Leaders of the US House Energy and Commerce Committee yesterday called on 10 investment banks and three credit-rating agencies to turn over records linked to Enron. Questions to the banks focused on loans to Enron and whether future business with Enron was linked to investment in the bankrupt energy trader’s special purpose entities.The letters, signed by committee chairman Billy Tauzin, were sent to the chief executives of Moody’s, Fitch, Standard & Poor’s, Merrill Lynch, Citigroup, Credit Suisse First Boston, Goldman Sachs, JP Morgan Chase, Lehman Brothers, Morgan Stanley, Deutsche Bank North America and USB PaineWebber.
The banks have until March 20 to answer a range of questions, and it is likely that top executives will be asked to testify before a committee probing Enron’s fall from grace.
The committee has also asked each rating agency to comment on speculation that they succumbed to pressure from investment banks not to lower Enron’s credit ratings in November 2001, when the company was in merger negotiations with rival US energy firm Dynegy. Although Enron bonds were trading as junk, and the stock price had plummeted from an all-time high of almost $90 a year earlier to just $4, the rating agencies took their time to downgrade Enron in line with market opinion.
More on Structured Products
ECB rate cut to drive modest recovery in eurozone
Correlation sensitivity in multi-asset structured products explained
UK investors offered autocallable in conservative or bullish versions
Schlumberger product puts capital at risk if American barrier is breached
Sign up for Risk.net email alerts
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
Isda directors warn on fragmentation, access and liquidity - but expect problems to pass
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.