For too many executives, the easy riches to be made were hugely tempting, and the moral (and sometimes legal) niceties easily ignored. All too often, the people who ran the companies that were the darlings of the bull market saw nothing wrong with taking a seat at the casino, selling high, and cashing out their chips. To put it another way, they got greedy.
— Mark Gimein, “You Bought, They Sold,” Fortune magazine (09-02-2002)
Let’s be honest: It’s difficult to watch the 2005 documentary movie Enron: The Smartest Guys in the Room (IMDB / Wikipedia) without forfeiting huge chunks of trust in corporate America and Wall Street. But I found it even harder to watch the show and NOT find staggering similarities to what’s going on right now with the Mortgage Mess and our body-blown financial system.
Directed by Alex Gibney, The Smartest Guys in the Room is based upon a 2003 book of the same name (coauthored by Fortune writers Bethany McLean and Peter Elkind). As documentaries go, I thoroughly enjoyed The Smartest Guys in the Room. In fact, though I was watching at 2am and was gosh-darn tired, I simply could not shut down the video until the ending credits took liftoff.
Quick Recap
At one point, Enron was the seventh-largest corporation in America; its market value tagged the $70 billion mark. Wall Street — and investors of all types — were, of course, enamored. Until ... they weren’t.
“It had taken Enron about sixteen years to go from about ten billion in assets to sixty-five billion in assets,” says John Olson, a stock analyst who took a skeptical view of Enron well before it was trendy (or even wise, on a job-security basis) to do so. “It took them twenty-four days to go bankrupt.”
In a dervish of greed, arrogance, and accounting shenanigans, Enron's multi-faceted energy-trading business became a big force in the 1990s business world. It didn't last, of course. Names like Ken Lay, Jeffrey Skilling, and Andrew Fastow became infamous as the truth seeped out, while thousands of investors and hundreds of Enron employees watched their investments and retirements crater to nothing.
(Curious souls might wish to read my article regarding a videotaped session of CNBC in early 2000. In it, the ridiculous spoutings of stock analysts focused mostly on tech stocks ... but Enron squeezed in there, too.)
The Movie Itself
Enron: The Smartest Guys in the Room was, in my opinion, exceptionally well-done. Lots of footage — both video and audio — from inside Enron (company meetings; trader-to-trader audio conversations) make for a very stinging exposé.
I was particularly mesmerized by the recorded headset-talk from Enron's trading floor; verbal exchanges between traders during the California "rolling blackout" crisis (during which Enron was booking scary-big profits, all at Californians' expense) volcanoed my blood pressure. On their own, these intimate glimpses of Enron's corporate culture make the movie worth watching.
If you have any interest at all in Wall Street goings-on, or in corporate America in general, then I highly recommend watching The Smartest Guys in the Room.
Labels: Investing, Movie_Reviews
