By the 2000 presidential campaign, Lay was a Pioneer for Bush, raising $100,000. Enron also gave the Republicans $250,000 for the convention in Philadelphia and contributed $1.1 million in soft money to the Republican Party. Not only was Lay a top fund-raiser for the campaign, but he helped out during the recount battle in Florida in November 2000.
Lay and his wife donated $10,000 to Bush's Florida recount fund that helped pay for Republican lawyers and other expenses. Lay even let Bush operatives use Enron's corporate jet to fly in reinforcements. After Bush secured his victory, another $300,000 poured in from Enron circles - including $100,000 from Lay and $100,000 from Skilling - for the Bush-Cheney Inaugural Fund.
Yet, after the Enron scandal broke, Bush acted as if he barely knew Lay. On Jan. 11, 2002, Bush told reporters that Lay "was a supporter of Ann Richards in my run in 1994" for Texas governor, implying that he had gotten to know Lay as Gov. Richards' holdover appointee to a Texas business council.
The administration also claimed that it turned down Enron's bail-out pleas in late October 2001 when Lay sounded out senior Bush officials about overt financial help. By then, however, Enron's troubles were too advanced - and the public spotlight too intense - for the administration to launch a full-scale rescue mission out in the open.
Yet, before Enron went into its death spiral, the Bush administration did what it could, behind the scenes.
Gathering Storm
The Houston-based energy trader's financial crisis can be traced back to 2000 when the long-running stock market boom ended. During the boom, Enron had risen through the ranks of Fortune 500 companies to a perch at No. 7.
A leader of the so-called New Economy, Enron expanded beyond its core business interests in natural gas pipelines, branching out into complex commodity trading, which included electricity, broadband capacity and other ethereal items, such as weather futures.
The bursting of the dot-com bubble in March 2000 put pressure on Enron as it did many other companies. Even though Enron's stock held strong, hitting an all-time high of $90 a share on Aug. 17, 2000, the tumbling market and some risky overseas energy projects left Enron with many poor-performing assets.
To protect its image as a darling of Wall Street - and to prop up its stock value - Enron began shifting more of its losing operations into off-the-books partnerships given names like Raptor and Chewco. Hedges were set up to limit Enron's potential losses from equity investments, but some hedges were themselves backed by Enron stock, creating the possibility of a spiraling decline if investors lost faith in Enron.
Still, Enron saw a silver lining in the darkening economic clouds of 2000. A prospective George W. Bush victory could speed up Enron's deregulatory plans for the energy markets. Through energy trading in California alone, Enron stood to earn tens of billions of dollars.
Meanwhile, in summer 2000, the first signs of suspicions arose that Enron was trying to manipulate the California energy market.
An employee with Southern California Edison sent the Federal Energy Regulatory Commission (FERC) a memo expressing concerns that Enron and other electricity providers to California's deregulated energy market were gaming the system by cutting off supply and creating phony congestion in the electricity grid to run up energy prices. [See Energy Daily, May 16, 2002]
By December 2000, Enron was implementing plans dubbed "Fat Boy," "Death Star" and "Get Shorty" to siphon electricity away from areas that needed it most and getting paid for phantom transfers of energy supposedly to relieve transmission-line congestion. [Washington Post, May 7, 2002]
That same month, after a 35-day battle over Florida's vote count, Bush nailed down his presidential victory by getting five Republicans on the U.S. Supreme Court to stop a statewide recount.
Grateful Bush
Lay and his wife donated $10,000 to Bush's Florida recount fund that helped pay for Republican lawyers and other expenses. Lay even let Bush operatives use Enron's corporate jet to fly in reinforcements. After Bush secured his victory, another $300,000 poured in from Enron circles - including $100,000 from Lay and $100,000 from Skilling - for the Bush-Cheney Inaugural Fund.
Yet, after the Enron scandal broke, Bush acted as if he barely knew Lay. On Jan. 11, 2002, Bush told reporters that Lay "was a supporter of Ann Richards in my run in 1994" for Texas governor, implying that he had gotten to know Lay as Gov. Richards' holdover appointee to a Texas business council.
The administration also claimed that it turned down Enron's bail-out pleas in late October 2001 when Lay sounded out senior Bush officials about overt financial help. By then, however, Enron's troubles were too advanced - and the public spotlight too intense - for the administration to launch a full-scale rescue mission out in the open.
Gathering Storm
The Houston-based energy trader's financial crisis can be traced back to 2000 when the long-running stock market boom ended. During the boom, Enron had risen through the ranks of Fortune 500 companies to a perch at No. 7.
A leader of the so-called New Economy, Enron expanded beyond its core business interests in natural gas pipelines, branching out into complex commodity trading, which included electricity, broadband capacity and other ethereal items, such as weather futures.
The bursting of the dot-com bubble in March 2000 put pressure on Enron as it did many other companies. Even though Enron's stock held strong, hitting an all-time high of $90 a share on Aug. 17, 2000, the tumbling market and some risky overseas energy projects left Enron with many poor-performing assets.
To protect its image as a darling of Wall Street - and to prop up its stock value - Enron began shifting more of its losing operations into off-the-books partnerships given names like Raptor and Chewco. Hedges were set up to limit Enron's potential losses from equity investments, but some hedges were themselves backed by Enron stock, creating the possibility of a spiraling decline if investors lost faith in Enron.
Still, Enron saw a silver lining in the darkening economic clouds of 2000. A prospective George W. Bush victory could speed up Enron's deregulatory plans for the energy markets. Through energy trading in California alone, Enron stood to earn tens of billions of dollars.
Meanwhile, in summer 2000, the first signs of suspicions arose that Enron was trying to manipulate the California energy market.
An employee with Southern California Edison sent the Federal Energy Regulatory Commission (FERC) a memo expressing concerns that Enron and other electricity providers to California's deregulated energy market were gaming the system by cutting off supply and creating phony congestion in the electricity grid to run up energy prices. [See Energy Daily, May 16, 2002]
By December 2000, Enron was implementing plans dubbed "Fat Boy," "Death Star" and "Get Shorty" to siphon electricity away from areas that needed it most and getting paid for phantom transfers of energy supposedly to relieve transmission-line congestion. [Washington Post, May 7, 2002]
That same month, after a 35-day battle over Florida's vote count, Bush nailed down his presidential victory by getting five Republicans on the U.S. Supreme Court to stop a statewide recount.
Grateful Bush
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