The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron by Bethany McLean and Peter Elkind (Originally published in 2003. The 2013 edition had an Afterword that referenced the financial industry’s responsibility for the housing market crash of 2007-08. This is a long book with lots of detail.)
Enron was a phenomenon in the late 1990s, with its stock consistently increasing in value and its employees constantly searching for new deals to make more money. The company posted impressive profits for most of its existence, numbers some would say, were too good to be true. As it turned out, they were too good to be true. For most of its existence, Enron invented new financial vehicles and misleading accounting procedures to ensure that each quarter showed a profit, even if there had been no profit. After the wheels came off, company executives continued to maintain that they had nothing to do with the disaster and that their approach to business was still brilliant. The book’s authors disagree. “In the public's eyes, Enron’s mission was nothing more than the cover story for a massive fraud,” carried out by “smart people who believed the next gamble would cover their last disaster – and who couldn’t admit they were wrong.”
Ken Lay was Enron's founder. He was a smart guy from a middle-class family from the Midwest. He earned a doctorate in economics and held a number of impressive jobs before he was 30 years old. He was religious and said that he based his day-to-day work on Christian values. Coming out of grad school, Lay worked in the energy industry and noticed that nobody seemed to care much about natural gas as a major energy source. He went to work for legacy natural gas companies which were sort of old-fashioned and not keeping up with changes in technology and marketing. He was recruited to be CEO and chairman of Houston Natural Gas where he quickly arranged an acquisition of a bigger energy company out of Omaha, InterNorth. Lay and his crew basically snookered InterNorth managers who thought that they would be the lead dog on the energy sled. Ken Lay was good at using any means necessary to get what he wanted. In 1986, the new company was named Enron and soon expanded into the oil business - Enron Oil. Louis Borget, the trader they brought on to help them out, was a bit sketchy and an expert at playing games with numbers. He always made a company look good to analysts and Wall Street, no matter how bad things were. Over the next decade or so, Enron executives would refine these skills.
Unfortunately, Borget stole so much money that he had to keep two sets of books. The real numbers showed that Enron Oil was just about bankrupt. Enron brought in a forensic accountant who looked at the actual books and then helped Ken Lay sell off pieces of the business to get the debt down to $140 million instead of the billion dollars that was initially calculated. The company could manage that so it lived to fight another day. Ken Lay and Enron did know that Borget was cooking the books to make them look good and that he was taking money. They just didn’t know how big a crook he was. The Securities and Exchange Commission investigated and believed Ken when he said that he was “shocked, shocked” that figures were being fudged. He and Enron skated.
Playing it straight Early on, in the late 1980s and early 1990s, Enron made good deals to supply gas and legitimately made a lot of money. One good account was Teesside in England, which called for supplying 300 million cubic feet a day to a power company. Operations started in 1993 and things worked out for all involved. Prime Minister Margaret Thatcher led the deregulation of British utilities and she liked Enron. There were many other deals that made sense, and Enron made real money for most of the 1990s.
By the late 1980s, Enron was successful in the natural gas business and looking for the next big thing. Lay quickly rebranded Enron into an energy trader and supplier. He hired Jeff Skilling, a Harvard Business School graduate, who convinced Lay that the natural gas market could be made to produce great profits for Enron by smart analysis and effective service delivery. Instead of owning gas fields and pipelines, the Enron Gas Bank (a nickname) would sign long-term contracts to buy gas at low wholesale prices and sell it to customers as needed with a solid mark-up. This was a revolutionary approach in the natural gas business. It was possible to do this because deregulation of the energy markets allowed companies to place bets on future prices. By the early 1990s, Enron had enough pipelines and gas supply contracts to make this work.
Skilling was the chief operating officer for Enron throughout most of the 1990s. He hired brilliant MBAs who were aggressive in life and work – “guys (and sometimes women) with spikes,” as he called them. Their job was to make deals that were favorable to the company, no matter what they had to do to close the deal. They were essentially all free agents, doing their thing. That may get you some early wins, but over the long term it couldn’t be sustained. The deal makers would get paid upfront so they had no incentive to make deals that might actually work. Skilling put in a new type of accounting protocol that would come back to bite Enron. Instead of using a cash basis - real revenue and actual costs– which almost all businesses use, Enron got SEC approval to use mark-to-market accounting.
This is an accounting practice that involves adjusting the value of an asset to reflect its value as determined by future market conditions. Traditionally, once you record an asset or a liability, the cost is fixed. In a mark-to-market environment, you can change the recorded value based on what happens in the future. This can work if the company is scrupulously honest about the actual values of assets. That wasn’t Enron, which would grossly inflate the worth of almost everything it was involved in.
Example 1 Enron would build an asset, such as a power plant, and immediately claim the projected profit on its books, even though the company had not made one dime from the asset. If the revenue from the power plant was less than the projected amount, instead of taking the loss, the company would then transfer the asset to an off-the-books corporation where the loss would go unreported. This type of accounting enabled Enron to write off unprofitable activities without hurting its bottom line.
Example 2 Enron would have a long-term contract to deliver a certain volume of gas at a certain price that would result in a specific profit over time. The company would use unrealistic best-case assumptions to determine its future profits. Concerning gas delivery that assumption would be that the retail price of gas would increase at a much higher rate than any sane person expected, and that the customer would use a lot more gas than had been anticipated in the initial contract. Those assumptions would greatly increase your future profits and make the company look really attractive to analysts and investors.
This mark-to-market accounting - making up numbers to make your company look better than it really was - was a major element in Enron’s downfall. It made Enron look like it was growing at a much faster clip than it actually was, and it would greatly inflate reported profits which had little or no relationship to the company’s actual performance.
Time for a break. Go get a glass of wine or a cup of coffee. Maybe coffee would be better so you can stay awake while reading this.
Jeff Skilling’s leadership As president and chief operating officer, Skilling did a pretty good job of motivating the company’s traders to make deals that were front-loaded with money for Enron. But, as a marketing hustler, he had no interest in running the company efficiently, the primary job of the president. In the mid-1990s, the company generated over $13 billion in revenue and had 11,700 employees in myriad divisions and units. Skilling did not have the skill set nor the interest in managing that kind of operation.
Under Skilling, Enron moved away from its highly profitable natural gas division and went into making speculative deals. Those deals were front-loaded with money that Enron could grab and claim as operating revenue to make the quarterly numbers look good. He also moved Enron into different businesses such as selling electric power, water delivery, and broadband, areas where the company had no expertise or experience.
Jeff Skilling set Wall Street expectations of Enron so high that they could not be reached without cheating. Deal makers produced their own profit projections with no oversight or vetting by adults, so on paper everything looked great. Because the traders thought they were creating a new world, they looked upon existing rules not as guidelines to be respected but as mere conventions to be gotten around in whatever creative fashion they could devise. “It is utterly beyond question that in reshaping Enron after he was named its president, Skilling turned it into a place where financial deception became almost inevitable.”
One of the early deals in the 1990s was with a New York state utility, Sithe Energies, to supply gas over 20 years for up to $4 billion dollars. This was something Enron could do well. What they did poorly was front-load all of the profit from that long-term deal into short-term accounting. That gave the company a big cushion to fall back on and call “profits” to use to cover up deals that didn't work out. That made the balance sheet look good enough to keep the stock rising. This became a pattern for Enron: shifting profits from a legitimate enterprise or assets in order to deal with shortfalls.
Enron established a Risk Assessment and Control (RAC) unit run by a man with a very weak personality. He was a classic accountant. It all sounded good to Wall Street, but RAC’s analysis was routinely ignored. Putting the brakes on a bad deal would cost individual traders’ millions of dollars in income and reduce the amount of money the company could fraudulently record as profits. In 1996, Enron bought Mariner Energy for $85 million and claimed that it was really worth $367 million. The RAC unit valued it at $120 million, much less than the claimed price. Skilling ignored them. RAC was right. Eventually, Enron had to write it off and ended up losing $257 million.
Rebecca Mark had started working for Enron when it was first formed. Her tenure reflects a lot of what went wrong with Enron. She initially worked in the natural gas unit - the one that made money - and in 1996 was made the head of Enron International, which was charged with developing and operating power and pipeline assets around the globe and greatly expanding Enron's global portfolio.
She soon butted heads with Chief Operating Officer Jeff Skilling. He was almost obsessed with making new deals, regardless of risk. She, coming from the natural gas operation, had to actually make profitable deals. Ken Lay, the CEO and Chairman, also liked making deals and using profits from other areas to make them look good, so Mark was marginalized in the company. She kept working on international projects, including a major one with Dabhol Power Company in India. The deal was signed in 1993. Due to Indian politics, difficulty getting financing, and allegations of Enron’s traders bribing Indian officials, it never got going until Mark took over Enron International in 1996. By 2000 the power plant and pipeline system were ready, just as Enron was beginning to crash. Enron and the utility company got into a fight about who would be paying for what and Enron pulled out. The company lost $900 million on the deal. Rebecca Mark got rich on the failed deal, pocketing a $10 million bonus.
In 1998, Enron formed an international water company, Azurix. Rebecca Mark was chosen to lead it, starting with the purchase of a major British water utility, Wessex Water. With Azurix barely off the ground, Enron quickly sucked out over $1 billion in cash while loading the water unit up with debt. As was typical, Enron counted future profits as current income – even if you’re not an accountant, you know that is bad – and used it to make sure that the company looked good so that the stock would go up at least 15% a year. In a few years, British water regulators required the company to cut its rates by 12% starting in April 2000, and Enron was responsible for an upgrade of the utility's aging infrastructure, estimated at costing over a billion dollars. By the end of 2000, Azurix had an operating profit of less than $100 million and was $2 billion in debt.
In August 2000, after Azurix stock took a plunge following its earnings report, Mark resigned from Azurix and Enron when it became apparent she had no internal support from Enron or its board, both of which had switched to focusing on financial trading – making deals – instead of on supporting industrial assets. Azurix assets, including Wessex, were eventually sold by Enron for very little. Once again, Rebecca did well financially. She sold her Enron stock while it was still valuable and made $80 million.
Going first class Enron was a great place to work in terms of being pampered. There was a fleet of jets for personal use by executives and managers, luxury “working retreats” that were junkets with no work done, personal concierges, houseplant waterers, personal shoppers, and lots of limousines ferrying people all over the place. Enron was good at corporate excess.
In the late 1990s, everyone was greedy, especially big financial institutions that were trying to out-cowboy each other. Each year Enron would invite top bankers on junkets in exotic locales with the tab typically running well over $100,000.
Andrew Fastow was a rising star who was very good at stretching and breaking accounting rules. He was promoted to chief financial officer in 1998, despite the fact that he had none of the attributes of a good CFO – financial knowledge and experience, integrity, and a stable personality. He developed a deliberate plan to show that the company was in sound financial shape despite the fact that many of its subsidiaries were losing money.
The company overvalued everything. They assumed that growth would continue forever at the ridiculously high levels of the mid and late 1990s dot.com boom. Many companies played games with accounting and tax avoidance once in a while. Enron did it as its core operating principle.
Fastow would do things like borrow money from Citibank to cover immediate debt obligations but he’d record it as an investment in a joint venture. He kept doing this, borrowing billions of dollars over time and recording the loans as operating revenue, not debt. As long as you can borrow enough money or have high enough real company income to cover your immediate obligations, you're fine.
Big banks like Citibank and Chase Manhattan kept providing loans. The Enron balance sheets looked good because the level of debt was not disclosed. The debt was buried in fake Enron financial entities with weird names like Raptor. The people who did know about them – Fastow, his wife, and his sleazy colleagues – also took out huge fees from the off-balance sheet “special entities.”
Special purpose entities By 1998, Enron’s real debt was increasing rapidly as obligations they couldn’t kick down the road came due. Fastow needed a place to hide debt and dress up Enron’s financial statements to keep their stock soaring. He set up off-balance sheet entities known as special purpose entities (SPEs) where he could hide Enron’s mountains of debt and toxic assets. Thus, was the LJM private equity fund born. The primary aim of these SPEs was to hide bad accounting realities.
Fastow also raised money from legitimate investors but padded the bottom line with exaggerated revenue and a lot of Enron stock which was doing well in the late 1990s. The SPE would give Fastow a place to go to get money whenever the books need adjusting to look better and keep the stock moving up. He and his cronies also got huge management fees so it was a win-win. They did have a couple of real investors who were confident that their money was safe with Enron. If bad things did happen, they’d get Enron stock and that was valuable. Things went so well that Fastow set up LJM2 and convinced a lot of big Wall Street powerhouses to invest.
The idea of a private equity fund is sound. If Enron had played it straight they would have been able to utilize these financial vehicles to attract more outside investment. As was true of all things Enron, things went south pretty fast. Fastow bragged to potential investors about his insider status that gave him exclusive Enron information that he would share with investors. Then they could target additional investments and be in on the ground floor of Enron’s inevitable future greatness. Even Wall Street investors, who in the late 1990s would do almost anything to get in on a good deal, were shocked by his blatant bragging about misusing his insider status. Merrill Lynch asked Enron President Skilling several pointed questions about the fund. The answers were mostly lies, but Merrill was satisfied and was in. Chase Manhattan followed the same pattern and jumped in. That Fastow was threatening to take Enron’s business away from the big banks if they didn’t play ball no doubt influenced their decisions.
Besides raising real money, the LJMs would take troubled assets off Enron’s books and make them their own. Removing financial losers from the official records made Enron’s balance sheet look much better, again to keep the stock rising, which was all that counted.
Enron’s internal auditors reviewed Fastow’s enterprises and found nothing wrong. A senior finance person who was troubled by the shenanigans took his concerns to Skilling. He was demoted. The official Enron internal report - “Nothing to see here, folks!” - was one-page long. Arthur Andersen’s accountants, who by now had become Enron’s enablers, supposedly didn’t know about the special funds.
Enron Energy Services: Getting into the retail energy market Electricity utilities were deregulated by Congress in 1994. Enron, seeing an opportunity with rising electricity prices, was eager to jump into the market. In 1997, Enron acquired a power plant in Oregon and set up a new division, Enron Energy Services. The company ramped up its efforts by offering discounts to potential customers in California. Starting in 1998, Enron figured that with deregulation, electricity was a commodity that could be sold at a profit and that by offering exceptional customer service, people would buy from Enron. That didn’t happen. Individual people would not change electric suppliers, so Enron went after businesses and got a few long-term deals struck with several major customers, including the state of California and the Roman Catholic Archdiocese of Chicago. Enron promised to deliver power less expensively than anyone else. As usual, Enron reported the total cost of the contracts as immediate income, even if the agreement was for ten years. Enron would also have to figure out how to actually supply the power and maintain the lines and such. They never really bothered to do that stuff, but they kept signing deals and front-loaded the money into current operating revenue. That made them look profitable and kept the stock gaining value at a good clip.
As usual, Enron’s traders and managers cared more about making money for Enron that they did about delivering power. In May of 1999, Tim Belden, an Enron trader in California, scheduled electricity to be delivered through a system that couldn’t handle the demand. As expected, it didn’t work and power had to be diverted from another source. Belden was experimenting to see if he could instantly create big demand which would, under Enron’s contract, increase the price of the power and the profits that Enron made. This was similar to what happened in Texas this past winter when high demand triggered high electricity prices. Enron got caught and slapped on the wrist, but they had learned that they could manipulate the power supply.
California was growing fast and there wasn’t enough in-state power. That was one reason companies like Enron were brought in. They had access to power from other states. Enron and other private companies routinely manipulated the power supply to increase the rates charged. Also, Enron was really good at exporting California-generated power out of state when rates were low and bringing it back in when rates were high. They made a lot of money doing this.
Energy miscalculation In early 2001, Enron Energy was negotiating deals with business customers and Enron’s traders mis-analyzed the cost of electricity going forward. They also didn’t pay attention to future demand changes. They made really bad deals which were soon bleeding money and helped lead to the bankruptcy of the company. As the losses increased, Enron began to hide them as well as counting money from future activity as current income, making the books look better. Some employees were starting to understand that Enron was losing a lot of money in its electricity division, but Ken Lay and Jeff Skilling assured people that all was well, and that any problems were the California government’s fault.
In May of 2002, the <em>New York Times </em>did an investigative piece and provided hard evidence that Enron manipulated the power grid and actually contributed to the frequent electricity brownouts and to the bankruptcies of major California power companies.
“Electricity traders at Enron drove up prices during the California power crisis through questionable techniques that company lawyers said ‘may have contributed’ to severe power shortages, according to internal Enron documents released today by federal regulators. Within Enron, the documents show, traders used strategies code-named Fat Boy, Ricochet, Get Shorty, Load Shift and Death Star to increase Enron's profits from trading power in the state -- techniques that added to electricity costs and congestion on transmission lines.”
Enron also wanted to trade bandwidth like it traded oil, gas, electricity, etc. It launched a secret plan to build an enormous amount of fiber optic transmission capacity in Las Vegas. It was all part of Enron’s plan to essentially own the internet. Enron modestly sought to have all US internet service providers rely on Enron facilities to supply bandwidth, which Enron would sell in a fashion similar to other commodities.
In January 2000, investors quickly bought Enron stock following the announcement which drove the stock way up. At this point, Enron was a respected brand like Apple. A lot of Enron executives sold their stock and made millions of dollars.
As prices of existing fiber optic cables plummeted due to the vast oversupply, so did potential profits. Enron went back to playing accounting games by adding exaggerated revenue to their balance sheets although they were not making any money. A deal with Blockbuster to distribute videos over the Internet failed. Enron and Blockbuster envisioned Netflix, but neither the technology or the consumer demand was there to make it happen.
By the second quarter of 2001, Enron Broadband Services was reporting losses. While Enron had claimed that its broadband services would add $40 billion to the company's stock value, the final value was $408 million. In mid-2001, Enron pulled the plug on its broadband unit which had lost money.
The Beginning of the End
In the summer of 2001, the Wall Street Journal started to dig into Enron's finances, asking tough questions that Ken Lay could not answer. A high-level Enron vice-president, Sherron Watkins, had done her own investigating and found lots of problems with Enron’s accounting. She spoke with her bosses who did an “internal investigation” and found that all was well. Another employee, Margaret Ceconi, had figured out that Enron was cooking the books. Her bosses didn’t take her seriously. She was laid off. She contacted the Securities and Exchange Commission (SEC).
A year before, in the spring of 2000, the bull market was over and most tech stocks were crashing. One thing Enron could count on for many years was the growth of its high-tech stock portfolio as a way to raise cash to pay current obligations. Now that was gone and most of Enron’s business operations were not producing real profits. “We have no cash!” was how one high-level Enron manager put it.
Jim Chanos was a smart independent investor who followed a lot of companies and rooted out the fraudulent ones. He figured out that Enron had been playing games with its accounting for years. He checked Enron's spring 2000 filings and saw that they contained very high profits for the broadband unit. No one was making money in that area by 2000, so he knew it was bogus. He read another filing from the fall of 2000. “No matter how many times he read it, he still couldn't understand what it said.”
When confronted with mounting evidence that the cat was out of the bag, Enron adjusted its reporting and basically said that any problems were the result of a one-time issue. That was absurd. The company went on to report solid third quarter 2001 earnings, which was also nuts.
In October of 2001, the Wall Street Journal published damaging articles about Enron’s hazy accounting. Its stock was down to $26, a big drop from the $90 of a year before. The SEC began a formal investigation. Andy Fastow, the chief financial officer who really pushed the lying-about-profits envelope, was fired. The stock was down to $16.41.
The End
By late October, 2001, Enron had no money to pay its immediate obligations. Most businesses borrow money to finance operations; it’s routine. Since everyone thought that it was making so much money, Enron could always borrow money – unsecured by collateral – from big banks to cover what it owed. By the fall of 2001, the big banks realized that Enron was not in good fiscal shape so the loans stopped.
Jeff McMahon, who became CFO after Fastow’s firing, was one of the few people at the top of Enron who actually understood corporate finance. He knew that the company was on the ropes, something Skilling and Lay continued to publicly deny. Most of Enron’s deals were made assuming that the company would stay profitable forever as demonstrated by a high stock value. If the stock dropped below certain levels, a lot of debt that was owed became immediately due. With the stock consistently dropping now, lots of notes – about $2 billion in the fall of 2001 – needed to be paid immediately. With no cash, that was hard to do. Enron did raise some money but not enough. Meanwhile, what had been a profitable unit, electricity services, lost $750 million in the last six months of 2001.
Enron was looking for a buyer. Dynegy was a Houston energy company that was considered to be an Enron wannabe. Its president, Chuck Watson, was a pillar of the community. The two companies agreed on a deal, but things got complicated. One part of the agreement was that Enron’s credit rating not hit junk status. It dropped but was barely above junk level. The other problem was that Enron’s earnings were falling across the company. A lot of the accounting tricks were coming back to bite the company. As stock value and credit rating dropped, a lot of debt came due – another $2 billion in the last few months of 2001 alone. Even with money that Dynegy and a few friendly banks had provided in anticipation of the merger, it wasn’t nearly enough to pay the bills.
Dynegy was having second thoughts. Enron never revealed that it had lots of ticking debt time bombs ready to explode. Chuck Watson, was starting to wonder what else Enron was keeping secret. It didn't help that Ken Lay insisted that he retain a leadership position in the new company and that the top few hundred Enron traders and managers receive six- and seven-figure “bonuses'' for their great work. In late November, Enron’s credit rating dropped two notches below junk level. Dynegy called off the merger. Enron was done.
At the end of the year, 20,000 Enron employees had lost $2 billion as the stock crashed. The stock was down to 61 cents a share. On December 2, the company filed for bankruptcy. At the end, Enron<strong> </strong>owed $38 billion and had assets of only $13 billion. It was the biggest bankruptcy filing in US history.
Criminal Charges
Bob’s Take
In the 1980s and 1990s, Sue and I and the kids would visit Houston every year to see her family, and Enron was a big deal. Ken Lay was a star who gave lots of money to lots of charities. I still remember TV news accounts of the demise of Enron, with video of hundreds of employees leaving the headquarters building, their belongings in hand, crying. Not many of the regular people had any idea that their company was a big fraud.
Cooking the Books 101 Normally, accounting keeps businesses aware of what the numbers really are. Not so with Enron.
Enron had 600 CPAs who were charged with making the numbers look good regardless of what they actually were. If you worked at Enron and were paid really well, you didn’t ask too many questions.
Arthur Andersen, a highly respected operation, was Enron’s accounting firm. Andersen’s account executives who were charged with overseeing the numbers became chummy with Enron executives. They became best buddies and soon the Andersen people began to want to believe the numbers and didn't ask any questions. It was also a huge account - $100 million a year - so it was worth looking the other way. The firm’s job was to keep Enron happy and keep the high fees rolling in.
When Enron crashed in 2001, the insurance companies from which the lending banks had bought policies to cover possible non-payment of loans refused to pay. They were not told that much of Enron’s operating revenue was really loans. They had a good point.
Enron got great press So long as the company met or beat its earnings-per-share estimate, nothing else mattered, Enron found ways to always beat the target earnings. Harvard Business School did a case study that swooned about Enron’s business model. Fortune Magazine did puff pieces on the company and its leadership. CEO Magazine loved Ken Lay. Credit Suisse, a respected international finance company, visited their broadband unit and praised the “sheer technical excellence that was obvious from our walk through of Enron’s facilities.” The unit never made any money.
Enron and Theranos Alert readers - both of you - will recall my February, 2021, summary of Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou. That book exposed the fraud behind Theranos, a start-up created by Elizabeth Holmes, a bright Stanford dropout, who claimed that her company had developed a small machine that could quickly do a battery of tests with one or two drops of blood. It turns out that the machine never worked, but she managed to raise $8 billion from impressed investors. Theranos, her company, was run by two crooks, specifically Elizabeth and her boyfriend. Most of the employees believed that the test machine worked. Dozens of employees who sensed that all was not well stepped up to speak with Elizabeth and board members about their concerns. Usually, they were fired, but a few did bring their concerns to the Wall Street Journal and to the Food and Drug Administration. Those courageous whistleblowers caused Theranos’s demise.
In Enron’s case, many people were in on and actively promoting the fraud. The 600 CPAs, most middle managers, the traders who made the deals, and all senior managers were in on it. The entire corporate culture was fraudulent, not just a few leaders at the top. Enron was rotten to the core.
Did anything change after Enron? Probably not. After the bankruptcy, there were some serious laws passed by Congress. But, in the book’s Afterword, the authors point out that the mortgage crisis of 2007-2008 was much worse than anything Enron did. Perhaps more on point is the fact that the major financial institutions played more games with accounting than had Enron. Citigroup bundled $50 billion worth of sub-prime mortgages (translation: likely to not be paid) in a financial instrument and told potential investors that the exposure was only $13 billion. Like Enron, they lied. This was typical of the too-big-to-fail crowd. When the dust settled, many people lost their homes, but only one irrelevant middle manager did any time for his crimes. Some finance leaders had to pay small fines, but their companies made billions in the fraudulent run-up to the recession from which it took us years to recover.
