Lee Sachs was contacted for a second interview by Girth.  Lee concluded from this interview that Girth is going down the "Enron influence" path.  Girth did not probe the question of whether derivatives drive the physical commodity market, which as noted below was a big part of the first interview.  Girth asked Lee extensive questions about Enron's involvement in the legislation and who talked to whom and when.  Girth said that he had talked to the CFTC who said they got steamrolled on the energy exemption by the Hill.  Lee reminded Girth how the CFTC got themselves into this bind when they first issued the "Concept Release" paper, which the President's working group immediately denounced.  Lee said that the Working Group constantly told the CFTC that they should work out the issue with the Hill and to do so quickly because the CFTC had made a massive mistake with the Concept Release document.  Lee reminded Girth that while the Working group did not get into the specifics of the energy exemption, that in fact energy was already exempted prior to reauthorization and that it continued to meet the criteria laid out in the President's report.  I can go into that part of the discussion more thoroughly, but just suffice it to say Lee meticulously walked Girth through the safe harbor test and the background of the issue.  Girth asked Lee if I had talked to Lee about the issue after leaving Treasury, to which Lee said we talked but not about this subject and that he instead talked to Chris Long.  Girth asked if Ken Lay had talked to either Summers or Phil Gramm.  Lee said he did not think Ken talked to Summers about the CFTC reauthorization (but mentioned Ken's very constructive engagement on the Calif energy talks) and that as far as Ken talking to Gramm, Lee had no idea but assumed two Republican Texans would have lots of reasons to talk to each other.  Girth told Lee he would soon go on vacation and that they story would come after Labor Day.  

----- Forwarded by Linda Robertson/NA/Enron on 07/31/2001 05:37 PM -----


	Linda Robertson 07/10/2001 06:00 PM 	   To: Mark Palmer/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, James D Steffes/NA/Enron@Enron  cc:   Subject: Jeff Girth of NYT	


As I mentioned earlier to Mark, Jeff Girth of the NYT again today contacted Lee Sachs about Enron.  You recall Lee was Asst Secretary of Treasury for Financial Markets during the Clinton Administration.  From his conversation, Lee reports the following items were raised by Girth:  a) the state of energy trading products and investment climate; b)  Enron's role in this market; c) whether and how financial energy products drive pricing and supply of physical energy products (Lee told him emphatically no); and, c) whether government regulators understand these issues.  Lee said this is clearly an Enron specific story.  Lee thinks Girth came away from the conversation with more of a right perspective (namely that these are important markets and that we play a vital role).  Lee said that Girth was less focussed on passage of the CEA and the politics than Girth had been in an earlier conversation; almost all  of today's conversation was forward looking.  Girth told Lee that he had not told Lee "all" that is behind this story, but did say that there is an interesting twist (Lee thinks Girth perhaps something specific either on a document front or source).   Lee gave Girth a list of experts to talk to who are unbiased but clearly right thinking on the subject.  Lee suggested that Girth to:  Pat Parkinson at the Fed (the godfather of the "hands off" regulatory perspective for the OTC market), Bill Rainer, and Ed Rosen (a prominent attorney in NY).  Lee expects Girth to keep calling him.