Inasmuch as what took place with regard to Enron earlier in the decade has now happened to much of Wall Street, the vacuity of the Houston Chronicle’s coverage of Enron-related matters has become clear.
Nevertheless, Chronicle business columnist Loren Steffy still cannot work himself out of his small Enron shell.
Most recently, Steffy wrote this column in which he compares Sir Allen Stanford of the beleaguered Stanford Financial Group to former Enron executives, Ken Lay and Jeff Skilling:
All this finger pointing should bring a strong sense of déjà vu to Houstonians, who watched Enron’s meteoric rise and fall, as well as the unsuccessful efforts of the late company chairman Ken Lay and CEO Jeff Skilling to plead ignorance of the company’s fraudulent accounting practices and blame any criminal behavior on the chief financial officer, Andy Fastow. . . .
If Stanford is any indication, the “I’m not a crook, I’m an idiot” defense for CEOs remains alive and well. For those who buy the idea that people who construct and direct massive financial enterprises are really dunces who haven’t a clue how they function, we’ve got a truckload of Enron shares to sell.
Of course, the foregoing is a complete misrepresentation of Skilling and Lay’s defense. Rather than contending that he did not know what was going on at Enron, Skilling contended that he was a hand’s-on manager over virtually all facets of Enron’s far-flung business operations. Similarly, Lay contended that he became intimately involved in day-to-day management of the company after re-taking the Enron CEO role when Skilling resigned unexpectedly in August, 2001. Thus, Skilling and Lay’s position was that they were totally engaged in Enron’s massive business operations, that there was no wide-ranging fraud, and that Enron’s trust-based business model failed when skittish post-9/11 markets became spooked over conflict-of-interest allegations regarding Fastow’s role in generally legitimate special purpose entities.
That’s a bit different than Sir Allen’s defense that "he left all the financial stuff" to Stanford Capital’s CFO James Davis, don’t you think?
Steffy has done this before in regard to Enron-related matters, so another misrepresentation isn’t really surprising. But what is troubling is the Chronicle’s continued promotion of Steffy’s simplistic world view in which most troubled businesses are seen as merely a vehicle by which greedy and unethical executives exploit helpless investors. Indeed, Steffy’s fatuous viewpoint casts complex business events as merely struggles by honest investors against bad executives. Not only does this viewpoint ignore reality, it provides Steffy comfort by allowing himself to feel morally certain and superior to those he is belittling, while saving himself from the hard work of performing any serious analysis.
Morality plays are comfortable and easy to tell. The truth is more nuanced and harder to explain. In choosing to take the easy way out, the Chronicle and Steffy have forfeited the opportunity to provide a valuable service to investors and businesspeople by furthering understanding on such key subjects as the importance of hedging risk and the fragile nature of trust-based businesses.
That type of understanding sure would have come in handy for many investors in Wall Street firms over the past couple of years.
April 30, 2009 Update: Loren Steffy responds here and points out that the quote that I used above is from a Chronicle editorial that he did not write. For that error, I apologize.
However, Steffy’s related column here makes the same misrepresentation regarding Ken Lay’s defense and Steffy’s blog post continues to fail to respond to the misrepresentation.
Some things never change.
Tom,
I was talking about Steffy with a friend today. Steffy has written a Stanford/Enron post every day for the past week. His entire argument seems to be that since both companies were in Houston, they’re both guilty.
One thing I pointed out on my own blog is that one of Skilling’s points made in the Supplemental Brief was that the Houston media – including Steffy – was so egregiously biased that Skilling and Dr. Lay could not get a fair trial. Steffy denied only one small point about this (he says that a quote is attributed to him which shouldn’t be.) Yet he is giving the same heavy, negative coverage to Stanford, whom he also clearly believes is guilty. If he were smart, he would shut up and not give the defense an argument for a change of venue or a basis for appeal. (For what it’s worth, I have no idea if Stanford is guilty or not; incidentally neither does Steffy or anyone else. The difference is that I admit it.)
Loren Steffy is just a cartoon of himself these days. He’s not even a journalist; he’s an opinion writer.
I share your frustrations with respect to Steffy’s ‘reporting’ but I generally shrug it off. Steffy’s audience consists mainly by puppies being house trained and various caged parrots, cockatoos and the like. He doesn’t write for a serious business audience, which is why you get frustrated that his writing doesn’t meet the standards of serious journalism.
You and I have discussed my connections to the crew at Stanford. I firmly believe that there are a number of very important lessons to be learned from the Stanford Financial saga. It would be simple for Steffy to discuss some of the substantive issues surrounding Stanford Financial with individuals living in Houston and having first hand knowledge of the activities of Stanford Financial. Instead, Steffy chooses to engage in superficial and simplified reporting that is devoid of substance of factual reporting.
In April 2007, Stanford was fined by industry regulators for failing to maintain minimum net capital. Has Steffy bothered to discuss what minimum net capital means? Has he bothered to discuss the ramifications of such a sanction? Has he let investors know they should use BrokerCheck to keep up on the firm they invest with or the brokers and those supervising their brokers? Has he mentioned how inability to maintain minimum net capital ties into larger issues facing the financial services industry? Has he discussed with former Stanford employees what the internal discussions were at the time of the minimum net capital sanction? Of course not. That story alone would shed some light on the internal problems at Stanford as they were developing. Such a story would also remind investors the necessity of keeping a vigilant watch on their brokers and brokerage firms. Such a story would help give investors an early warning sign to switch brokers or firms. Instead, Steffy takes the cheap shot.
“He doesn’t write for a serious business audience”
This is of secondary importance. Whether we like it or not—the Houston Chronicle influences countless people. It has done enormous damage over the recent years. You may know that Loren Steffy shouldn’t be taken seriously, but most people have no idea what you are talking about.
David,
I can’t honestly believe that the Chronicle influence anyone. It might reinforce pre-established beliefs and feed off of stereotypes, but I can’t accept that it truly influences anyone.
The MSM is very powerful. After all, it helped elect Barack Obama in the last election. Remember him? He’s the guy who talks about the 57 states and the Austrian language. These propagandists influence the typical American who, for whatever reason, does not thoroughly study the issues. Evan Thomas candidly conceded during the 2004 election that left-wing media bias helped John Kerry by a 15% percentage margin. No, you should never underestimate the influence of the Houston Chronicle and its MSM allies. They are a force to be reckoned with.