Congress wants to hear from an Enron Corp. official who warned then-Chairman Kenneth Lay of serious financial problems just months before the company's collapse.

Lay invoked his Fifth Amendment right against self-incrimination at a Senate hearing Tuesday and refused to answer questions about the dealings that led to Enron's collapse, which financially wiped out thousands of Enron workers and numerous investors nationwide and rattled Wall Street.

William Powers, the University of Texas law school dean who headed Enron's internal investigation into the biggest bankruptcy in U.S. history, reached highly critical conclusions about the financial structure of the Houston-based energy trading company and the conduct of its top officials. His group's report dissected a series of complex partnerships that investigators say led to Enron's downfall.

Powers, whose assessment has been well received by lawmakers, testified at a Senate Commerce Committee hearing Tuesday that Lay clearly approved of the partnership arrangements and knew they were being used to keep hundreds of millions of dollars of debt off Enron's balance sheet.

Powers also said Lay approved Andrew Fastow's serving a dual role as head of a partnership while still Enron's chief financial officer, contrary to Enron's code of ethics, and that he sat in on at least one meeting in which a partnership transaction was discussed.

Meanwhile, Rep. Jim Greenwood, R-Pa., chairman of a House investigative subcommittee, said he hoped to question Enron executive Sherron Watkins — who warned Lay and others — on Wednesday and that his panel would issue a "friendly subpoena" for her appearance on Thursday.

Watkins sent Lay a detailed memo in August and subsequently met with him. Her lawyer, Philip Hilder, has said she had additional meetings with Lay in October.

With many investors unnerved by the Enron collapse and distrustful of the accuracy of the financial reports of big companies, the Securities and Exchange Commission announced Wednesday that it will propose changes to tighten corporate disclosure rules.

Among other things, the new rules would require prompter filing by companies of their quarterly and annual reports and of stock purchases and sales by company officers and directors.

"Our financial disclosure system is the best in the world," SEC Chairman Harvey Pitt said in a statement. "Investors can be confident in the system as we continue to work to improve it."

Powers said Lay "bears significant responsibility ... for Enron's failure to implement sufficiently rigorous procedural controls to prevent the abuses." In one instance, he noted, "Mr. Lay had signed off on a deal approval sheet" for a transaction related to the partnerships.

Powers said Lay, in interviews with the Enron investigators, had said he thought the partnerships and transactions involving them "were OK because Andersen (Enron's auditing firm) signed off on them."

Lay's wife, Linda, has publicly defended him and said he was largely misled by underlings.

Powers also disputed congressional testimony last week by Jeffrey Skilling, Enron's former chief executive officer, that he did not know details of certain transactions between Enron and one of the partnerships allegedly used by the company to hide debt and disguise losses.

Skilling's assertion was met with disbelief from lawmakers, and senators had wanted to ask Lay on Tuesday what Skilling may have told him.

"I think there's substantial evidence that Mr. Skilling was involved," Powers said in response to senators' questions.

Lay, before he asserted his constitutional protection, had to sit through an hour-long browbeating by senators who vilified him as a con man who betrayed Americans' trust. He expressed "profound sadness" over the reverberating impact of Enron's failure but rejected pleas to testify about it. Lay conceded his silence may cause some to believe "I have something to hide."

Lay, a longtime friend of President Bush and his family, and one of the Republican Party's biggest financial benefactors, joined five other men -- including ex-chief financial officer Fastow and an Andersen auditor -- who have cited the Fifth Amendment constitutional right and declined to testify in Congress' deepening inquiry.

Lawmakers say they are not considering granting them immunity from prosecution in exchange for their testimony because they don't want to harm the Justice Department's criminal investigation of Enron and its longtime auditor, the Arthur Andersen accounting firm. The Securities and Exchange Commission is pursuing a civil inquiry.

Key lawmakers said Sunday they did not believe Skilling's testimony. Rep. Billy Tauzin, R-La., whose House Energy and Commerce Committee is investigating Enron, suggested that Skilling could face formal accusations of perjury.

Skilling's attorney, Bruce Hiler, said Tuesday that their views and those of Powers "are not supported."

Powers "was imprecise and made some general sweeping statements that are not even supported by the information in the report" of the Enron internal investigation, Hiler said in a telephone interview.

Meantime, a California Senate committee asked the state to investigate whether Enron intentionally withheld or destroyed documents relevant to an investigation last year of the state's energy crisis.

Committee members also voted to ask the full Senate to find Enron in contempt of two legislative subpoenas — one issued in June seeking documents related to California's energy market and the other for testimony about destruction of documents.