Larry Summers' Enron Connection Is Yet Another Reason Not To Make Him Fed Chairman
Mark Gongloff, HuffPost, Posted: 08/05/2013 1:38 pm EDT | Updated: 08/05/2013 4:28 pm EDT
Here's something else to add to the long list of reasons Larry Summers would make a terrible Federal Reserve chairman: He reportedly told California to suck it up when it complained that Enron was manipulating its power market.
According to Kurt Eichenwald's 2005 book about the Enron scandal, "Conspiracy of Fools," then-California Gov. Gray Davis (D) reached out in late 2000 to Summers, who was then the Treasury secretary under President Clinton, for help with the state's little problem of power outages and skyrocketing electricity prices. Davis suspected, rightly, that Enron was toying with the state's electricity supply for fun and profit.
Summers, though, scoffed at Davis's suspicions, according to Eichenwald. The book details how together with then-Fed Chairman Alan Greenspan, Summers [ex]plained to Davis that over-regulation was the real problem and that Davis risked scaring away Enron and other power suppliers if he raised a big fuss. In fact, maybe the real problem was that California's energy prices were too low, because of onerous price caps, Summers reckoned, according to Eichenwald.
When energy prices kept on soaring, Davis complained again, prompting a video conference call that included Summers and Greenspan and, incredibly, George W. Bush's favorite executive, Enron CEO Kenneth "Kenny Boy" Lay. On that call, Summers declared that Lay was doing a "pretty good job" of supplying energy to California, Eichenwald writes. The book says Summers again suggested that the state's energy prices were actually too low, and that maybe if the state was so in love with low energy prices, what it needed to do was relax environmental regulations to let more power plants get built in a hurry.
(More here.)
Here's something else to add to the long list of reasons Larry Summers would make a terrible Federal Reserve chairman: He reportedly told California to suck it up when it complained that Enron was manipulating its power market.
According to Kurt Eichenwald's 2005 book about the Enron scandal, "Conspiracy of Fools," then-California Gov. Gray Davis (D) reached out in late 2000 to Summers, who was then the Treasury secretary under President Clinton, for help with the state's little problem of power outages and skyrocketing electricity prices. Davis suspected, rightly, that Enron was toying with the state's electricity supply for fun and profit.
Summers, though, scoffed at Davis's suspicions, according to Eichenwald. The book details how together with then-Fed Chairman Alan Greenspan, Summers [ex]plained to Davis that over-regulation was the real problem and that Davis risked scaring away Enron and other power suppliers if he raised a big fuss. In fact, maybe the real problem was that California's energy prices were too low, because of onerous price caps, Summers reckoned, according to Eichenwald.
When energy prices kept on soaring, Davis complained again, prompting a video conference call that included Summers and Greenspan and, incredibly, George W. Bush's favorite executive, Enron CEO Kenneth "Kenny Boy" Lay. On that call, Summers declared that Lay was doing a "pretty good job" of supplying energy to California, Eichenwald writes. The book says Summers again suggested that the state's energy prices were actually too low, and that maybe if the state was so in love with low energy prices, what it needed to do was relax environmental regulations to let more power plants get built in a hurry.
(More here.)
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