Did Kenneth Lay's call of doom to Paul O'Neill contain a germ of truth? The Enron chairman claimed in an October telephone conversation with the US Treasury secretary that the collapse of Enron could lead to a systemic decline in the US financial system. It was easy to deride it at the time as the desperate ravings of a man scrambling to save the company he and fellow executives had crashed into the ground. For a while the Enron saga unfolded as an extraordinary but somehow remote and isolated event, rather like the collapse of Argentina. Financial markets took the biggest ever bankruptcy in America calmly. Neither credit nor equity markets sold off. But now, three months on, it seems Lay had a point.
February 01, 2002