WASHINGTON – He's the top Republican on the Senate Banking Committee and a big recipient of Enron campaign contributions. She's on Enron's board and audit committee. Together, they are Phil and Wendy Gramm, a Washington power couple entangled like no other in Enron's fall.
By their own accounting, the Gramms lost nearly $700,000 when the company went under. But sympathy may be hard to come by.
Wendy Gramm is named in a suit filed by investors against Enron executives and directors. And Phil Gramm's role in reducing government oversight of energy trading, which helped Enron in its rise to power, is under the microscope as well.
As devoted free-market economists, the Gramms have long espoused a hands-off approach to government regulation. One of their two sons, Marshall, is named after British free-market economist Alfred Marshall. President Reagan liked to call Mrs. Gramm his favorite economist.
The Gramms' economic philosophy jibed perfectly with Enron's business interests. Sen. Gramm collected almost $100,000 in campaign contributions from Enron over the past 12 years, the second-biggest draw in Congress. And Wendy Gramm collected between $915,000 and $1.85 million from Enron in salary, attendance fees, stock options and dividends between 1993 and 2001, according to Public Citizen, a Washington watchdog group.
Wendy Gramm took a seat on Enron's board in 1993, just five weeks after resigning as chairwoman of the Commodity Futures Trading Commission, where she pushed through a key regulatory exemption that benefited Enron.
She heads the regulatory studies program at George Mason University's Mercatus Center, which received $50,000 from Enron since 1996. The contribution represents less than 1 percent of total corporate gifts to Mercatus.
Mrs. Gramm did not return calls seeking comment Wednesday, nor did an attorney for Enron.
But Phil Gramm tried to soften their portrait by offering what he calls "the rest of the story" on Enron.
The Republican senator said his family lost $686,000 in deferred compensation that had been set aside for later payment to his wife in an account tied to the value of Enron stock. Because of the bankruptcy filing, the account is worthless.
"She is now a general creditor of Enron, like so many of its employees and former employees," he said in an interview.
Gramm said he had no warning of the company's bankruptcy or its dire financial situation. And he said his wife had done nothing wrong from her vantage point on Enron's board and audit committee, which is supposed to keep a close watch on the company's financial practices.
Gramm said his wife sold all her Enron stock in the fall of 1998 to avoid any conflict of interest with his Senate work, making a net gain of about $207,000 on the transactions. Because the value of the company's stock soared over the next two years, she might have made far more if she'd sold it later, he said.
Gramm said he decided to discuss his family's stake in Enron's situation because "any time a story has been run alleging profiteering by Enron," his wife's name and photo have generally been prominently featured.
"Obviously, our loss at Enron is small as compared to some people's," he said. "I'm not complaining about it. I just wanted people to know what the facts were."
Gramm said he and his wife have made it a point not to discuss her business activities.
"My wife and I have had parallel careers ever since we came to Washington," he said. "When we go home, we talk about important things like Texas A&M football, me taking out the garbage, those kind of things."
Now Gramm, who is retiring from the Senate at the end of this year, has to decide how to handle the Enron debacle not only at home but in Congress. He says he'll sit out any investigations specifically aimed at Enron's conduct, but participate in "forward-looking" work on revising accounting standards, safeguards for 401(k) accounts, retirement policy and the like.
That's not good enough for some of the Gramms' critics.
Public Citizen's Tyson Slocum said Phil Gramm should remove himself entirely from any Enron-related issues in Congress, and Wendy Gramm "needs to start answering some questions, and not just about how much money she stands to lose, but what the heck she was doing on the audit committee."