Enron Corp. - University of California | Office of The President

manage such conflicts of interests. They would erect so-called Chinese Walls that
forbade sharing information between those selling a company's stock and those
arranging its financing.
But the Chinese walls are porus. Bankers ignore them when it's
convenient: They take analysts on road shows of investment-banking clients –
their way of making it clear they don't want downgrades of those companies. The
walls also provide cover for bankers, who let analysts push a client's stock even when
they know the company is in trouble. That's why analysts recommended Enron to the
end, though the bankers behind its complex financing knew it was on the skids.
644. According to the Miami Herald on 3/19/02:
Banks Tangled in Fall of Enron
* * *
They are the titans of Wall Street, possessing pedigrees that date to the
founding of America and wealth greater than many nations.
* * *
Empowered by the massive deregulation of financial services they zealously
sought, New York's investment banks created their masterpiece in Enron, providing
every conceivable product and service.
They lent it money, often without collateral. They sold its securities to an
unsuspecting public. They wrote rosy, inaccurate analyst reports.
They were pivotal players in the mysterious offshore partnerships that
ultimately brought Enron down.
Wearing so many hats was unthinkable a generation ago, when laws kept the
banking, brokerage and insurance industries separate. Deregulation changed all that,
particularly in 1999 when the Depression-era Glass-Stegall Act was repealed....
* * *
Enron was such a lucrative customer that virtually every Wall Street firm had
a relationship with it.
645. On 2/26/02, Dow Jones News Service ran a story headlined: "Next Stop On Enron
Express: Wall Street." It noted the "long gravy train of stock and bond offerings that Enron sent
the Streets' way over the past decade." It also discussed:
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