Senate Vote on Enron Reform Possible On Tuesday Opponents Of Feinstein Derivatives Amendment Spent More Than $48 Million In Lobbying/Contributions Since 2000

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Opponents of an amendment to the Senate Energy bill to end regulatory exemptions for energy derivatives trading that helped Enron inflate its balance sheet and hide its debt have spent $46 million lobbying Congress since 2000 and made campaign contributions of more than $2.7 million in hard and soft money in the 2000 and 2002 cycles, according to a new report by the Enron Watchdog campaign of the state Public Interest Research Groups. The amendment, proposed by Senator Dianne Feinstein (D-CA), would provide price transparency when energy derivatives are traded and give the Commodity Futures Trading Commission (CFTC) oversight authority for such transactions.

"Consumer groups support the Feinstein amendment because it restores necessary transparency and oversight to the financial marketplace," said PIRG Consumer Program Director Ed Mierzwinski. "This amendment is the first major test of whether Congress is going to enact Enron reforms, or just wring its hands and stick with business as usual."

According to the Enron Watchdog report, nine industry associations publicly opposing the Feinstein amendment have spent $46 million on lobbying in 2000 and the first half of 2001 alone. In addition, these industry associations have given more than a million dollars in PAC contributions to Senate candidates and contributed more than $1.7 million in soft money in the 1999-2000 and 2001-2002 election cycles. The associations opposing the amendment include the American Bankers Association, Securities Industry Association, International Swaps and Derivatives Association and the U.S. Chamber of Commerce. [Tables attached detailing contributions and lobbying expenses.]

Senator Feinstein's amendment would repeal certain provisions of the Commodity Futures Modernization Act, enacted in 2000 with strong support from Senator Phil Gramm (R-TX), former Senate Banking Committee chairman. This legislation exempted energy and minerals trading and electronic trading platforms from regulatory oversight. Enron Online and others in the energy sector took advantage of this new loophole by trading energy derivatives absent any regulatory oversight or transparency. As a result, about 90% of energy trades representing purely financial transactions escape regulation by either the Federal Energy Regulatory Commission (FERC) or the Commodity Futures Trading Commission (CFTC).

Senator Feinstein's amendment would help ensure that over-the-counter traders of energy derivatives operate with proper federal oversight, fostering a more stable market with transparent transactions.

"Enron used over-the-counter derivatives extensively in order to hide just what it was doing to make money. Far too many former employees, investors and retirees are now paying the price for Enron's desire to operate through murky, confusing, and unregulated transactions," concluded Mierzwinski. "It's time for Congress to stand up for those little guys by standing up to the big guys peddling influence."

The Enron Watchdog Campaign is a project of the State Public Interest Research Groups (PIRGs), state-based advocacy organizations advancing an agenda of environmental health, good government and consumer protection. For a copy of a "Dear Senator" letter supporting the Feinstein amendment from U.S. PIRG, the Consumer Federation of America, the Consumers Union and the Derivatives Study Center, click here.