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As the scandal was revealed, Enron shares dropped from over US$90.00 to less than 50¢. As Enron had been considered a blue chip stock, this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements.
Lay and Skilling were indicted for securities and wire fraud in July 2004, leading to a highly-publicized trial in which Lay was convicted on all six counts and Skilling on 19 of 28 counts on May 25, 2006. On July 5, 2006, Lay died at age 64 while vacationing in Aspen, Colorado, after suffering a heart attack on July 4. Skilling was convicted and sentenced to 24 years, 4 months in a federal prison on October 23, 2006. As well as his sentence of 24 years, 4 months, he was ordered to restore the Enron pension fund with $26 million out-of-pocket. It is expected that he will appeal.
"Something was very rotten in the state of Enron," said Sen. Carl Levin, D-Michigan, the chairman of the Senate Permanent Subcommittee on Investigations.
What is known so far, said Levin, indicates "layer upon layer of conflicts of interest."
What senators want to know, said Levin, is whether new laws and regulations are needed to prevent another collapse or whether "laws and regulations were violated" in Enron's collapse.
The Republican nominee, Mr. McCain of Arizona, has numerous close relationships with and contributions from current and former company lobbyists. Mr. Obama, his Democratic rival from Illinois, is second among members of Congress in donations from the firms’ employees and political action committees.
All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Dodd, Christopher J S CT D $165,400 $48,500 $116,900
Obama, Barack S IL D $126,349 $6,000 $120,349
Kerry, John S MA D $111,000 $2,000 $109,000
Originally posted by disgustedbyhumanity
This crisis is not the fault of Freddie and Fannie. It is because of Investment banks gone wild. Through some perverse way of thinking the investments banks think their problems are because Fannie and Freddie won't buy their worthless crap.
FBI investigating companies at heart of meltdown
By LARA JAKES JORDAN
Associated Press Writer
WASHINGTON (AP) -- The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration.
Two law enforcement officials said the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc., and insurer American International Group Inc.
"Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.
Originally posted by Lebowski achiever
reply to post by RRconservative
Yes do follow the money! But have an open mind as you will be amazed. Who are the greatest detractors of the current Bail Out proposals? Who are the greatest supporters. Come back here with your findings. No Obama slamming allowed, Mkay?
They're getting support from Republican lawmakers, who are stepping up their efforts to put a halt to further rescues. Yesterday a group of 100 lawmakers released a letter asking Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson to ``refrain from conducting any additional government-financed bailouts for large financial firms.''