impressive," Mr. M= eyer said in his speech in late November. But "it was less exceptional than= it had appeared before."=20 The big question now is which view of the economy's potential performance w= ill prevail in coming years. If a new pessimism takes root at the central b= ank -- if officials come to regret their Greenspan-inspired experiment of t= he 1990s -- the Fed may be more inclined to rein in growth. If the influent= ial chairman maintains his optimism and that of his colleagues, the bank ma= y try harder to restore the 1990s boom.=20 ---=20 Question of the Day: Is there a New Economy? Visit WSJ.com/Question to vote= . Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial Desk; Section A Could've Been Worse By PAUL KRUGMAN 12/28/2001 The New York Times Page 19, Column 1 c. 2001 New York Times Company It has not been a good year for economic policy, at home or abroad. The bes= t you can say is that things could have been worse.=20 The bad news was legion. The U.S. went into recession, and the collapse of = Enron raised questions not only about our economy but about the state of bu= siness ethics. We squandered our hard-won budget surplus, and with it our b= est chance to do something about the fiscal burdens of an aging population,= on an ill-conceived tax cut. Overseas, Argentina melted down -- something = I had long predicted, but the actual events were still shocking. And Japan'= s prime minister, Junichiro Koizumi, looks less like Franklin Roosevelt and= more like Herbert Hoover every day. The good news all takes the form of things that didn't happen.=20 The good news about the U.S. economy is that it fell into recession, but it= didn't fall off a cliff. Most of the credit probably goes to the dogged op= timism of American consumers, but the Fed's dramatic interest rate cuts hel= ped keep housing strong even as business investment plunged. The pain is fa= r from over -- unemployment looks set to keep on rising, even if the G.D.P.= starts growing again -- but our worst fears have not been realized.=20 It was good news that the World Trade Organization didn't collapse. Trade i= s one area in which the Bush administration is right and the Democrats are = wrong; but there was a real risk that the 1999 debacle in Seattle, where an= attempt to start a new round of negotiations collapsed in disarray, would = be repeated this year. In fact the meeting, in Doha, Qatar, went off fairly= well. Alas, I cannot take any satisfaction in the passage of ''fast track'= ' trade authority: as Lael Brainard pointed out on this page yesterday, the= Bush administration purchased fast-track at the cost of appalling concessi= ons to special interests, concessions that hurt the very countries free tra= de is supposed to help.=20 It was good news when California's energy crisis evaporated, thanks to pric= e controls and conservation. The Bush administration was all set to use the= crisis to push through an environmentally destructive program of corporate= welfare, which had nothing to do with the actual problem; the sudden surpl= us of power put that plan on hold.=20 Really big good news: To my immense relief, the absurdity of Social Securit= y privatization became manifest before the system had been dismantled. I ha= d been really worried about that; the Bush administration's claim that priv= ate accounts would improve rather than worsen the system's finances made no= sense at all, yet it got a free pass from most commentators.=20 Fortunately, the commission that was supposed to propose a detailed plan ca= me to a farcical end. Its final report declared that private accounts would= indeed strengthen Social Security, if they were accompanied by sharp benef= it cuts and huge financial injections from unspecified sources. Yes, and ea= ting a jelly doughnut every morning will help you lose weight, if you also = cut back sharply on other foods and do a lot of exercise; otherwise the dou= ghnuts will make you fatter. Again, aren't you glad the absurdity of the Bu= sh proposal came to light before $1 trillion was diverted into private acco= unts?=20 And one more thing to be grateful for: We didn't get a stimulus bill. That = doesn't sound like good news, unless you look at the content of the bills t= hat were actually on the table: huge further tax breaks for corporations an= d the wealthy, doing little for the economy but further worsening our alrea= dy dreary fiscal outlook.=20 But what about the year ahead?=20 For me the gloomiest moment was probably around mid-October. That's when th= e straight economics looked worst -- when the impact of Sept. 11 on confide= nce seemed all too likely to turn the recession into something truly nasty.= It was also the moment when some politicians decided to abandon all restra= int, and throw their weight behind huge special-interest giveaways. But gue= ss what? Confidence didn't collapse, and the special interests didn't get w= hat they wanted. It turns out that there are still decent politicians, in b= oth parties, and so far they have had enough power -- just -- to prevent th= e worst.=20 In short, things could have been worse, and there is still reason to hope. = Happy New Year. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C JDS Set the Record, but It May Not Be 2001's Biggest Loser By FLOYD NORRIS 12/28/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company CALL it the year of good will gone bad. Never in history has so much in int= angible assets been wiped off balance sheets as companies were forced to ac= knowledge that they had made some very bad acquisitions.=20 But records are made to be broken, and accountants and appraisers say that = companies are lining up to announce huge write-offs in 2002. Until this year, the worst annual performance for an American corporation w= as the $23.5 billion loss posted by General Motors in 1992, largely because= of an accounting change that forced it to recognize the costs of health ca= re for retired workers. But that record was smashed by JDS Uniphase, which = lost $56.1 billion in its fiscal year that ended June 30. Of that, more tha= n $51 billion came from writing off the costs of bad acquisitions and inves= tments.=20 As a symbol of the age, that was perfect. When G.M. set the record, it was = an American icon, and its net loss that year came to just one-sixth of its = annual revenue. JDS Uniphase, a maker of telecommunications equipment, is n= ot known to most Americans, and for good reason. Its 2001 loss was about 10= times as large as its lifetime revenue.=20 JDS never saw $50 billion in cash, but it could lose that much because it w= as blessed, for a time, with an overvalued stock, which it used to buy over= priced companies. After the bubble burst, the accountants acted as if JDS h= ad spent real money.=20 Another 2001 record breaker, Enron, did spend real money. Its bankruptcy se= t the record as the largest in American history in terms of assets. It mana= ged to go broke without ever reporting a bad quarter, at least not as measu= red by the ''pro forma'' earnings that Wall Street relied upon until it was= too late.=20 Enron will now report huge losses. And, reports Alfred King, the co-chairma= n of the Valuation Research Corporation, it will not be alone.=20 ''A lot of write-downs are coming'' early in 2002 and will involve hundreds= of billions of dollars, Mr. King told a recent New York University seminar= on the new merger accounting rule that has just taken effect. Appraisal fi= rms like his have been inundated with business from companies seeking advic= e on how much to write off.=20 The rule says good will from mergers must be written off if the business un= it containing the acquired company is worth less than book value, including= the good will taken on as part of the acquisition. Companies have some lee= way in determining whether a write-off is needed, but it appears that many = of them want to take their write-offs quickly, when they can blame a change= in accounting rules.=20 After the 2002 baths are taken, the usefulness of the new merger rule for i= nvestors will depend on whether it forces companies to take losses quickly = when a deal goes wrong, or whether companies can postpone the bad news unti= l years later, after problems are clear to all.=20 There is a sense in which JDS did not suffer 2001's largest loss, nor did E= nron. The biggest loss of good will may have been suffered by the accountin= g profession. The Big Five accounting firms are clearly worried, and they a= re scrambling to come up with a quick fix to improve disclosures of off-bal= ance sheet debts, related-party transactions and market risks relative to c= ommodity prices. In other words, all the things that Enron hid until it col= lapsed.=20 The worry among accountants is that investors who were willing to shrug off= accounting scandals during the bull market may now be less tolerant. Wheth= er that proves to be the case will be one thing to watch in 2002. Chart: ''JDS Uniphase'' Results, in millions. Fiscal years ended June 30. '= 97 REVENUE: $113 LOSSES: $18 '98 REVENUE: 185 LOSSES: 20 '99 REVENUE: 283 L= OSSES: 171 '00 REVENUE: 1,430 LOSSES: 905 '01 REVENUE: 3,233 LOSSES: 56,122= =20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 LETTERS TO THE EDITOR - Power traders necessary for efficiency. By BERNARD WEINSTEIN. 12/28/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved From Prof Bernard L. Weinstein.=20 The collapse of Enron is a serious blow to its employees and to the city of= Houston. But claims by some politicians and pundits that the electric powe= r industry does not need such companies to make a market are ridiculous. Fo= r consumers and businesses to get full benefit from deregulation and retail= competition, the activities of power traders such as Enron, Dynegy, Calpin= e and Reliant are critical. Enron may have overreached and made strategic blunders but this is often th= e case when a formerly regulated industry restructures and one company atte= mpts to "get ahead of the curve". Braniff Airlines is one example. When the= airlines were deregulated in the early 1980s, Braniff pursued a programme = of rapid domestic and international expansion. Unable to generate sufficien= t passenger revenue to cover its higher fixed costs and operating expenses,= Braniff went bankrupt in two years. Southwest Airlines took a more deliber= ate approach to route expansion and became the most profitable airline in t= he US. The trucking and telecommunications industries have also witnessed d= ramatic failures by companies growing too fast, too soon after deregulation= . Trucking giant McLean raced ahead of the pack during the initial impetus = of deregulation in 1980, only to collapse several years later. A similar fa= te befell ClayDesta Communications, which aspired to become a rival to AT&T= during the early years of telecoms deregulation. As with other restructuri= ngs, it will take time for the electric power industry to sort itself out. = This has been the case in Britain, where the push for competitive power mar= kets began in the late 1980s. Few gains were recorded in the first years bu= t by the mid-1990s consumers and businesses began to reap significant benef= its. Today, electricity prices are down a third and about 30 per cent of cu= stomers have switched providers. Unfortunately, some state legislatures are= citing the Enron case as a reason to slow down or derail electric power de= regulation, while Congress is considering legislation severely to restrict = the activities of power traders. Such measures would be a serious mistake. = Power traders are the "middlemen" who make markets work and ensure they ope= rate efficiently. Spot purchases and sales can spread lower power costs acr= oss a wide geographic market in the short term while traders who sell long-= term contracts reduce risks for utilities and ratepayers by providing price= certainty. Enron may or may not survive as a corporate entity. But a vibra= nt market for power trading remains the key to ensuring that utilities, bus= inesses and customers benefit from deregulation and competition in electric= ity.=20 Bernard L. Weinstein, Professor of Applied Economics and Director, Centre f= or Economic Development and Research University of North Texas, Denton, Tex= as US.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 California Commentary An Enron Tale of Strange Bedfellows ALEXANDER COCKBURN 12/28/2001 Los Angeles Times Home Edition B-17 Copyright 2001 / The Times Mirror Company The fall of Enron sounds the death knell for one of the great rackets of th= e last decade: the "Green Guys" seal of approval, whereby some outfit such = as the Natural Resources Defense Council or the Environmental Defense Fund = would issue testimonials to the enviro-conscience and selfless devotion to = the public weal of corporations such as Enron. This approbation was part an= d parcel of the neoliberal pitch that fuddy-duddy regulation should yield t= o modern, "market-oriented" inducements to environmental good behavior, and= the NRDC and EDF were the prime salespeople.=20 The NRDC's deep involvement with the Enron lobby machine is a case in point= . Here's what happened: In 1997, high-flying Enron was in a pitched battle = in Oregon, where it planned to acquire Portland General Electric, the state= 's largest public utility. Warning that Enron's motives were of a highly pr= edatory nature, the Public Utilities Commission staff opposed the merger. T= hey warned that an Enron takeover would mean less protection for the enviro= nment, increased insecurity for Portland General's workers and, likely, soa= ring prices. There also was the issue of decommissioning Portland General's= Trojan nuclear plant. Other critics argued that Enron's actual plan was to cannibalize Portland G= eneral, in particular its hydropower, which Enron would sell in California'= s energy market.=20 But as such protests threatened to deprive Enron of its prize, into town ro= de the NRDC's top energy commissar, Ralph Cavanagh, flaunting his ties to t= he Energy Foundation, a San Francisco-based outfit providing the financial = wattage for many citizen and environmental groups. Cavanagh lost no time in= whipping the refractory greens of Oregon into line. In concert with Enron,= he put together a memo of understanding that pledged that the company woul= d lend financial support to some of these groups' pet projects. But he had = arduous politicking ahead. Approval for the merger had to come from the PUC= , whose staff was opposed. So, on Feb. 14, 1997, Cavanagh showed up at a he= aring in Salem, Ore., to plead Enron's case.=20 Addressing the PUC, he averred that this was "the first time I've ever spok= en in support of a utility merger." If so, it was one of the quickest trans= itions from virginity to seasoned performance in the history of intellectua= l prostitution. Cavanagh touted the delights of an embrace with Enron: "Wha= t we've put before you with this company is ... a robust assortment of publ= ic benefits for the citizens of Oregon, which would not emerge without the = merger." He then moved into rhetorical high gear: "The Oregonian [newspaper= ] asks the question, 'Can you trust Enron?' On stewardship issues and publi= c benefit issues, I've dealt with this company for a decade, often in the m= ost contentious circumstances, and the answer is, yes."=20 The PUC approved the merger, and it wasn't long before the darkest suspicio= ns about Enron's plans were vindicated. The company raised rates, tried to = soak ratepayers with the cost of its failed Trojan nuclear reactor and move= d to put some of the company's most valuable assets on the block.=20 Enron's motive had indeed been to get access to the hydropower of the North= west, the cheapest in the country, and to sell it in the California market,= the priciest and, in part because of Cavanagh's campaigning for deregulati= on, the ripest for exploitation. Two years later, the company Cavanagh had = hailed as "engaged, motivated and committed" put Portland General on the au= ction block.=20 Today, some House Republicans want to treat the Enron collapse as a crimina= l matter, while Democrats talk about cleaning up accounting rules and plugg= ing holes in the regulatory system. The outrage over the inability of Enron= employees to sell company stock from their 401(k) plans while higher-ups a= bsconded with millions may doom President Bush's promised onslaught on Soci= al Security.=20 There are many morals in Enron's collapse, and the role of the Green Guys s= eal of approval shouldn't be forgotten.=20 *=20 Alexander Cockburn writes for the Nation and other publications. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 California Despite the Shock, Davis Kept the Lights On 12/28/2001 Los Angeles Times Home Edition B-16 Copyright 2001 / The Times Mirror Company Re "Let Consumers Shop for Cheaper Energy," Commentary, Dec. 20: Fixated as= he is on nit-picking Gov. Gray Davis' solutions to the energy crisis, Tom = McClintock misses the most vital fact: The governor's quick and aggressive = actions kept the lights on. He protected ratepayers from the brunt of the o= utrageous price manipulations of the out-of-state generators. He secured a = reliable energy supply for the state's long-term future and goaded the Fede= ral Energy Regulatory Commission into waking to its legal role as a regulat= or.=20 McClintock says Davis didn't lift a finger to deal with skyrocketing natura= l gas prices, forgetting, apparently, that gas prices dropped only after Pr= esident Bush agreed to the governor's call for an investigation last spring= . He forgets that it was not Davis who froze customer rates. That freeze was = part of the original deregulation law. The utilities wholeheartedly support= ed the freeze because the rate allowed them to make substantial profits for= several years. In opposing large retail rate increases, Davis stated firml= y that residential customers hadn't asked for deregulation, hadn't wanted i= t and shouldn't be victims of its failure.=20 McClintock claims that left alone, energy prices would have settled down. Y= et he fails to note that energy prices shot up most dramatically in Decembe= r 2000, when FERC freed them from price controls, and they did not settle d= own until the Davis administration had negotiated enough long-term contract= s to end dependence on the spot market. Finally, McClintock cites NewPower = Holdings as an exemplar of electricity market competition in Texas. However= , Newsweek maintains that NPH, an Enron spinoff, was one of the "deals that= sank Enron." This underscores the precarious nature of the electricity mar= ket--which Enron customers in California know all too well.=20 David Freeman=20 Chairman, Consumer Power=20 and Conservation Financing=20 Authority, Sacramento Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Business Desk IN BRIEF / ENERGY Enron Bankers Delay Deadline for Financing Bloomberg News 12/28/2001 Los Angeles Times Home Edition C-4 Copyright 2001 / The Times Mirror Company Enron Corp.'s bankers gained a 23-day delay of a deadline to get commitment= s for $1 billion in financing the energy trader said it needs to stay in bu= siness after filing the largest Chapter 11 bankruptcy.=20 A hearing on the financing in Bankruptcy Court in New York was postponed fr= om Jan. 7 to Jan. 30, said to Martin Bienenstock of Weil Gotshal & Manges, = which represents Enron. "We have a lot of asset sales going on and don't have an immediate need for= additional funds," Bienenstock said.=20 Bankers at J.P. Morgan Chase & Co. and Citigroup Inc. have been working to = persuade lenders, including Bank of America Corp., UBS and Deutsche Bank, t= o take part in a $1.5-billion loan.=20 In a related proceeding, Enron will auction off a controlling stake in its = energy-trading business at a hearing set for Jan. 10.=20 Internet-based trading generated about 90% of Enron's $101-billion revenue = last year.=20 Enron shares, which began the year at $83.13, fell 5 cents to 60 cents on t= he NYSE. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron stock has rising value for collectors. By Philip Klein 12/28/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Dec 28 (Reuters) - Enron Corp.'s stock is rising once again - but= don't look for its rebound in Standard & Poor's 500 index listings.=20 Now it's joined a much more select group that includes stocks and bonds fro= m Czarist Russia, Victorian railroads and countries that no longer exist: C= ollectors have been snapping up Enron stock certificates as artifacts of th= e company's spectacular collapse, not on hopes for a recovery. While Enron's shares were at 58 cents in Friday trading on the New York Sto= ck Exchange, the physical stock certificate was selling for much more, fetc= hing as much as $99.95 on the Internet.=20 "It's one of the biggest bankruptcies ever and is quite a collectible," Bob= Kerstein, president of a Scripophily.com, a Web site which specializes in = selling old stock and bond certificates said on Thursday.=20 Kerstein said he sold four of the certificates to a hedge fund manager who = made a fortune selling Enron stock short. Now the investor plans to give th= e certificates out as gifts and display a framed one on his wall, like a st= uffed deer head hanging on the wall of a hunter's study.=20 The Enron certificate is blue and white, with an etched drawing of a brawny= man in a hard hat sitting in the foreground of an oil field and a printed = signature of Chief Executive Officer Kenneth Lay in the bottom right corner= .=20 "We just put it up today and we already sold five of them," Kerstein said. = "A company like Enron everybody wants."=20 Kerstein, whose Web site sells certificates ranging from 19th Century Railr= oad bonds to recent dead dot-coms such as WebVan, said that he could have s= old 100 Enron certificates over Christmas if he had them on hand.=20 Collectors of old stocks and bonds, who call their hobby scripophily or 'lo= ve of ownership,' seek out certificates that have aesthetic value, contain = rare signatures or have historical significance.=20 "People are always seeking a piece of history that says something about the= time" Kerstein said. "Enron says a lot."=20 Enron's stock, which traded at $90.75 at its height in August 2000, hit a l= ow of 25 cents earlier this month as the company spiraled toward the bigges= t bankruptcy filing in U.S. history. While investors can still buy the stoc= k at 58 cents, Kerstein justifies his price by citing brokers fees and char= ges for issuing physical certificates.=20 Unlike trading on the exchange, the pricing for the certificates is inexact= and can vary by condition and other factors. Enron certificates were being= bid on eBay Inc.'s auction Web site for as low as $19.=20 Enron's transfer agent EquiServe Inc. said that in September through Novemb= er it received requests to issue an average of 580 Enron certificates per m= onth, but has received 3,500 in December alone, because of the interest gen= erated by the bankruptcy filing.=20 Thomas Carroll, who is the director of sales and marketing for satellite la= unching company International Launch Services, a joint venture of Lockheed = Martin Corp. and Russia's Khrunichev Space agency, has been collecting stoc= k certificates for over a year. He just bought the Enron certificate for se= ntimental reasons.=20 "I was on the site this morning, and when I saw it I knew I needed to have = it," he said. Back when Enron was Houston Natural Gas, he worked for a diff= erent satellite company that helped transmit data on the rate of growth of = rust in pipelines.=20 But stock certificates are not the only piece of Enron nostalgia out there,= as the company's collapse is spawning an industry of its own.=20 On eBay Inc.'s auction website, people are selling Enron watches, Yo Yo's a= nd mugs. Several parody Web sites have also been set up by ex-Enron workers= who are fed up with the company after seeing their 401(k) plans dwindle to= a fraction of their value as shares of the company's stock plummeted.=20 The Web sites, laydoff.com, enronx.com and thecrookede.com sell T-shirts wi= th slogans such as, "I got laid off from Enron and all I got was this lousy= T-shirt," "The Execs that Stole Christmas" and "I got Lay'd by Enron," a r= eference to the company's CEO Ken Lay.=20 When told about what Enron certificates were selling for, company spokeswom= an Karen Denne couldn't suppress a laugh.=20 "That's a better price than Enron was selling for on its best day," Denne s= aid. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Bush says 'deeply concerned' about Enron collapse. 12/28/2001 Reuters English News Service (C) Reuters Limited 2001. CRAWFORD, Texas, Dec 28 (Reuters) - U.S. President George W. Bush said on F= riday he was "deeply concerned" about financial losses suffered by employee= s of fallen energy trading giant Enron Corp. , which earlier this month mad= e the largest bankruptcy filing in U.S. history.=20 "I'm deeply concerned about the citizens of Houston who worked for Enron wh= o lost life savings. It's very troubling to read the stories about the ones= ... who had their Enron stock locked up in their 401(k) plans," Bush said = at a televised press conference on his ranch in Crawford, Texas. The president also said he had not been in recent communication with compan= y executives, who were among major supporters of his election campaign.=20 "I have had no contact with Enron officials in the last six weeks," Bush sa= id in response to a reporter's question.=20 "The government will be looking into this. The SEC (Securities and Exchange= Commission) will be looking into the matter. Congress appears to be lookin= g into the matter. There will be a lot of government inquiry into Enron and= what took place there," Bush said.=20 Enron, based in Houston, is under investigation by the market-regulating SE= C, the departments of Justice and Labor and at least four congressional com= mittees.=20 "It's very important for us to fully understand the whys of Enron. There wi= ll be plenty of investigations," Bush said.=20 A Wall Street darling just a few months ago, Enron on Dec. 2 made the large= st bankruptcy court filing in U.S. history after a rescue takeover by rival= Dynegy Inc. fell apart amid investor concerns about Enron's murky finances= .=20 Once ranked No. 7 on the Fortune 500 list of top companies, Enron's stock w= as trading at 58 cents a share at midday on the New York Stock Exchange, of= f an August 2000 high of $90.56.=20 Thousands of Enron employees have lost their jobs and much of their retirem= ent savings. A 401(k) retirement plan that made many of them heavily depend= ent on company stock came under fire at a recent congressional hearing when= employees said they were unable to sell their holdings when the stock pric= e plunged. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Seeks Bankruptcy Court Approval for Asset Sales by Year-End By Christina Cheddar 12/28/2001 Dow Jones Business News (Copyright (c) 2001, Dow Jones & Company, Inc.) Dow Jones Newswires=20 NEW YORK -- Enron Corp. has asked the judge overseeing its bankruptcy case = to approve the sale of several hundred million dollars worth of assets by t= he end of the year. The assets were earmarked for sale more than a year ago as part of Enron's = efforts to focus on its core energy trading business, according to papers f= iled Friday with the U.S. Bankruptcy Court in New York's southern district.= =20 In one transaction, Enron (ENE) is trying to sell two wind power generating= facilities in West Texas, Indian Mesa and Clear Sky, for $175 million to A= merican Electric Power Inc. (AEP), of Columbus, Ohio.=20 The generating facilities are owned by its Enron Wind Development Corp. uni= t, which wasn't part of Enron's bankruptcy filing in early December.=20 According to documents filed with the court, AEP said the deal must be comp= leted by Friday. Otherwise, the total value of the transaction will be redu= ced by at least $6 million to reflect tax benefits AEP will lose.=20 Separately, Enron also wants the court to approve Enron Canada Power Corp.'= s plan to sell its interest in electricity generated by the Sundance power = generation plant in Alberta, Canada, for 215 million Canadian dollars (US$1= 34.6 million) to a partnership operated by AltaGas Services Inc. and TransC= anada Pipelines Ltd.'s (TRP) TransCanada Energy unit.=20 Enron had originally expected the deal to close in the first quarter, but t= he company now wants to expedite the sale in order to stave off a default a= t the Canadian unit.=20 Although the Canadian unit remains outside Enron's bankruptcy filing, its p= arent's Chapter 11 status has led some of Enron Canada's third-party credit= ors to ask the unit to post security to back some of its contractual obliga= tions.=20 In the filing, Enron Canada said it is concerned that if it can't meet thes= e requirements and doesn't post security, it will be forced into an involun= tary bankruptcy proceeding, which in turn would trigger a default under its= Sundance agreement.=20 If this were to occur, Enron said the Sundance assets would be "worthless."= =20 Enron said its ability to reorganize successfully is connected to its abili= ty to sell the assets owned by its units that remain outside its bankruptcy= case.=20 As of last Wednesday, 23 of Enron's units have filed for bankruptcy protect= ion under Chapter 11 of the U.S. Bankruptcy Code. About 3,500 other Enron e= ntities remain operating worldwide, outside of bankruptcy court protection.= =20 Still, as a result of the bankruptcy filing, several purchasers of some of = Enron's solvent assets have conditioned the closing of the divestitures on = Enron's ability to get bankruptcy court approval for the deals.=20 These transactions include Enron's sale of Enron Oil & Gas India Ltd. to BG= Group PLC (BRG) for $388 million, and the sale of Enron LNG Power Atlantic= to an undisclosed buyer for $266 million, the company said in a filing wit= h the court.=20 Write to Christina Cheddar at christina.cheddar@dowjones.com=20 Copyright (c) 2001 Dow Jones & Company, Inc.=20 All Rights Reserved. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Seeks Court OK For Asset Sales By Year-End By Christina Cheddar 12/28/2001 Dow Jones News Service (Copyright (c) 2001, Dow Jones & Company, Inc.) Of DOW JONES NEWSWIRES=20 NEW YORK -(Dow Jones)- Enron Corp. (ENE) has asked the judge overseeing its= bankruptcy case to approve the sale of several hundred million dollars wor= th of assets by the end of the year. The assets were earmarked for sale more than a year ago as part of Enron's = efforts to focus on its core energy trading business, according to papers f= iled with the U.S. Bankruptcy Court in New York's southern district.=20 In one transaction, the company is trying to sell two wind power generating= facilities in West Texas, Indian Mesa and Clear Sky, for $175 million to A= merican Electric Power Inc. (AEP), of Columbus, Ohio.=20 The generating facilities are owned by its Enron Wind Development Corp. uni= t, which wasn't part of Enron's bankruptcy filing in early December.=20 According to documents filed with the court, AEP said the deal must be comp= leted by Friday. Otherwise, the total value of the transaction will be redu= ced by at least $6 million to reflect tax benefits AEP will lose.=20 Separately, Enron also wants the court to approve Enron Canada Power Corp.'= s plan to sell its interest in electricity generated by the Sundance power = generation plant in Alberta, Canada, for C$215 million to a partnership ope= rated by AltaGas Services Inc. (T.ALA) and TransCanada Pipelines Ltd.'s (TR= P) TransCanada Energy unit.=20 Enron had originally expected the deal to close in the first quarter, but t= he company now wants to expedite the sale in order to stave off a default a= t the Canadian unit.=20 Although the Canadian unit remains outside Enron's bankruptcy filing, its p= arent's Chapter 11 status has led some of Enron Canada's third-party credit= ors to ask the unit to post security to back some of its contractual obliga= tions.=20 In the filing, Enron Canada said it is concerned that if it can't meet thes= e requirements and doesn't post security, it will be forced into an involun= tary bankruptcy proceeding, which in turn would trigger a default under its= Sundance agreement.=20 If this were to occur, Enron said the Sundance assets would be "worthless."= =20 Enron said its ability to reorganize successfully is connected to its abili= ty to sell the assets owned by its units that remain outside its bankruptcy= case.=20 As of last Wednesday, 23 of Enron's units have filed for bankruptcy protect= ion under Chapter 11 of the U.S. Bankruptcy code. About 3,500 other Enron e= ntities remain operating worldwide, outside of bankruptcy court protection.= =20 Still, as a result of the bankruptcy filing, several purchasers of some of = Enron's solvent assets have conditioned the closing of the divestitures on = Enron's ability to get bankruptcy court approval for the deals.=20 These transactions include Enron's sale of Enron Oil & Gas India Ltd. to BG= Group PLC (BRG) for $388 million, and the sale of Enron LNG Power Atlantic= to an undisclosed buyer for $266 million, the company said in a filing wit= h the court.=20 -Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@do= wjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Wins Court Approval for $309 Mln of Asset Sales (Correct) 2001-12-28 14:57 (New York) Enron Wins Court Approval for $309 Mln of Asset Sales (Correct) (Corrects amount of sale to $309 million in headline and first paragraph.) New York, Dec. 28 (Bloomberg) -- Enron Corp., the once- dominant energy trader reorganizing in bankruptcy court, won a judge's permission to complete two previously planned asset sales that will raise a total of about $309 million. Enron plans to sell two wind-power facilities in Texas for about $175 million to Columbus, Ohio-based American Electric Power Co. Enron's Enron Wind Development Corp. unit, which isn't part of the Houston-based parent's bankruptcy case, owns the power generating facilities. In a separate sale, a partnership run by AltaGas Services Inc. and TransCanada Pipelines Ltd.'s TransCanada Energy unit will pay about $134 million for Enron Canada Power Corp.'s right to electricity from a plant in Alberta, Canada. As with Enron Wind, the Canadian unit isn't part of Enron's bankruptcy. U.S. Bankruptcy Judge Arthur J. Gonzalez in Manhattan approved Enron's request to proceed with the transactions at a hearing late Thursday. The sales are scheduled to close today, according to Enron's bankruptcy attorney, Brian Rosen, of New York's Weil, Gotshal & Manges. Closing costs and fees will slightly reduce the overall proceeds from the sales, he said. Enron sought Chapter 11 protection from creditors earlier this month, in the largest bankruptcy filing ever. The company sought refuge in bankruptcy court after Dynegy Inc. withdrew a $23 billion rescue in late November. Shares of Enron, which began the year at $83.13, fell 4 cents to 56 cents in midafternoon trading. The shares have lost more than 99 percent of their value in the past year. American Electric shares rose 4 cents to $43.25. Windmills American Electric agreed to buy 107 wind turbines in west Texas that can generate power for San Antonio, AEP spokesman Tom Ayres said. Although Enron Wind hasn't sought bankruptcy protection ``both sides felt that the court should bless'' the transaction, Ayres said. The windmills can generate enough power to light about 160,500 average U.S. homes. Other purchasers of Enron's assets want the company to gain court approval for its bankruptcy plan before completing the transactions. As examples, Enron in court papers cited its proposed sale of Enron Oil & Gas India Ltd. to BG Group PLC for $380 million and its proposed sale of Enron LNG Power Atlantic to an unidentified buyer for $266 million. Enron LNG Power Atlantic owns Enron's stake in Eco Electrica, a power plant and natural gas terminal in Puerto Rico. Mirant Corp., an Atlanta-based power producer, agreed in July to buy Eco Electrica from Enron and Edison International which also holds a stake, for about $600 million. ``Core Operations'' Mirant Chief Executive Marce Fuller said last week that Dec. 31 is the deadline to complete the transaction. Enron's bankruptcy made it unlikely the purchase will occur, she said. Enron Oil and Gas India owns 30 percent stakes in oil and gas fields on the west coast of India. The sale has been held up by a dispute between BG Group, and Enron's two Indian partners, Reliance Industries Inc. and Oil & Natural Gas Corp. Ltd., over who will manage the operations. B.G. Group said Monday it was continuing negotiations although its agreement with Enron had expired. The asset sales are part of a plan Enron began more than a year ago to return to its ``core operations'' and ``derive as much value as possible from enterprises'' it bought or developed, the company said in court papers. Enron said it's ``critical to the success'' of its reorganization that its affiliates complete the transactions started before the Dec. 2 bankruptcy filing. --Jeff St.Onge in Washington (202) 624-1946 or Enron's Woes Cost New York Pension Funds $109 Mln, Paper Says 2001-12-28 12:05 (New York) New York, Dec. 28 (Bloomberg) -- Enron Corp. is facing a lawsuit from New York City over $109 million in pension-fund losses because of investments in the company's stock, the New York Daily News reported. The city filed suit against the energy trading company because of ``accounting irregularities and fraud involved here with the company,'' said David Neustadt, a spokesman for Controller Alan Hevesi. Enron declined to comment, the paper said. The controller's office oversees pension funds worth $85 billion for teachers, police, firemen, board of education workers and others. Spokesmen for the police, fire, and teachers' unions declined to comment, and a spokeswoman for District Council 37, the city's largest public employees union, didn't return calls, the paper said. The news comes after reports that New York State's $112 billion pension fund lost $58 million on Enron, the paper said, citing state Controller Carl McCall's office. (Daily News 12-28 85) For the New York Daily News Web site, see {NYDN }. --Judy Fettner in the Princeton newsroom, (609) 750-4636 or at jfettner1@bloomberg.netjjs Bush `Concerned,' Says Government Must Look Into Enron Collapse 2001-12-28 11:17 (New York) Bush `Concerned,' Says Government Must Look Into Enron Collapse Crawford, Texas, Dec. 28 (Bloomberg) -- President George W. Bush said the government needs to look into what happened at Enron Corp. and he's concerned about employees who lost their savings when the Houston-based energy trader collapsed. ``The government will be looking into this,'' Bush told reporters during a visit to his Texas ranch. ``I'm deeply concerned about the citizens of Houston who worked for Enron and lost savings. It's very troubling.'' Enron this month filed the largest Chapter 11 bankruptcy case in history after its credit rating was cut to junk levels and it couldn't raise cash to back trades. The company last month restated five years of earnings to reflect losses and debt held by affiliated partnerships. The U.S. Securities and Exchange Commission, the Justice Department and Congress are investigating Enron's collapse. Former chief executive Jeff Skilling and former chief financial officer Andrew Fastow are named as defendants in more than 40 lawsuits filed by investors and former employees who lost retirement accounts after Enron's shares plunged. The stock, which began the year at $83.13, traded this morning at 58 cents. The company and its employees, including chairman and chief executive Ken Lay, have long been top financial supporters of Bush and other Republicans. Enron and its employees have donated $572,350 to Bush over the course of his political career. Bush said he's had no contact with Lay or other Enron officials in the last six weeks. Enron and Lay have had close ties to the Bush administration. Lay had a private meeting with Vice President Dick Cheney as the White House shaped an energy policy that called for an increase in domestic energy sources. Lay also participated in roundtables with Bush and other business executives about the economy. --Heidi Przybyla in Crawford and Holly Rosenkrantz in Washington,