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David Brancaccio on “Enron: The Smartest Guys in the Room”

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Hello there, 

I need to start by disclosing that I am not inclined to adore a firm that employed people who made fun of “Grandma Millie.” As our documentary this month mentions, a trader for the energy goliath Enron was caught on tape complaining to another that California was trying to claw back “all the money you guys stole from those poor grandmothers.” This is a reference to Enron’s aggressive manipulation of California’s partially deregulated energy market more than 20 years ago. Blackouts ensued and the price spikes cost California $30 billion. A trader is on tape sharing his colleague’s joy in their pillaging of the innocents, responding “Yeah, Grandma Millie, man.” The thing is, I literally had a Grandma Millie. That is how we referred to my paternal grandmother, Carmela. I am sure she would have been aghast at the story of a company with a culture that had turned sociopathic.

“Enron: The Smartest Guys in the Room”’ earned an Oscar nomination for director Alex Gibney in 2006. The film was completed before former Enron CEO Jeff Skilling and former Chairman and CEO Ken Lay were each convicted and sentenced to prison. Skilling did his time; Lay died before he could. Enron, which had been the darling of investors and the analysts that guide them, spectacularly unraveled 20 years ago this month.

The story is full of lessons about economics and our financial system. Of those, perhaps most important is about the ornate financial ecosystem in which Enron’s big accounting lie flourished. This featured analysts who were content to urge investors to keep buying Enron stock even though many had little understanding of the company’s internal workings. This included Enron’s “independent” accounting firm, Arthur Andersen, which itself went out of business in a flurry of shredded documents. Banks fed the monster and pension funds, perhaps unwittingly, and helped Enron do the fancy accounting footwork that made its profits look bigger than they were and its debts much, much smaller. Federal regulators share blame, given that the Securities and Exchange Commission approved Enron’s preferred system of accounting that allowed the firm to count lots of wishful thinking as real dollars.

The law, financial regulation and so much else changed after Enron went bust (search the term “Sarbanes-Oxley”). The collapse ruined the lives of tens of thousands of people in its orbit. What has not changed is the danger of companies focussing their work on keeping their daily and quarterly stock prices high on the theory that, without that, nothing else matters much. 

— David

“Enron: The Smartest Guys in the Room” is available with a library card or university login on Kanopy and for rent for a small fee on various streaming platforms. 

We’d love to hear your feedback on the documentary. What were your main takeaways? What did it leave you wondering? Send us a note at We’ll feature the reactions in our next newsletter. 

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