WASHINGTON – As Congress probes Enron's impact on the financial markets, the effect of the energy giant's bankruptcy on Washington politics is still unfolding.
Federal regulators told a Senate panel Tuesday that Enron's bankruptcy did not mean that new enforcement powers are needed to police the energy industry, and there's been no serious impact on the nation's or the world's energy markets.
But that won't stop House Democratic Leader Dick Gephardt from raising the name of Enron when he delivers his Democratic response to the president's State of the Union address.
Aides say Gephardt, D-Mo., will use the huge prime-time television audience to argue that Enron's political contributions and access to power prove there is an "urgent need" for campaign finance reform.
But the commingling of money and influence is not just limited to elected politicians. One of the most vocal critics of the Bush administration's financial and political ties to Enron has been Democratic Party Chairman Terry McAuliffe. He came under fire Tuesday for his investments in Global Crossing, the Bermuda-based telecom firm that went belly up Monday after reporting $11 billion in debt.
Folks are questioning how McAuliffe turned a $100,000 investment in the early '90s into $18 million in stocks that he sold three years ago.
McAuliffe said that his relationship to Global Crossing chief Gary Winnick had nothing to do with the windfall, in fact claiming Global Crossing was a "Republican company" that helped to profit the first President Bush, who made $15 million.
McAuliffe says while he took risk at the beginning, George H.W. Bush was allowed to buy in late because he gave a couple of speeches in Japan after he left the presidency that made favorable mention of Global Crossing.
Global Crossing was formed by Winnick, a donor to the Clinton library as well as to Republican campaigns. Winnick also participated in a golf event with former President Clinton, and actors Sylvester Stallone and Jack Nicholson. Co-chairman Lawd Cooke was heavily involved in the Reagan library.
Global Crossing's collapse is the fourth-largest bankruptcy in U.S. history, but instead of taking a rap for his ties to the company, McAuliffe credited himself with being a savvy investor.
"It was an investment. It worked. I am happy I made money on that," McAuliffe said.
Republicans and Democrats alike have not commented on McAuliffe's investment situation, but the Democratic Senate leader signaled Tuesday that the collapse of the energy giant has made financial inquiries fair political game.
"Obviously, we can expect a lot more attention and scrutiny to these questions as the weeks unfold," Sen. Tom Daschle, D-S.D., said Tuesday.
Among those with the microscopes is Gephardt, who announced last week that he had the 218 signatures required to bring the campaign finance reform bill to the floor.
If the campaign finance bill Gephardt favors is passed, it is expected to go far in stopping contributions like those to Sen. Charles Schumer, D-N.Y., the biggest recipient of campaign cash from Enron in the last six months of 2001.
Schumer received $2,090 from Enron's political action committee. Schumer has said he will donate the money to a fund for Enron employees.
But he is just one of five out of the six members of Congress who received the most Enron money in late 2001 who also sit on a House or Senate energy committee that will be holding hearings on the Enron matter. In all, 11 congressional committees have hearings planned to review the nation's largest bankruptcy in history.
Texans for Public Justice reports that as Enron was collapsing its PAC doled out $105,393 in campaign contributions. Of that 76 percent, or $80,618, went to federal politicians. The rest went to state politicians around the country. Not just politicians specifically, but party organizations on both sides of the aisle also received the maximum donation from Enron's PAC.
Enron's money was not just spread through the halls of Congress either. In an apparent violation of Federal Election Commission regulations, Enron appears to have underreported half of its lobbying expenditures in the first six months of 2001, according to congressional investigators.
They say Enron disclosed that it spent $825,000 on lobbying during the period. Congressional sources say so far 13 firms have been identified that were collectively paid more than $1.7 million for lobbying, twice what Enron reported having paid.
Congressional sources say the discrepancy could also spill into the investigation of Arthur Andersen's accounting practices.
Enron's bankruptcy left thousands of investors penniless and has become a target for regulators, activists and reformers who say too much power is corrupting.
Global Crossing, on the other hand, is not expected to have that problem. Its representatives downplayed the bankruptcy filing as being run of the mill.
"Ours is a balance sheet issue, not an operational one," John Legere, chief executive officer of Global Crossing told the New York Post. "Today's actions are intended to directly address this issue."
The Post reported that the company also will continue to be pay wages and other benefits to employees and operations will not be affected. Custimers are not expected to see any delays or problems in their service.
Trading of Global Crossing stock was halted Tuesday morning.
Carl Cameron currently serves as Fox News Channel's (FNC) Washington-based chief political correspondent. He joined FNC in 1996 as a correspondent.