Sen. John McCain Has Forgotten His Friendship With "Mr. Enron"

McCain Hasn't Always Been So Averse To The Accounting Measures Taken By Enron

Sen. McCain: "...But fundamentally, the Bernie Madoff accounting, Enron accounting, that's been going on with this bill is dependent on envisioning a half a trillion dollars in cuts that are not attainable...and this legislation will destroy the quality and the availability if the cuts envisioned in this legislation, in this Enron accounting measure..." [Senate Floor Speech, 11/30/09, via YouTube]

In Fact, McCain's Economic "Mentor" Was Phil Gramm

Gramm Was National Co-Chairman Of McCain's Campaign. Former Texas Senator Phil Gramm is the general co-chairman of McCain's presidential campaign. [JohnMcCain.com, accessed 6/3/08]

• McCain Was Chairman Of Gramm's 1996 Presidential Campaign. The Pittsburgh Tribune Review reported that in 1996, "McCain was national chairman for the presidential-nomination bid of U.S. Sen. Phil Gramm, R-Texas." [Pittsburgh Tribune Review, 9/3/07, via LexisNexis]

McCain: As President "I Would Rely On" Gramm. During the January 24 Republican debate in Florida, John McCain said, "But I as president, as every other president, rely primarily on my secretary of the Treasury, on my Council of Economic Advisers, on the head of that.  I would rely on the circle that I have developed over many years of people like Jack Kemp, Phil Gramm, Warren Rudman, Pete Peterson, and [think tank] The Concorde Group." [New York Post, 1/26/08, emphasis added]

McCain: Gramm Is "Smartest" Politician. John McCain said the following about Phil Gramm to the Houston Chronicle: "He's probably the smartest - not just economist, but politician - there is." [Houston Chronicle, 2/25/08, via LexisNexis]

McCain Praised Gramm's Strategic Advice. The Houston Chronicle reported, "In an interview with the Chronicle, McCain called his friend's ability to frame issues and come up with clever campaign tactics 'just remarkable.'" [Houston Chronicle, 2/25/08, via LexisNexis]

• McCain Looked To Gramm When Campaign Was Floundering. The Houston Chronicle reported, "After working in the background for months, Gramm stepped into the center of the McCain campaign at its nadir last summer. Gramm said McCain 'asked me to come to Washington to look at the books and see what we needed to do to straighten them out.' The man famous for the Gramm-Latta budget cuts of the Reagan era recommended deep cuts in the McCain campaign budget and a radical change in strategy so that voters would hear the old 'straight-talk express' again. It worked. In January, Gramm stepped out of the shadows. He traveled with McCain in Iowa, New Hampshire and South Carolina and stumped solo for his friend in his native state of Georgia." [Houston Chronicle, 2/25/08, via LexisNexis]

McCain Said Gramm Was His "Mentor" On Economic Issues. New York Times business and economics columnist David Leonhardt wrote, "Mr. McCain begins the story of his economic education in 1982, when the country was in recession and he was first elected to the House.  Once in Congress, he worked with Jack F. Kemp and Phil Gramm, who conservatives who were also in the House then, and Martin Feldstein, a Harvard economist who was an aide to President Ronald Reagan, to pass tax cuts and spending restraints.  Mr. McCain said that Mr. Gramm - 'a guy who taught economics for 12 years at Texas A&M' and has endorsed Mr. McCain - had been an especially important mentor." [New York Times, 1/26/08, emphasis added]

Phil "Mr. Enron" Gramm, Close McCain Economic Adviser

Gramm And His Wife Dubbed "Mr. And Mrs. Enron." The Dallas Morning News reported, "Critics say the Gramms' high-powered positions raise questions about improper influence.  The financial newspaper Barron's tagged the couple with the label 'Mr. and Mrs. Enron.'" [Dallas Morning News, 1/27/02, via LexisNexis]

Gramm Took Over $100,000 From Enron, More Than All But One Other Senator. Between 1986 and 2000, Senator Gramm took at least $100,850 in political contributions from Enron.  According to the Dallas Morning News, Enron "contributed $97,350 to the Texas Republican's campaigns since 1989, the most of any senator apart from Sen. Kay Bailey Hutchinson, R-Texas."  Data from CQ Moneyline, which tracks political contributions prior to 1989, showed that Gramm also received $3,500 in Enron donations from 1986 to 1988. [Dallas Morning News, 1/18/02, via LexisNexis; CQ Moneyline, accessed 6/2/08]

As Far Back As 1990, Gramm Was Looking Out For Enron's Interests. According to San Antonio Express News columnist Jan Jarboe Russell, Gramm "pushed deregulation bills through the U.S. Senate.  Sometimes in his legislative zeal, Gramm even mentioned Enron by name - in 1990, for instance, Gramm supported a tax credit for natural gas drilling by citing Enron's desire for tax relief.  Naturally Gramm was rewarded for his commitment to free enterprise with large campaign contributions from Enron.  According to the Center for Responsive politics, in 10 years, Enron donated more than $100,000 to Gramm's political campaigns." [San Antonio Express-News, 10/27/02, via LexisNexis]

Gramm's New Employer Took Over Enron's Energy Trading Operations. The Dallas Morning News reported, "Sen. Phil Gramm bade farewell to public service on Monday, announcing he's becoming an investment banker when he leaves the Senate in three months.  The Texas Republican said he had signed with one of the world's largest investment banks, UBS Warburg, to be its vice chairman and serve on its policy board. ... UBS Warburg is part of a sprawling Swiss-based financial services conglomerate with nearly 70,000 employees in 50 countries.  In January, it took over the energy trading operations of Enron Corp. - the bankrupt Houston energy firm where Mr. Gramm's wife, Dr. Wendy Gramm, had been a director." [Dallas Morning News, 10/8/02, via LexisNexis, emphasis added]

San Antonio Express-News Columnist: Gramms And Enron May Have Had "Quid Pro Quo," But Definitely Helped Cause Scandal. In an editorial in the San Antonio Express-News, Jan Jarboe Russell wrote, "Whether there was an official quid pro quo between U.S. Sen. Phil Gramm, his wife, Wendy, and the peerless promoters who once ran the Enron Corp. is a matter between the Gramms, Enron and heaven's own accountants.  It's safe to say, however, that without the help of the Gramms, Enron would not have been so successful at keeping the government completely out of its affairs until A.) California consumers were hit with skyrocketing electricity bills and B.) Enron imploded from within." [San Antonio Express-News, 10/27/02, via LexisNexis]

Gramm's Wife Named In Enron Lawsuits - Still Took Home $276,000 In Stock Profits

Gramm's Wife Sat On Enron Board And Served On Audit And Compliance Committee. According to the Dallas Morning News, Gramm's wife not only sat on Enron's board, she was also "a member of the board's audit and compliance committee." [Dallas Morning News, 1/27/02, via LexisNexis]

Gramm's Wife Was Responsible For Working With Enron Auditors To Maintain The Company's Books. The Dallas Morning News reported, "As a member of Enron's audit committee, Dr. Gramm carried the burden of helping keep the company's books clean.  'This is not an honorary position that doesn't require work,' said corporate-governance expert Curtis Verschoor.  'An audit committee director has a hard-working responsibility, and if you don't take it seriously, you could get your company - or get yourself - in trouble,' said Dr. Verschoor, a senior research professor with DePaul University's school of accounting and author of a book on corporate director responsibilities.  Indeed, the Securities and Exchange Commission is so strict that it requires a corporation's outside auditors to work directly for the board of directors' audit committee. ... Because of the special responsibilities borne by corporate audit committees, some outside experts question how Enron's panel - and the board - could have been in the dark about so many questionable dealings.  'If you've asked the right questions, why then you're protected,' governance expert Dr. Verschoor said of the audit committee.  'It seems hard to believe that if they did their job they wouldn't have known more and been able to prevent what happened - but it's possible.'" [Dallas Morning News, 1/18/02, via LexisNexis, emphasis added]

Senate Investigators Subpoenaed Gramm's Wife's Papers About Enron Oversight. The Dallas Morning News reported, "A Senate investigations subcommittee has subpoenaed Dr. Gramm's papers about oversight of Enron's accounts and [Arthur] Andersen." [Dallas Morning News, 1/18/02, via LexisNexis]

Before Joining Enron Board, Gramm's Wife Helped Create Loophole That Led "Enron's Explosive Growth." According to the Dallas Morning News, Senator Gramm's wife "joined Enron five weeks after stepping down as chairwoman of the federal Commodity Futures Trading Commission, where she served from 1988 to January 1993.  While at the commission, she helped draft language exempting regulatory oversight of the kind of energy trading that helped Enron's explosive growth in the 1990s.  Three months after she stepped down, the commission adopted the new regulations." [Dallas Morning News, 1/27/02, via LexisNexis]

Gramm's Wife Named In Enron Lawsuits. The Dallas Morning News reported, "Wendy Gramm, a research scholar on regulatory matters who has a doctorate in economics, has served on the Enron board's audit and compliance committee since 1993.  Several Enron shareholder lawsuits alleging securities fraud and insider trading have named her as a defendant.  The lawsuits seek tens of billions of dollars in damages from Enron's board, management and accountants, Arthur Andersen LLP." [Dallas Morning News, 1/23/02, via LexisNexis, emphasis added]

Houston Chronicle Columnist: Gramm's Wife "Helped Make Enron Possible." Houston Chronicle columnist Rick Casey wrote, "Wendy Gramm isn't going to prison.  There's no reason to think she'll be charged with a crime, despite her considerable involvement with Enron.  First, she helped make Enron possible.  As chairwoman of the U.S. Commodity Futures Trading Commission during the first Bush administration, she oversaw a reregulation scheme that legalized Enron's creative cowboy approach to energy trading.  Second, as an Enron board member sitting on its audit committee, she had at least theoretical responsibility for its inventive accounting practices." [Houston Chronicle, 2/6/04, via LexisNexis]

Gramm's Wife Cashed Out Her Enron Stock, Earned Hundreds Of Thousands. According to the Dallas Morning News, Wendy Gramm's service on Enron's board "brought her more than $276,000 in stock profits before she cashed out in 1998, and hundreds of thousands more in compensation since then." [Dallas Morning News, 1/18/02, via LexisNexis]

Salon: Wendy "Gramm Thinks The System Works Just Fine." Salon reported, "Wendy Gramm, a member of the Enron audit committee that approved Fastow's shady partnerships, filed one of the reported record 12,000 public comments on the Securities and Exchange Commission's proposal to tweak the rules for choosing corporate boards of directors.  The SEC proposal grew out of a consensus that, thank to a Soviet-style election system that effectively sidelines shareholders, directors were neglecting their legal duty to investors to oversee managers, creating a climate conducive to corporate scandals.  For example, the failure of Enron's board of directors in general, and its audit committee, in particular, led to the company's stunning bankruptcy, vaporizing stockholdings once valued at $90 billion.  You'd expect Wendy Gramm, now head of the Regulatory Studies Program at George Mason University's Mercatus Center, to recognize that the Enron board's extraordinary failure indicated a dire need for reform.  You'd be dead wrong.  Gramm thinks the system works just fine.  After all, she pocketed an estimated $2 million as an Enron director." [Salon, 1/28/04]

Gramm Had A Close Relationship With Enron Chairman Ken Lay

Ken Lay Personally Gave Gramm $10,500. According to CQ Moneyline, Enron chairman was one of Gramm's biggest political benefactors, contributing $10,500 to Gramm's political campaigns. [CQ Moneyline, accessed 6/2/08]

1996: Ken Lay Was Regional Chairman Of Gramm's Failed Presidential Campaign. According to the Center for Public Integrity, Enron CEO Ken Lay and his wife were regional chairs of the 1996 Gramm presidential campaign. [Center for Public Integrity, accessed 6/3/08]

1996: Ken Lay Was Texas Finance Committee Chairman For Gramm's Failed Presidential Campaign.  According to the Sunday Oregonian, "Lay chaired the Texas finance committee for Sen. Phil Gramm's 1996 presidential bid." [Sunday Oregonian, 6/22/97, via LexisNexis]

• Fortune: Lay Was "Major Contributor" For Gramm's Presidential Bid. Fortune reported that Ken Lay "was a major contributor and fundraiser for former President George Bush, and for the failed presidential campaign of Texas Senator Phil Gramm, whose wife, former Commodity Futures Trading Commission Chairman Wendy Gramm, sits on Enron's board." [Fortune, 8/5/96, via LexisNexis]

1992: Ken Lay Was Chairman Of Gramm's Senate Re-Election Campaign. According to the Texas Observer, Enron CEO Ken Lay was the chairman of Phil Gramm's 1992 re-election campaign. [Texas Observer, 5/30/08]

Gramm Called Longtime "Friend" Lay A "Renaissance Man" And Complimented His Business Sense. Business Week reported, "But Lay is no country bumpkin: Texas Senator Phil Gramm, a longtime Republican friend for whom Lay has worked as a fund-raiser, says there's 'an element of the Renaissance man,' about the well-read Lay, noting that he's 'as comfortable talking about the ancient Greeks as he is the competitive selling of electric power.'  Gramm also credits Lay, who has a PhD in economics, with an ability to separate the important from the trivial.  'He has the ability to step back from an issue and see the big picture, something that I don't see in a lot of people in business,' says Gramm." [Business Week, 6/9/97, via LexisNexis, emphasis added]

Phil Gramm Worked To Kill Legislation To Address Problems Highlighted By Enron Scandal

Gramm "Almost Singlehandedly Killed" Legislation Preventing Companies Like Enron From Masking Profits. The Houston Chronicle reported, "This spring he [Gramm] almost singlehandedly killed an Enron-related amendment drafted by Sen. Dianne Feinstein, D-Calif.  The provision would have prevented energy traders - such as Enron's online business, now owned by UBS - from masking profits.  Feinstein's amendment to the Senate energy bill would have required energy traders to reveal wholesale prices.  The idea was to prevent the conditions that led to huge spikes in the cost of electricity during California's energy crisis last year."  [Houston Chronicle, 10/8/02, via LexisNexis; S. 517, Vote #61, 4/10/02]

Gramm Pushed Policy Making It Harder For Families To Emerge From Bankruptcy. The Houston Chronicle reported, "Gramm also pushed a bankruptcy reform bill that would prevent hundreds of thousands of consumers from writing off credit card debt, and other unsecured loans, in bankruptcy court." [Houston Chronicle, 10/8/02, via LexisNexis]