BIG BUSINESS, DEMOCRACY, AND THE AMERICAN WAY: NARRATIVES OF THE ENRON SCANDAL IN 2000s POLITICAL CULTURE Rosalie Genova A dissertation submitted to the faculty of the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of History Chapel Hill 2010 Approved by: Dr. John Kasson Dr. Michael Hunt Dr. Peter Coclanis Dr. Lawrence Grossberg Dr. Benjamin Waterhouse © 2010 Rosalie Genova ALL RIGHTS RESERVED ii ABSTRACT ROSALIE GENOVA: Big Business, Democracy, and the American Way: Narratives of The Enron Scandal in 2000s Political Culture (Under the Direction of Dr. John Kasson) This study examines narratives of the Enron bankruptcy and their political, cultural and legal ramifications. People’s understandings and renderings of Enron have affected American politics and culture much more than have the company’s actual errors, blunders and lies. Accordingly, this analysis argues that narratives about Enron were, are, and will continue to be more important than any associated “facts.” Central themes of analysis include the legitimacy and accountability of leadership (both governmental and in business); contestation over who does or does not “understand” business, economics, or the law, and the implications thereof; and conceptions of the American way, the American dream, and American civic culture. The study also demonstrates how Enron narratives fit in to longer patterns of American commentary on big business. iii Dedicated to the memory of my father Paul, 1954-2008 the only “Doctor Genova” I have ever known iv ACKNOWLEDGMENTS To a certain extent, the colleagues who have been making fun of me ever since I developed my dissertation topic are right: this research process has been different, shall we say, from that of most historians. While I didn’t quite Google and DVR my way through this project, I have no curators or archivists to acknowledge. I must, however, thank the Reference and Microforms staff at UNC’s Davis Library for helping me locate and access some of my news and congressional sources, and for advice at various points on developing database searches. For time in the form of money, I am indebted to the Scholars for Tomorrow fellowship program, generously offered by the UNC History Department and the Graduate School, which supported me through my two years as a masters student, and to my department as well for the Mowry Dissertation Fund grant. Thanks to my dissertation committee, including Dr. Peter Coclanis and Dr. Lawrence Grossberg. I am especially grateful to my advisor, Dr. John Kasson, for years of extremely helpful guidance on my writing and my graduate career. Dr. Michael Hunt always nurtured my ideas, at times taking them more seriously than I did. Dr. Benjamin Waterhouse, drafted into service at a critical juncture, commented on early drafts of parts of this manuscript. And Dr. Peter Filene critiqued and approved my masters thesis, which would become part of this dissertation. Never again will I take so cavalier an attitude toward semicolons. At various stages in the writing process I received helpful and empathetic feedback from fellow History graduate students—all now PhDs—Jackie Whitt, Matt Harper, and Josh Davis. Dr. Pam Lach and Dr. Robin Payne advised me informally from beginning to end, and Toby Nathan provided invaluable perspective and suggestions. Thanks to UNC History’s Departmental Research Colloquium, to the Working Group for Feminism in History, jointly sponsored by UNC and Duke University, and to Duke’s Cultures of Recession conference, all for providing productive forums of discussion and for provoking many comments that found their way into this manuscript. v By far the hardest thing about this endeavor was losing my father roughly halfway through it. Since before I could even form letters correctly I have been showing him my writing, and everything produced since his death has finished with a sting as I’ve remembered once more I can no longer get his opinion. Such a trial leaves me with many people to thank, beginning with my Dad himself. He was a profoundly inspiring intellect and a raucously infectious anti-intellect. His expectations were impossible, and he loved people all the more for failing to meet them— proudly leading the way himself. He always encouraged me to proceed in work and life as if he was not ill and as if our time together was not limited. In the most transparent dream that I can ever remember having, my mother called me to say that, depending on the results of his latest test, Dad might be able to “come back” for a month or two. In that magical world I would be overjoyed even by a few minutes. I thank my mother Noel and my siblings Pete and Marie, who counseled and comforted me and each other even while being devastated themselves. Thanks also to all the Genovas of New Hampshire, to the Jenningses of Boston, and to Lauren Hastings, the best thing that ever happened to my brother. We have a true family without denying the searing absence in it. Finally I must thank all of my friends, nearby and far away, who saw me through the worst of that experience. One in particular—with me watching a devastating loss to Duke, in men’s basketball, as I write—deserves his own paragraph. Through even the most unbelievably disappointing of seasons, Daniel Weger has cheered faithfully. He appreciates my quirks, puts up with my neuroses, and listens to numerous stray thoughts that are not necessarily right, or even interesting. Everyone knows he’s a showstopper, but I know he’s also a rock. It’s a rare combination. vi TABLE OF CONTENTS INTRODUCTION………………………………………………………………………………………….viii Chapter I. LAUGHTER AND TEARS IN THE FIRST NARRATIVES OF ENRON……………………….36 Political Theatrics in the Aftermath of Enron…………………………………………………43 How Enron Collapsed at Ground Zero………………………………………………………..77 II. “NEVER AGAIN:” POST-ENRON LEGISLATIVE REFORMS……………………………….109 Appearance of Corruption: The Bipartisan Campaign Reform Act……………………….112 Enron Melodrama’s Curtain Call: The Sarbanes-Oxley Act……………………………….142 III. ENRON REMEMBERED………………………………………………………………………..159 IV. A TRIAL, A DEATH, AND A CLASS-ACTION LAWSUIT…………………………………...207 EPILOGUE: THE FINANCIAL CRISIS OF 2008……………………………………………………..261 BIBLIOGRAPHY…………………………………………………………………………………………317 vii Introduction Those who passed through Enron’s offices after the company declared bankruptcy on December 2, 2001, described an eerie scene reminiscent of the fabled ghost ship. It showed all signs of human occupancy; buzzing computer monitors, half-eaten snacks, and disarrayed papers all seemed to await the momentary return of people who had stepped out temporarily as if for a fire drill. Yet the 4,000 evacuees were gone forever—having been allowed only 30 minutes, on “Black Monday,” to clear the building. Now the surreal lifelessness at 1400 Smith Street in Houston was as startling and disturbing as the spectacular corporate collapse to which it testified.1 This is one of several vivid images that have been strung together in an incoherent montage of the scandal: ominous trucks marked “Shred-It” and “Shredco;” the lowering of the “crooked E” logo from its perch above the Astros’ baseball field; President George W. Bush speaking in front of a banner reading “Corporate Responsibility;” the car in which an executive’s corpse was discovered; and those ordinary-looking Houstonians, crying and embracing, as they left their offices for the last time. In one sense, the Enron drama was over—yet on the national scene, its broader ramifications and meaning were still far from clear. Questions of business law and ethics and corporate influence on public policy were just as critical in American society before the Enron disaster as they are afterward. Such concepts may have been rather abstract, but the reality that thousands of employees and stockholders had lost their “nest eggs” now made them 1 Mimi Swartz with Sherron Watkins, Power Failure: The Inside Story of the Collapse of Enron (New York: Doubleday, 2003); Enron: The Smartest Guys in the Room, prod. Mark Cuban, Todd Wagner, and Joana Vicente, dir. Alex Gibney, 110 min., Magnolia Home Entertainment, 2005, DVD; Bethany McLean and Peter Elkind; The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (New York: Portfolio, 2003); Loren Fox, Enron: The Rise and Fall (Hoboken: John Wiley & Sons, 2003); David Kaplan and L. M. Sixel, “Enron Lays off 4,000,” Houston Chronicle, 4 December 2001, 1A. all too concrete. If only for a moment, the Enron scandal won for these issues the level of public attention that they had deserved all along. From the company’s bankruptcy through the criminal trial of its chief executives in 2006, strikingly different narratives would compete in the public sphere, vying for primacy in laypeople’s understanding of “what went wrong at Enron.”2 Even the question, when posed this way, was rife with ambiguity. “Wrong” could have a moral meaning, making the inquiry an investigation into the greed, deceit and manipulation that caused or at least condoned the dramatic collapse. However, “wrong” could also be taken in its objective sense, referring to errors: human incompetence and misunderstanding. Like the notion of wrongness, so-called “fact” was critical in debates about Enron, but not always in the straightforward sense: “fact” was a hallowed concept, constantly invoked and just as constantly contested. If there was any consensus amid the rhetorical din of this moment, it was simply that something had happened that mattered. Were it not so, conceptualization of the story would have been neither urgent nor contentious. But the story was being told and re-told, in forums ranging from the State of the Union address to jokes exchanged among friends. This is a study of those stories—of narratives of the Enron bankruptcy and scandal.