Skilling Resentenced: Echoes of Enron in Current Wall Street Crisis

• Although his sentence may now be reduced, Enron's former CEO is in jail (as is former CFO Andrew Fastow), while none of the major players from the mortgage industry or Wall Street have yet been charged with any crimes. ("Yet" being the operative word.)
• Enron received no government bailout.
• Enron's bankruptcy, while devastating to its employees and shareholders, did not have a major systemic impact on the U.S. economy -- unless you count Sarbanes-Oxley and other regulations that came out of the era.

In the accompanying video, Henry Blodget argues that while Wall Street was guilty of greed and stupidity, Enron was guilty of greed, stupidity and outright fraud. We may yet find fraud was committed at major Wall Street firms or (certainly) mortgage lenders, but - again - "yet" is the operative word.

That said, there are plenty of Enron echoes in the recent Wall Street debacle:

• It was the Commodity Futures Modernization Act of 2000, a.k.a. "the Enron bill", that deregulated derivatives, paving the way for the CDO and MBS orgy that ultimately crippled AIG, Bear Stearns, Lehman Brothers and other Wall Street firms.
• Enron executives were masters of the "blame the shorts" and "it's a crisis of confidence" strategies more recently employed by Wall Street CEOs, and former CEOs turned Treasury Secretary. (On a related note, going back the 1998 Long Term Capital Management crisis, how many "100-year floods" can realistically occur in one 10-year period?)
• It was Enron who introduced "off balance sheet" accounting to the corporate vernacular. It's not a stretch to believe Enron advisers like Citigroup learned some lessons from the energy trading firm when they created Structured Investment Vehicles (SIVs) that proved deadly when the credit crunch hit.

Finally, Enron was the ultimate proponent of "free and unregulated markets" and the related belief derivatives were great vehicles for diminishing risk. Wall Street firms took those theories and ran with them -- ultimately over a cliff.