As Enron Corp. spiraled toward bankruptcy last fall, Wall Street analysts continued to recommend the company's stock. Now members of Congress want an explanation for the optimism.

At a hearing Wednesday, members of the Senate Governmental Affairs Committee will ask how the recommendations were reached and whether there was pressure on the analysts to maintain their bullish views about Enron, said committee spokeswoman Leslie Phillips.

The hearing, presided over by Sen. Joseph Lieberman, D-Conn., was to focus also on the conflicts that emerge when analysts are rewarded for helping their employers -- brokerages with investment banking units -- land lucrative fees for arranging mergers or acquisitions or initial public stock offerings for the same companies the analysts cover.

None of the four analysts scheduled to testify issued sell recommendations on Enron stock before the company filed for bankruptcy protection in December -- which "leads into the question of the various conflicts of interests and pressures that may affect their objectivity," Phillips said.

Scheduled to testify were Anatol Feygin of J.P. Morgan Chase & Co., Richard Gross of Lehman Brothers Holdings Inc., Curt Launer of Credit Suisse Group's Credit Suisse First Boston and Ray Niles of Citigroup Inc.'s Salomon Smith Barney division.

Spokesmen for the brokerages declined comment Tuesday on the analysts' testimony and said the analysts weren't available to comment.

But senators are sure to hone in on the research notes the analysts wrote in the weeks and months before Enron sought bankruptcy protection.

While the notes about publicly traded companies are produced for clients, summaries of the recommendations are widely circulated -- and used by investors large and small to determine whether to buy or sell stock.

For example, on Nov. 21 -- after Enron stock had been battered in previous weeks -- Launer was still recommending the company's shares as a "strong buy." At the time, a wounded Enron was in negotiations to be bought by its crosstown rival in Houston, Dynegy Inc.

"We continue to hold the view that (Enron) is significantly undervalued, despite its issues, and that ultimately it will trade up," Launer wrote.

The deal with Dynegy fell apart Nov. 28, and Enron filed for bankruptcy protection Dec. 2.

The analysts were expected to testify that they relied on the best public information available and had no idea that Enron's problems were so profound that they would cause the company to implode.

But another expert was to testify that they should have seen warning signs as early as mid-October that Enron was in big trouble.

Those signs included Enron's report of a surprise $638 million third-quarter loss and a Securities and Exchange Commission investigation into Enron partnerships that masked debt and inflated profit, said Charles Hill, director of research at Thomson Financial/First Call.

"As the thing started to unwind, there was a red flag every other day," Hill said.

Hill said analysts probably won't stop the common practice of maintaining buy recommendations on most stocks unless rules are put in place preventing them from being compensated by the amount of investment banking business they help generate for brokerages.

The National Association of Securities Dealers, the self-policing arm of the securities industry, recommended earlier this month that analyst compensation should not be linked to specific investment banking transactions.

But Hill said that recommendation doesn't go far enough because the firms could "still analyze how well he's done for company overall and cut a bonus check."

In June, the SEC warned investors to view the stock recommendations of financial analysts with skepticism, amid growing criticism that some analysts aren't independent enough from the companies they tout. The agency advised investors to instead consult other sources of information, such as company financial reports filed with the SEC and independent news reports.

Two months later, the then-head of the SEC told Congress the agency had found substantial conflicts of interest among analysts at almost all the nation's largest brokerage firms. Laura Unger said some of the analysts' actions might become the subject of enforcement cases brought by the SEC.