Under an arrangement with Enron's board, Lay could repay his loans from the company with Enron stock. By August 2001, after Jeff Skilling resigned as chief executive, [Joanne] Cortez said she noticed Lay used stock to repay the entire $4 million on the credit line with stock, then borrowed the same amount the next day. The pattern of borrowing and repaying with stock continued into the fall, Cortez said.
"It made me question if this was being used as somewhat of a tool to sell shares," she said.
Bingo. More specifically, Lay was using it to convert his Enron stock into cash, to monetize his holdings, which were falling in value. Normally, a corporate officer would have to report stock sales to the Securities and Exchange Commission, but by selling shares back to the issuer, Lay wasn't required to.
It's a simple system: Borrow $4 million. Repay with a worthless asset whose value is determined by propped-up market perceptions. Repeat day after day after day.
Ken Lay borrowed $77 million and paid it back in Beanie Babies.
Cortez's story is heartbreaking. She kept a secret log of Ken Lay's "transactions," never selling her own Enron stock because she was afraid that her knowledge of Lay's activity constituted her being considered an inside trader.
This happened in 2001, the same year that Ken Lay was having his secret energy policy meetings with the former CEO of Halliburton, Dick Cheney.
Top-down class warfare, at least in its current Republican guise, simultaneously depends upon and crushes the faith and goodwill of ordinary people like Joanne Cortez who are trying to do the right thing, even as their leaders fuck them over sixteen different ways. Nowadays we see it everywhere in the US, but especially in finance, in foreign policy, and in religion.
