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For Immediate Release
Office of the Press Secretary
January 10, 2002

Press Briefing by Ari Fleischer
The James S. Brady Briefing Room

      Listen to the Briefing

12:20 P.M. EST

  1. President's schedule
  2. Enron/Secretaries O'Neill and Evans
  3. Help for workers who lost savings
  4. Congressional investigation
  5. Prevention of future such bankruptcies
  6. Investment of Social Security funds
  7. India/Home Minister visit
  8. China
  9. Greece/Prime Minister visit
  10. Call for a budget summit

MR. FLEISCHER:  Good afternoon.  Let me give you a report on the President's day.  The President this morning spoke to Egyptian President Mubarak.  The President called President Mubarak to discuss the situation in the Middle East and the campaign against terrorism.  The President said that he will continue General Zinni's mission to help the parties achieve a cease-fire and to implement the Tenet-Mitchell agreement.  And the President also, however, registered his deep concern about the arms shipment intercepted last week.

Both leaders agreed to continue their efforts to help bring peace to the Middle East.  They also pledged to cooperate closely to eradicate terrorism.  The President expressed his appreciation for Egypt's help in this regard.  And the leaders noted their satisfaction that the U.S. will speed up economic assistance the Egypt in order to help Egypt address its economic situation.

The President also did a drop-by of the National Security Advisor's meeting with the Home Minister of India.  The drop-by was designed to underscore the United States commitment to strong bilateral relations with India and to work together to combat terrorism in all its manifestations.

The President again expressed his outrage over the recent terrorist attacks in New Delhi and Srinagar.  The President told Minister Advani that he has urged President Musharraf to take appropriate steps against extremists operating in and from Pakistan.  The President also stressed the importance of solving the India-Pakistan differences through diplomatic and political means.

The President will be shortly departing to sign into law the Defense Appropriations measure at the Pentagon.  This measure will give the Pentagon what it needs to fight the war on terrorism now.  It provides more than $26 billion of spending above last year's level.  It also provides for a much needed, very important pay increase for military personnel, as well as assistance to help military personnel receive better housing wherever they are based.

The President later today will meet with the Prime Minister of Greece to also talk about the war on terrorism, as well as the upcoming Olympics in Greece.

And one final note I want to report to you on.  Secretary Chao was joined this morning by Secretary Evans of Commerce, and Secretary Mineta of the Department of Transportation at the Department of Labor's work force recovery conference which took place at the Washington, D.C. Convention Center.  Thousands of people attended the conference this morning to receive information from the federal government to help them at this day-long job and skills fair.  More than 200 representatives from the government agencies and the private sector were there.  And the conference was planned to help people in the Washington, D.C. metropolitan area who have lost jobs as a result of the aftermath of the September 11th attacks. So the President is very pleased to see his administration is bringing help to people who need it.

Q    Ari, when you spoke this morning to Secretary O'Neill and Secretary Evans, was it your impression that when Mr. Lay called them last fall, he was asking for a bailout, in the style that was given to Long Term Capital Management, organized by the Federal Reserve, but supplied by private sector?

MR. FLEISCHER:  I can't speak for anybody other than Secretary Evans and O'Neill in this case, in terms of what they told me.  And what was told to me this morning was, Secretary O'Neill said that he had been contacted by Mr. Lay in the fall of last year, and Mr. Lay brought to the Secretary's attention his concerns about whether or not Enron would be able to meet its obligations.  And he expressed his concern about the experience that Long Term Capital went through, when Long Term Capital went bankrupt.

Secretary O'Neill then contacted Under Secretary Fisher to ask him to evaluate whether the comparison was apt.  And the Department of Treasury was advised that it was not apt, as a result of Secretary Fisher's review.

Q    It sounds like he was asking for a bailout.

MR. FLEISCHER:  I don't characterize it one way or another.  I just report to you what was said.  I leave the characterization to others.  That was the conversation with Secretary O'Neill.

Q    Ari, did that conversation with Secretary O'Neill happen before October 16th of last year, when Enron announced a very surprising charge against its earnings, that they had $500 million of losses that had been previously unreported?  Did the Secretary know that before investors and workers did?

MR. FLEISCHER:  The Secretary told me the date was October.  He did not know the exact date.  But I'm sure Treasury would be more than happy to provide it.

Q    Would he have had an obligation, if he knew that information, to pass it on to investors and workers?

MR. FLEISCHER:  Terry, again -- Terry, on all the questions I answered this morning, what you asked me about -- didn't the administration have any contacts where they were given information by Enron about their financial condition -- I've given you everything I have on that topic from the Secretaries.  I'm sure they'll be happy to go into that with you.

Q    One more.  On the criminal investigation that is underway, John Ashcroft received $25,000 -- his own PAC received $25,000.  Is that a conflict of interest?  Can he independently investigate -- manage the investigation of this situation, given that his campaign was a personal financial benefactor?

MR. FLEISCHER:  The President has full faith and confidence in the professional prosecutors at the Department of Justice and the Attorney General to do what is right in pursuing this investigation, which must be pursued, to get to the bottom of all of the allegations of criminal wrongdoing by Enron.  The Department of Justice has conflict of interest rules, and if there is anything that the Attorney General was aware of that would trigger it, the President knows he will take appropriate action.

Q    Did Mr. Lay call Mr. Evans the same day as he called Secretary O'Neill?

MR. FLEISCHER:  Well, since I don't have the day that he called Secretary O'Neill, I can't answer that.  It was a similar time frame, yes. They both recall it was October.

Q    Did either of the two of them pass along that information to the President in that same time frame?

MR. FLEISCHER:  They did not.

Q    They did not?  So they made this decision on their own. without withholding anyone?

MR. FLEISCHER:  That's correct.

Q    How about anyone at the White House, like senior officials, any other -- it was all in the Commerce and Treasury Department?

MR. FLEISCHER:  There's nobody here that I'm aware of that anybody's brought to my attention.

Q    Given the ramifications of this from an economic and regulatory standpoint, and also potentially from a political standpoint, because of the generosity of this company and its executives not only to the President and Republicans, but to Democrats as well, you understand the political ramifications of this as well.  And people have been asking here for weeks about contacts between the company and the President and the administration.  Why are we just hearing about these conversations that took place months ago, now?

MR. FLEISCHER:  Every question you've asked me before or asked the President was about the President.  I speak for the President.  This morning, Secretary O'Neill, Secretary Evans made the information known, and we immediately shared it and provided it to you.

What's important here, in the President's opinion, is that this needs to be investigated from a criminal point of view to determine what went wrong with Enron, as well as from the Department of Labor, to protect the pensioners who worked for Enron, the employees of Enron.  But in addition, it's very important to look at policies to make certain this doesn't happen to anybody else.  And that's what the President announced this morning.

Q    But, Ari, you also speak for the government.  You come here some days and tell us about the Secretary of Labor going to speak to a skills conference.  You sometimes update us on things on the war on terrorism, or Secretary O'Neill's actions on the financial front on the war on terrorism.

Nobody at that moment in your office or the economic advisors sent out a government-wide advisory saying, hey, this is coming up a lot?  Anybody talk to Enron?  Anyone talk to Ken Lay,  anyone having anything to do with this, and to get a chronology of contacts with the government?

MR. FLEISCHER:  That's correct.  There has been no such effort like that.

Q    When did the President learn that the two Secretaries had talked to Enron?

MR. FLEISCHER:  This morning.

Q    They did not tell him until this morning?

MR. FLEISCHER:  That's correct.  I think it should surprise no one that people in the administration receive phone calls from people who are either in business or in unions.  It happens every day.  It's not uncommon for people to receive phone calls from business leaders across the country, from union officials across the country.  That happens as a common occurrence, is always taking place.

Q    But, Ari, nobody is looking at this in a vacuum.  And you understand that.  Everybody understands that Don Evans ran the Bush campaign, and now he's Secretary of Commerce.  There are close ties with this administration and Ken Lay.  So I guess the question to follow on John's point is, why didn't the alarm bells go off sooner to give us as much as -- give the American people as much as the administration had about contacts with regard to a huge financial collapse?

MR. FLEISCHER:  As soon as you asked the question we gave you the answer.  As soon as I had the information, you got it today.  I think your question should be just the opposite -- provide it to you today.

Q    Are you saying there were no questions posed about contacts in the past?

MR. FLEISCHER:  Not to me about the administration.  I was asked a question yesterday morning about the White House, and I answered it.

Q    Ari, first of all, do we know if any other Cabinet Secretaries have had contact with Ken Lay or representatives of Enron?  Have you now gone through all of the rest of the Cabinet to --

MR. FLEISCHER:  As I indicated this morning, I cannot speak definitively for each and every entity or soul in this government.  I'm sure you're free to ask, you're free to find out.  But I want to remind you that communication is not a wrongdoing.  What took place here was, they received phone calls and took no action.  The charge has been, did the government take any action.  And the answer from these two officials is no. And I think if you were going to go down this road, I think it's also fair to say, who in the entire town had any contact with Enron or phone calls.

Q    When did the President learn of the financial straits of Enron, and who told the President that?

MR. FLEISCHER:  He learned last fall, and I couldn't tell you if he learned as a result of media accounts when everybody wrote that Enron had gone bankrupt, or through any other mechanism.  He learned last fall.

Q    But Enron didn't go bankrupt until December.  And we're talking about telephone calls in mid-October.

MR. FLEISCHER:  That's when the President learned.  Last fall.

Q    So nobody sat down with the President at any point and -- Ken Lay felt the need to warn the Treasury Secretary and warn the Commerce Department, but nobody warned the President that the biggest energy trading company, the biggest bankruptcy was on the verge of happening, and nobody told the President?

MR. FLEISCHER:  Bankruptcies happen in our economy.  And it's not uncommon for people who are in the community, business community or in the labor community, to talk to a Cabinet Secretary to tell them about the financial status of their business, and it ends there.  That is not uncommon.

Q    But I'm trying to get a yes or no --

MR. FLEISCHER:  I think it's just curious, because your questions always seem to be, up until today --

Q    Are you saying that nobody told the President?

MR. FLEISCHER:  In the case of those two, that's what I said, and I told you the President learned about it --

Q    And how about nobody else?

MR. FLEISCHER:  The President learned about it last fall.  I indicated to you I don't know the exact mechanism of how the President learned about the bankruptcy --

Q    Why did he suddenly take note of it?

MR. FLEISCHER:  -- but he learned about it last fall.

Q    As far as the Home Minister of India's visit to the White House is concerned, did the President give him any commitment -- like he said yesterday that he needs a clear promise from Pakistan General Musharraf as far as terrorism is concerned? Because the Home Minister was sending a message that if Pakistan does not apply or take action, then options for India are still open.  So where do we stand today if Pakistan doesn't take any actions?

MR. FLEISCHER:  Well, the President is appreciative of the steps that have been taken by President Musharraf.  President Musharraf has taken some positive steps.  He has condemned the terrorist attacks; he has arrested the leaders of the Jaish-e- Mohammed and the Lashkar-e-Toiba organization. He's closed their offices.  The President believes there's room for additional work to be done and President Musharraf is moving forward.  And the President reminds all in the region that the war there is against terrorism and not a war between India and Pakistan.

Q    Just to follow.  As far as China is concerned, nuclear weapons and all that, I've been -- for the last five years or so that the future threat of the United States will be China, and now those reports are coming true.  So where do we stand as to the future Chinese threat to the U.S. on nuclear weapons are concerned?  And Pakistan is buying -- General Musharraf was in Pakistan while the U.S. was fighting in Afghanistan, and he bought 46 of the fighter planes with U.S. money which the U.S. gave Pakistan, $1 billion.

MR. FLEISCHER:  Well, as the President said when he visited Shanghai last year and met with President Jiang, the President sees opportunities for much progress to be made with China.  China is now a member of the World Trade Organization.  The President believes that there is much the United States and China can do, particularly on the trade front.  There are issues where the United States and China disagree, and in all cases, any disagreements will, of course, be resolved through political dialogue and through diplomacy.

Q    Yes, I want to ask you about Enron.  The President said he's worried about the effect on the stockholders, on the pensioners and on the American people.  Is there anything the government can do to help people who have lost all their savings?

MR. FLEISCHER:  That's what the Department of Labor is looking at now in regards specifically to the Enron case.  The Department of Labor -- what's happened as a result of the President's announcement today is the government is proceeding on two tracks.  One is the investigative track, dealing directly with Enron, and on that front, the Department of Justice yesterday announced a criminal investigation of Enron to determine whether or not there is criminal wrongdoing.

By the same token, the Department of Labor is also reviewing and investigating Enron to see what took place with the workers' pensions at Enron to see if anything can be done.  More broadly than that, the President thinks it is just crucial to focus on how to prevent this from ever happening again.  There are major policy implications that have to be explored.

So, today, the President directed his government to take a look at, one, how to protect people's pensions as a result of the way pension rules are written for people's benefits within the corporations, as well as taking a look at the accounting practices, procedures that are underway so people have accurate financial information.

Q    The President said this morning he hadn't talked to Mr. Lay in the last six weeks.  He also said that the last time he saw him was last spring.  Have you been able to establish when the last conversation between the two was?

MR. FLEISCHER:  It seems like it was last spring.

Q    So they never talked in between last spring and --

MR. FLEISCHER:  That's what the President said this morning; that's correct.

Q    I'm just wondering -- you're painting a picture then -- and I'm wondering if this is accurate -- that the President made a specific effort to stay out of the loop on this, or are you saying that when the decision by the administration was made not to offer any kind of bailout to Enron, that in fact the President made that decision or at least signed off on that decision, or was he specifically not part of it?

MR. FLEISCHER:  No, it was exactly as I indicated to you this morning. Secretary Evans talked to Secretary O'Neill, and they agreed that no action should be taken.

Q    Did the President know about that?  Did he sign off on that conclusion?  Or, as I suggested earlier --

MR. FLEISCHER:  That was, appropriately so, between the Cabinet Secretaries.

Q    You didn't answer the question, Ari.  The question was, did he sign off on it?  And the other question is, did he make a specific decision to distance himself from any discussions or decisions about Enron, or from even being briefed as to the accurate and current condition of their financial --

MR. FLEISCHER:  I repeat my answer to you.  Secretary Evans called Secretary O'Neill, and they agreed that no action should be taken in response to the call to Secretary Evans.

Q    The answer is no, he wasn't briefed and didn't sign off?

MR. FLEISCHER:  That's what I've said to you.  I'll say it for the second time now.

Q    No, you didn't say it, Ari.

Q    Ari, this morning you warned Congress against launching partisan investigations on this issue against the administration.  Would it be improper for Congress to look into ties or possible contacts between Enron officials and administration or White House officials?  Would that be improper?

MR. FLEISCHER:  I think that it's very important for the federal government, at all levels, from the Executive Branch to the legislature, to look very carefully at what has happened to Enron, to determine whether it was criminal wrong doing on behalf of Enron, and also to see what needs to be done to protect people so this cannot happen to them and their companies, and to protect people's pensions.

If this were to become what people have become so used to in watching Washington, which is a politically-charged, a politically-motivated effort to blame one party, or to look only at one party, when clearly Enron is a corporation that has given hundreds of thousands of dollars to both parties, then I think people would think that the Congress is not on the right path.  And I hope that won't happen.  It's very important for Congress to take a good hard look at the facts here, and to develop good policies.  And that would serve the country well.

Q    What are you saying, exactly?


Q    Can I follow up on the answer?

MR. FLEISCHER:  Go ahead.  Follow up, and we'll go to John.

Q    Are you saying that Congress should only look into contacts between Enron and the administration if it also looks into contacts between Enron and Democrats?  Or are you just saying that they shouldn't look into contacts between Enron and the administration at all?

MR. FLEISCHER:  It's appropriate to take a look into what led to the bankruptcy of Enron, and whether or not anything was done wrong in the process of Enron going bankrupt.  But if that's a politically-charged or politically motivated effort, then I think the American people are going to say that this is just another fishing expedition, another endless investigation, the type that they've soured on over the last many years.

Q    You still haven't answered the question.  Can Congress look into contact between Enron and administration officials?  Is that proper, or not?

MR. FLEISCHER:  Again, it depends if it's done -- Congress has the right to do as it sees fit, and Congress will act as it sees fit.  I think that it's important for Congress to act in a way that helps solve the policy problems, and not in a way that is suggestive of partisan, politically-charged investigations, that I think people have been tired of.

Q    Ari, these two Cabinet Secretaries are officers, if you will, of the United States government.  The United States government has regulatory and statutory authority over pension plans, over 401K plans, over publicly-held and publicly-traded companies.  If Ken Lay conveyed to them information about the company's finances that was contrary to what the company was saying publicly at the time about its finances, did they not have a legal and fiduciary responsibility to tell the SEC, to tell the Labor Department, to tell other regulatory agencies in the government to look into this company and make sure everything was okay?

MR. FLEISCHER:  I think those are questions you can properly address to the agencies to see at what point -- and as I told you last fall, the government began monitoring all of these issues, so those efforts did begin --

Q    No phone calls to other agencies to put them on alert?

MR. FLEISCHER:  -- those efforts did begin last fall.  I can only relate to you everything that I have been told by the Secretaries this morning.  I think these are appropriate questions, and I know the Secretaries will be happy to take them.

Q    Ari, has anybody in the administration had contact with Moody's or other credit grading agencies concerning Enron?

MR. FLEISCHER:  I can only tell you about what Secretary Evans told me this morning, and he did not.  Again, you ask about anybody in the administration -- I can tell you the President did not.  And I just don't know if anybody else in the administration -- it's a very big administration.  There's no information that I have that would lead me to suggest the answer to that is yes.

Q    Ari, does the President feel he was appropriately served and informed by his Cabinet officers, who apparently at least considered the possibility of a bailout for this company with huge political and economic consequences?

MR. FLEISCHER:  Again, I think you need to -- it's your words, it's nobody else's words, about what they considered or what the nature of it was.

Q    You said they were informed of the situation, looked and decided it --

MR. FLEISCHER:  To answer your question directly, the President is pleased with the actions that his Cabinet Secretaries took.  He thinks they acted wisely and properly.

Q    A couple of questions.  First of all, you just said that we should take a look and see if anything could be done that could prevent this from ever happening again.  A couple of minutes before that, you said bankruptcies happened.  What -- prevent what from ever happening again?

MR. FLEISCHER:  Well, under the rules for 401Ks and pensions that are under the purview of the Department of Labor to protect pensions of employees, they have options they can look at, and this is exactly what the President charged the Department of Labor in looking at today.

One issue involves exposure.  Are people's pensions flexible enough that they are invested in more than just the company in which they work. Obviously, if your entire retirement program depends on your company's retirement assets or stock market portfolio, then you are very vulnerable to that company going either up or going down.  Diversification in portfolio is a way to spread out that risk and to serve people very well.

Obviously, many people who have been invested in the stock market, in companies, are going to retire in great comfort and with a lot of wealth because they were invested in companies.  But the question the Department of Labor will now look at as a result of the President's direction is diversification.  That's one example.

Holding periods is another example.  The President is concerned about a situation in which regular working employees could not sell their stocks while others were able to.  The President charged the Department of Labor with taking a look at the holding periods by which employees are prohibited from selling their stocks as part of their retirement funds.  Those are the types of things that can be done to help other workers to keep their pensions.

Q    In a related question, what does this say to the President's desire to allow people to invest a portion of their Social Security in the stock market, given that, as you said, bankruptcies happen, apparently quite large ones?

MR. FLEISCHER:  This is not the first bankruptcy, and it won't be the last bankruptcy in a free and capitalistic economy, in which the going-ups and the going-downs allow people to make investments and retire with wealth.  And the President continues to believe, and as I indicated, there are many people who are enjoying retirement in wealth and in comfort as a result of now, for the first time, being given access to 401Ks in their retirement plans.  It's been a very healthy trend throughout society that people have been able to retire with money invested in companies.  And it's led to, throughout the '90s, in fact, one of the greatest expansions in people's wealth, as a result of the increased ownership Americans have had through mutual funds and through stocks.

So it's a widespread phenomenon throughout the economy that people have their money invested in their company's retirement plans, and it served people well.  The President wants to make certain, though, that in those instances in which there are bankruptcies, protections can be put in place.  They have been in the past.  The President has directed the Secretary of Labor to look at how those protections can be improved.

Q    But that does not speak to the investment of Social Security funds in the stock market.  The President is no less committed to that now than before Enron's bankruptcy?

MR. FLEISCHER:  No, that's just what I indicated.  The President remains fully committed to it because of the reasons I gave.  As a result of people being invested in the stock market and having 401Ks, people are now retiring with more money than they ever did before, even with companies going bankrupt.

Q    Ari, back on the investigations, are you aware of any White House officials hiring outside attorneys at this point?


Q    Have there been any -- in anticipation of the investigations, have there been any discussions yet where people are beginning to anticipate who might be called in any of the various investigations, either through Justice or up on the Hill? Here at the White House specifically.

MR. FLEISCHER:  Nothing that I've been told about, or am aware of, no.

Q    There have been no communications, no meetings --

MR. FLEISCHER:  I'm not aware of any of that here.  I'm not aware of any of that involving people in the former administration.  I'm not aware of any of that.

Q    May I follow up Jacobo's question?  I know this sounds idealistic, but is there any mechanism in the government to get the money back to the people who very naively lost their funds?  They were not responsible for what happened to them.  Can the money be taken away from those who profited if it's found that fraud was committed?

MR. FLEISCHER:  That's a question you need to address to the Department of Labor.  It's all covered by the labor laws dealing with pensions.

Q    Would the White House like to see this happen if possible?  The President has expressed concern --

MR. FLEISCHER:  I'm not going to -- that's something the Department of Labor is more expert in.

Q    Mr. Fleischer, a question and protest in the meantime.  My name is Lambros Papantoniou, correspondent here in Washington of the Greek opposition leading newspaper in Athens, assigned to the White House. Earlier today, I was told officially that only my name was excluded from the three correspondents from the pool which is going to cover today's meeting between President Bush and the Greek Prime Minister Costas Simitis. The exclusion was purely on a politically-based criteria.

The Office of the Prime Minister, next-door, is claiming that you, the White House, eliminated my name from the list; something I do not believe at all.  Since this is an act of bias and discrimination against the treatment of the press and the democratic rules, could you please comment. (Laughter.)

MR. FLEISCHER:  Let me take a look at that.  As you know --

Q    -- clarify what happened exactly?  Who -- because they say exactly the opposite, which I do not believe.

MR. FLEISCHER:  Let me take a look at it.  This is the first that I've heard about any of this.  As you know, any time there is a pool event, we must shrink the press corps down to a group that is sizeable to fit everybody in.  So we'll take a look at whether you were part of that pool or not.

Q    -- correspondents here in Washington, we are three, and excluded only one.  I'm not talking about those who are coming from overseas.  So it is very important to pay your attention.  And you told us that they are going to discuss terrorism and also the Olympic Games.  Do you know if they're going to discuss also the examination of the framework of Greek-Turkish relations?

MR. FLEISCHER:  Let me suggest you allow the meeting to take place. And there will be a pool report, and let's see if you're going to be part of that pool or not; I'll take a look.

Q    I wanted to get back to Ken's question.  Has Judge Gonzales or anyone in the White House sort of taken on the responsibility of doing information-gathering or being the point person for any requests for information from the White House?  Has the President organized a way to deal with this Enron situation?

MR. FLEISCHER:  The only request that I'm aware of that has been received by the White House were requests made to the Vice President's Office and the Vice President's Counsel has been pursuing that.

Q    Is there any move to consolidate the effort to put information together and be responsive to requests in one central place?

MR. FLEISCHER:  I think one thing you've always seen in this White House, we always work together, we are one team and we work very closely together and talk with each other.  But if you're asking something more formal, if you're making comparisons to the way business used to be done in the White House, we don't always do our business -- we do our business a little differently.

Q    May I ask this again?  Has the President felt, for appearance's sake alone, that it was necessary for him to keep distance between what was happening with Enron and himself?

MR. FLEISCHER:  No.  I mean, I think you've seen that in the times that you've asked the President questions.  He's answered them directly.

You ask me questions; I answer them directly.  This morning, when I had the answer -- the question was, has anybody in the administration had contact -- I shared everything I knew with you.

But I want to remind you that communication is routine between this country and the people in government.  What you're asking about is wrongdoing, and I haven't heard anything in here, from anybody, suggesting wrongdoing.  You've only said contact, communication, as if there is something wrong, inherently, with contact and communication, and there is not.

Q    That's actually my point, which is, given that all that is accurate -- that's why I asked the question about why, for instance, when Ken Lay calls the administration and says, we might be interested in a bailout or what can be done, and the administration makes the decision to say, no, not in this case, not appropriate -- given the size of the company, given the importance to the economy, and given, quite frankly, the personal relationship and business political relationship that the President has had, that he wouldn't either be informed or actually make that conclusion or sign off on it, as he will with other very important matters.

MR. FLEISCHER:  Again, it's at the Secretary level.  And the Secretaries determined that they would not intervene, and no action was taken.  That is what took place, and properly so.

Q    But what you have, in this case, Enron is the largest single donor to George Bush's political career -- from his house race, to his governorship, to his presidential run.  So there is certainly the appearance here of a possible conflict of interest.  Why wouldn't the President want to know what was going on with this company?  The better to keep his distance from it, if necessary.  Why wouldn't his subordinates feel it appropriate to feed him the information that they got, however belatedly?

MR. FLEISCHER:  I think that just the opposite is suggested, that the government acted as the government should.  It took a look at this from a substantive matter, from when Mr. Lay made those phone calls, and decided the appropriate step was not to intervene or take any action.  I think if anything else were done, you would be making just the opposite charge, that he took action because of his prior relationship with Mr. Lay.  And that is not the case here.  That did not happen.  This was done based on judgment of the Cabinet Secretaries and the merits, and they decided properly and wisely so, in the President's opinion, that the government should not have intervened in any way after Mr. Lay made the phone call to Secretary Evans.

Q    But, Ari, the question is -- looking at it a little bit differently, the reason to inform the President may not be because this is a friend of his or a big political donor.  The President, throughout the fall, was well-informed about the trouble in the airline industry.  This is an economic question.  And this is a big company that went bankrupt.  A lot of people were hurt by it.  There were questions about the impact it might have on the energy sector.  For economic reasons -- the President's in the middle of a recession, doing everything he can -- why didn't these people feel it made sense to at least alert him that a major company that might have a dramatic effect on a big sector, and you're worried about the economy, why didn't they tell him?

MR. FLEISCHER:  I think the answer to that is very much in what I told you earlier this morning, and repeated again right now, that when Mr. Lay called Secretary O'Neill to raise the issue involving Long Term Capital and the experience Long Term Capital had, in which it did have an impact, sector-wide, he brought that to the attention of the Secretary of Treasury and said that he thought the financial condition -- this is what Mr. Lay told Secretary O'Neill -- that the financial condition of Enron could have similar implications as Long Term Capital.

Secretary O'Neill asked Under Secretary Fisher to explore that.  Under Secretary Fisher and the Treasury Department concluded that was not the case, that this was isolated and unique, and focused on Enron Corporation, and was not symptomatic of anything sector-wide.  Just to the contrary of what you said.

Q    I just want to make sure that I understand.  Even now, with three months hindsight, the President is not in any way, at all disappointed that he wasn't informed of any of this?

MR. FLEISCHER:  No, the President was aware, of course, last fall about what the condition of Enron was, just like everybody else was.

Q    About the specific conversations with Secretary Evans and Secretary O'Neill?

MR. FLEISCHER:  The President thinks they acted properly in all times, and did the right thing.

Q    -- in three months hindsight?

MR. FLEISCHER:  That's correct.

Q    Can I make sure we're not missing a question here?  You say you're not aware of any communication after those conversations by Secretary Evans or Secretary O'Neill to the White House or senior officials here.  Does that include the Vice President and his staff?

MR. FLEISCHER:  Nothing that was brought to my attention or that I'm aware of.  Again, I cannot speak with 100-percent certainty about every single person in the administration that has thousands of people, or even for the top officials in which there are scores.  And I know you'll ask all the relevant questions.

But, again, I just want to remind everybody the difference between communication and contact and wrongdoing.  And I think these same questions are going to be addressed to this administration -- I recognize that.  I think in fairness, they need to be addressed if you are pursuing this line. This has been a situation that's been underway for any number of years.

Q    Ari, the criminal investigation of President Clinton's "Pardongate" was assigned to the U.S. Attorney for the Southern District of New York last February.  Now, Mary Jo White has retired without one word about this major scandal of fearful abuse of the presidency.  And my question is, will President Bush, rather than allowing this to just die, give any consideration to assigning this to Time Magazine's Person of the Year, who is a very effectively experienced as a New York federal prosecutor?  I mean, he's not going to let this die, is he, Ari?

MR. FLEISCHER:  Again, any questions involving Justice investigations are Justice matters.

Q    All right.  When the President was with the Texas Rangers, he never called for the Atlanta Braves or the Cleveland Indians to change their names, because a few professional Indians so demanded.  So he doesn't support the current drive to get the Washington Redskins to change their name, does he?

MR. FLEISCHER:  Not a topic I've talked with him about.

Q    Ari, a few minutes ago -- back on China -- you said the U.S. from time to time will have differences with Beijing and will endeavor to work out and resolve those differences.  But is the President at all concerned about an apparent pattern by Beijing to essentially ignore the U.S. concerns about religious persecution and continue in that --

MR. FLEISCHER:  And that is -- you put your finger on, one of the biggest differences between the United States and Beijing, and that is, the importance of China respecting religious freedom and people's right to worship as they see fit.  That is an issue in which the United States and China have differed, and that has been made very clear to Chinese officials and continues to be made clear to Chinese officials.

Q    John Spratt, who is the ranking member of the House Budget Committee, today called for a budget summit to try to delineate some parameters for the budget and prevent -- reduce the deficits.  Does the White House -- are you aware of that, and do you have a response to that?

MR. FLEISCHER:  The President looks forward to submitting his budget to the Congress, which will take place in early February, and then he hopes that Congress will give it a fair consideration.  The President believes that the process that Congress has with the House and Senate committees taking up the budget and considering them is the best process.

This will be an interesting year, because now the Senate, of course, being in Democrat hands, will have to come out with a budget resolution, and the House will come up with a budget resolution.  It will be very interesting to see, given the Senate's new control, what 50 senators in the Democratic Party and the Senate will be able to come up with.

Q    Thank you, Ari.

END                              12:50 P.M. EST


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