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View Diary: Thoughts on the Enron decision from an ex-Andersen guy (240 comments)

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  •  My cousin is a financial manager. (20+ / 0-)

    He left the investment company he had been working for for many years when they were about to invest in Enron. He advised them not to, and left to start his own company over this one decision. He also sussed out Global Crossing's problems and ratted them out to the SEC. So, the information was out there for the right kind of person to be able to see the truth about such companies. But how many are honest, and want to see the truth, and then act upon it? Unfortunately my cousin is a Bush supporter (or he was 5 months ago, the last time I talked to him. I can't stand the guy.)

    •  The honest corporations are being driven (10+ / 0-)

      out of business by the crooked ones.  For instance, most companies won't hire someone with a disability because their insurance premiums will go up.

      The trouble with war is that it kills off the best men a country has.-Rep. C. A. Lindbergh (R-MN)

      by Ice Blue on Thu May 25, 2006 at 11:13:23 AM PDT

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    •  Finance is a Con Game - Ask your cousin (4+ / 0-)
      Recommended by:
      Mcguffin, Halcyon, clammyc, nhwriter

      A confidence game.

      Everyone has to believe the game is fair for it to work.


      So the auditor's signature on the financial statements has to be trusted. Absolutely. And the accounting firms were clearly in conflict when they expanded to include consulting, then other fiduciary relations, (deal making re: investment banking etc.)  with clients.

      The regulation and governance of corporations is enormously important. Governments have avoided their responsibilities to keep the game fair for all.

      Customers, clients, employees, bankers, stock market investors all depend on the information contained in those reports. Capitalism itself depends on those financial reports.

      Aren't accounting firms organized as partnerships to ensure each partner is completely liable jointly for the actions of the other partners? Isn't their liability unlimited?  Isn't this part of the safeguard that is built into the system?

      Sorry you lost your jobs clammys.

      •  they are LLCs or LLPs (2+ / 0-)
        Recommended by:
        nhwriter, paul2port

        so that they are limited in their personal liability if another partner screws up royally.  So only the partner that is "to blame" may be personally liable.

        This was a big topic amongst the partners as Andersen was going under.

        As for our jobs, I was shuttled off to Deloitte for a year before I left there for my current job, and my wife went to law school and she is now back in public accounting.

        And yes, we are both giant suckers.

        •  After I wrote that comment (2+ / 0-)
          Recommended by:
          clammyc, nhwriter

          I went to walk the dog. I realized that I was not clear about the LLP. Thanks for the clarification.

          Your diary is excellent. But it bothers me that the system is so fragile and has so many loopholes.

          1. To limit liability and improve a tax situation a small business owner with $100k to invest in a bike shop would invest a small amount in the corporation, say $1k. That's all he or she  would risk from a liability point of view. The other $99k would be loaned to the  new corporation. Once up and at 'em the owner would arrange any profit to repay the loan's interest or return the owner's principal with little or no tax liability. In case of financial trouble that loan would be close to the front of the line. So much for corporate liability.
          1. Ken Lay and others can protect personal assets from seizure by using statutes in Texas, Florida and other places. So Kenny Boy will have his mansion protected and keep about $7 million for the day he gets out. If he ever has to serve time while appealing. And Congress created an exemption for Kenny Boy, and others with wealth, so bankruptcies over $2 million IIRC are dealt with under the old bankruptcy law. So much for personal liability.
          1. A confidence game. A game of confidence. Don't misinterpret my comment. I'm not implying you were a con or were conned as a sucker. You have my sympathy.  
          1. But civilization has a thin veneer. Once people lose confidence in "the system" there is big trouble. Politics may be too abstract to give a good example. However, with a crisis of confidence in the financial system you will see people run to gold, away from currency and other instruments. People will stuff their valuables in jars and bury them in the backyard. It has happened before and it can happen again. (S&L circa 1982)
          1. Texas and Florida seem to turn a blind eye to certain types of behavior.  You have examples of vigilantes along the Mexican border. They want law and order. The Texas authorities don't seem to enforce the law, even when the VP shoots a geezer in the face.  These are ominous signs that the "state" is in serious jeopardy.
          1. Good Luck I hope things work out for you.
    •  Global Crossing, Qwest, Frontier, and Enron (3+ / 0-)
      Recommended by:
      mikidee, clammyc, paul2port

      were all heavily advertising on television, (which to me says if they have to spend that kind of money on PR they must really need it) back in the day

      Then, on Sept. 30, a Sunday and the final day of the third quarter, Qwest signed a deal to pay Enron $308 million for assets that included so-called dark fiber along a route from Salt Lake City to New Orleans. Dark fiber refers to idle network strands that require additional investments in electronic equipment before they can be put into service. In exchange, Enron agreed to pay Qwest $195.5 million for "lit wavelength," or active fiber-optic cable services, over a 25-year period; each company exchanged checks for about $112 million around the close of the deal.

      The deal enabled Enron to book a sale and avoid recording a loss on the dark fiber assets, whose value in the open market had dropped far below the price on Enron's books.

      Now so many people have been complimenting Qwest for holding the line for our freedoms, yet it seems to me they had some back door deals going on...

      I say that in reference to this diary

      'spliced fiber line' (2+ / 0-)

      Oh I so called it last week. I said they were tapping into the mostly unused national fiber network and using it as a private network.

      by Arken on Mon May 22, 2006 at 10:23:22 PM PDT

      ...learn something new every day...

      by nhwriter on Thu May 25, 2006 at 02:38:57 PM PDT

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