J.P. Morgan Pressed on Enron Loan Data

Rep. Henry A. Waxman on Monday asked J.P. Morgan Chase & Co. to explain its role in a series of loans to Enron Corp. partnerships that may have helped keep debt off the energy trader’s books.

Waxman, a Los Angeles Democrat, asked J.P. Morgan to provide details about loans between an Enron unit called Sequoia Financial Assets and several Enron partnerships. Waxman is concerned that the transactions allowed Sequoia to avoid recording debt.

Waxman is asking whether J.P. Morgan designed the transactions to help Enron improve the financial picture it presented to Wall Street.

Transactions involving the Sequoia partnership “do not appear to have served a legitimate economic purpose,” Waxman wrote to William B. Harrison Jr., J.P. Morgan’s chief executive. “Rather, on their face, they appear to have been designed to allow Enron to covertly borrow hundreds of millions of dollars in undisclosed loans.”

Congress is stepping up its investigation into the role investment banks played in Enron’s bankruptcy filing. The House Energy and Commerce Committee, on which Waxman serves, sent letters last month to J.P. Morgan and eight other banks requesting information, including whether Enron pressured them to make investments.

J.P. Morgan and the other banks also are facing shareholder lawsuits that contend that the banks made billions in fees for helping to set up Enron partnerships that were little more than “Ponzi schemes” that helped inflate the company’s stock price.

J.P. Morgan has filed its own lawsuit that seeks to force Enron to release more than $2.1 billion it is allegedly holding on the bank’s behalf. Waxman indicated that court filings by J.P. Morgan in that case are raising a new line of inquiry for investigators looking at five partnerships: Sequoia, Choctaw, Cherokee, Zephyrus and Enron Finance Partners.