A $20 billion claim charges the bank helped the firm manufacture financial statements. Bethany McLean investigates.
"When Enron blows up, will it be worse than Long-Term Capital?"
So wrote one Citigroup banker to another in April 2001, some seven months before Enron's bankruptcy. That e-mail is, of course, a vivid reminder of two big blowups that rocked the capital markets. But -- surprise! -- it's not just a remembrance of things past.
The e-mail is also part of a series of lawsuits filed against Citi after Enron's bankruptcy, one of which is supposed to go to trial this spring, in which Enron -- or what remains of it -- is seeking more than $20 billion from Citi. In the inflated numbers, the aggressive posturing, and the mind-numbing complexity, the lawsuit itself is totally Enronesque. The funny thing, though, is that this time around it's not clear which actor is playing Enron.
Let's get this out of the way first: Yes, Enron still exists! But it's called Enron Creditors Recovery Corp., it has just 36 employees, and it exists for one reason: to pay creditors. To date, those creditors have gotten 36 cents on the dollar, double the original estimate, which Enron has paid by selling assets such as pipelines and power plants -- and extracting money from Wall Street banks that, like Citi, helped Enron fool the world....MORE
