Trading unaffected by Enron collapse
While Enron”s collapse has stunned investors, it has not damaged the nation”s energy trading industry or energy supplies, a top federal regulator told a Senate hearing yesterday.
Several senators questioned why on the day after Enron”s bankruptcy, long-term energy prices so-called forward prices traded electronically and largely in secret by Enron fell by nearly a third in the western power markets.
“That certainly raises questions about whether Enron was manipulating the West Coast market,” said Sen. Ron Wyden (D-Ore.).
Such transactions are exempt from federal regulation and do not fall under normal commodity exchanges, so they are conducted largely in secretmaking it virtually impossible to gauge whether actual manipulation occurred, witnesses told the senators.
Because of Enron”s prominence in electronic energy trading, it “had enormous ability to swing those forward (long-term) markets” and inflate prices, said Robert McCullough, an energy consultant whose clients include Northwest utilities.
He said the “very clear implication” of the sudden price drop in long-term power prices in the West on Dec. 3, a day after the Enron bankruptcy, “is that Enron may have been using its market dominance to set forward prices.”
Dow drops 247, most in three months
Investors showed a growing lack of faith in corporate America”s accounting practices yesterday, sending the Dow Jones industrials tumbling nearly 250 points on worries that more companies might be vulnerable to bookkeeping scandals.
Analysts said Wall Street, already jittery about the timing of an economic recovery, was concerned that companies including the conglomerate Tyco might suffer from the same type of balance-sheet irregularities that brought down Enron. Even stronger-than-expected consumer confidence numbers failed to stop the selling.
The Dow closed down 247.51, or 2.5 percent, at 9,618.24. The selling snapped a four-day winning streak and brought the blue-chip index to levels not seen since mid-November. It was the biggest point drop in three months.
The losses were even more significant in broader indicators. The Nasdaq composite index fell 50.93, or 2.6 percent, to 1,892.98. The Standard & Poor”s 500 index dropped 32.42, or 2.9 percent, to 1,100.64.
“On the heels of this Enron situation, people are very concerned about accounting practices,” said Todd Clark, head of listed equity trading at Wells Fargo Securities.
Robber holds bank employees hostage
A man demanding $50,000 and claiming to have a gun took nine employees hostage at a suburban Los Angeles bank yesterday, police said. All were released or escaped before the suspect surrendered.
The man had been negotiating his surrender when his last few hostages slipped out the front door or a bathroom window, Sgt. David Nater said.
“He was on the phone, kind of looked around, and realized he had no hostages,” Nater said. The other employees had been released earlier.
The man, believed to be in his 30s, walked into the Cathay Bank branch shortly before 9:30 a.m., told employees he was armed and demanded the money, Nater said. No customers were inside.
Bank employees gave him an undisclosed amount of money and triggered a silent alarm.
Nigerian president declares disaster
Nigeria”s president declared a national disaster yesterday after a series of explosions at an army weapons depot in Lagos left at least 600 dead, most of them women and children who drowned in a canal while trying to run away.
In a radio broadcast, President Olusegun Obasanjo said “over 600 bodies had been recovered,” including many from the Oke Afa canal in the northern Isolo neighborhood of this city of 12 million. He said the dead were mostly women, young people and children.
“What happened in Lagos was a monumental tragedy,” Obasanjo said, calling the deaths a “national disaster.”
Lagos Governor Bola Ahmed Tinubu blamed the deaths on military negligence, radio stations said. The Vanguard newspaper of Lagos estimated that more than 2,000 people were killed.
President”s niece arrested for fraud
Noelle Bush, daughter of Florida”s governor and niece of President Bush, was arrested early yesterday as she allegedly tried to buy an anti-anxiety drug with a fake prescription.
After being detained at the drive-up window of a pharmacy in Tallahassee, Florida”s capital, the 24-year-old woman, who appeared “very shaky” to police, was taken to jail for booking on a third-degree felony charge. She was released on $1,000 bond, Tallahassee police spokesman Scott Hunt said.
In a terse statement later in the day, Gov. Jeb Bush and his wife tacitly admitted the second-oldest of their three children had developed a drug problem, and asked for public understanding.
“Columba and I are deeply saddened over an incident that occurred last night involving our daughter Noelle,” the couple said.