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Sunday, Jul 12, 2009
The city where deregulation is king is in Enron denial -- and won't let go of its wildcatting ways.
Feb 1, 2002 | In a skyscraper just across the street from Enron's sparkly new downtown headquarters, Pamela Lovett explains why the biggest bankruptcy in history isn't something to get all worked up about. "This is not the first company to declare bankruptcy," she says. "Personally, I have very high regard for Ken Lay."
Lovett is the head of economic development for the Greater Houston Partnership, a local business group with 135 CEO members, which Lay was the chairman of in 1994. Her job is wooing big companies to come set up shop in the laissez-faire, pro-business Promised Land of Houston.
She lowers her voice to remind me reverently that in this country we assume the accused are "innocent until proven otherwise," and when it comes to Enron "a lot of things are being tried by speculation." But the civics lesson is interrupted when Lovett's colleague David McCollum comes bursting in to announce that the FBI has just occupied Enron's headquarters, based on reports that employees were still shredding documents there a few days earlier.
"We're just having so much fun now!" McCollum jokes before popping back out, leaving Lovett to continue to argue that in spite of the Enron collapse things here in Houston are just fine, thanks.
Congress is holding hearings, criminal investigations are under way and class action suits are bubbling over, but in Houston, civic leaders don't want to jump to any untoward conclusions. Despite all the sob stories generated by thousands of local laid-off Enron workers and retirees, Mayor Lee Brown has been careful not to cast blame. When Ken Lay resigned as the CEO of Enron, the mayor said in a statement: "Only those who are working all day, every day on this situation are in a position to know all the details." Oh, and by the way, Lay sponsored a $50,000 fundraiser for Brown's election last year.
The Houston City Council isn't exactly warming up the tar-and-feathers either. Instead, it's busy awarding a $198,000 consulting contract to Arthur Andersen, a company now feverishly attempting to escape its own immolation after its failure to competently audit Enron's books. "That disgusted me," says Amy Oberg, a former Enron employee who lost retirement savings in her 401K as well as her job. "The fact that the city went and did that in the middle of the federal investigation just blows my mind. For the people here who were hurt by Enron, that was a slap in the face."
Greetings from Houston, the city that tries too hard. Houston is a city that is proudly unapologetic about its status as an icon of anything-goes deregulation. Nowhere will you find a place more consciously devoted to living the free-market version of the American dream. But there's an insecurity lurking beneath the pride, an inferiority complex bred in part by the spectacular flameouts and huge busts that are a natural consequence of living with as few rules as possible. It is, as one resident notes, a place where "people come to make money, and then they go someplace else. Nobody retires in Houston."
Enron's fall from grace is but the most recent disaster to bring out the contradictions inherent in the Houston way. Even as many Houstonians feel a lingering sense of betrayal and disappointment and no shortage of embarrassment, they are still unwilling to ask themselves: Why did Enron happen here in Houston? And can anything be done to prevent the next catastrophe?
Probably not. Because to do anything substantive would be a betrayal of Houston's founding myth -- the idea that the city is a place where a guy can come to make a lot of money without being held back by a bunch of party-pooping naysayers and regulators. It's a myth that fits neatly into the explicit deregulation platform so heavily promoted by Ken Lay and Enron, and it's not something that Houstonians will give up on easily.
"There will be no reform in Houston," predicts Dr. Alvin Tarlov, a physician and policy advisor at the Baker Institute for Public Policy in Houston.
There never is.
