‘America’s 3rd Enron moment’: Adani Group CFO trolls former US Treasury Secretary on US banking turmoil
Adani Group CFO Jugeshinder ‘Robbie’ Singh on Saturday took a jibe at former US Treasury Secretary Larry Summers over the current banking turmoil in America and called it the country’s “3rd Enron moment”.
“Policy leaders need to be clear and decisive that depositors are not going to lose their money in large, medium or small banks. They can do that within their existing authorities,” Summers said in a tweet referring to the banking crisis set off by the swift collapse of Silicon Valley Bank.
Summers urged current Secretary Janet Yellen and other top US regulators to pledge that they will back the uninsured deposits in any banks that fail in the next year — an important move that could help build confidence amid the current turmoil.
Summers was speaking after news that Yellen had called an unscheduled meeting of the Financial Stability Oversight Council, which includes Federal Reserve Chair Jerome Powell and other top regulators. The gathering comes against a backdrop of continued banking strains in the US and around the world — with Germany’s Deutsche Bank AG in focus Friday.
In a tweet, replying to Lawrence H. Summers, Singh said, “In your own words America’s 3rd Enron moment”.
Summers is a Charles W. Eliot University Professor and President Emeritus at Harvard. He was the Secretary of the Treasury for former US President Clinton and Director of NEC for former US President Obama.
Singh’s Enron jibe was a throwback to a Bloomberg interview that Summers did last month in which, without naming Adani, he said, “We haven’t talked about it on the show but there’s been a kind of possible Enron moment in India.” He was referring to US short-seller Hindenburg Research accusing Adani Group of stock manipulation and improper use of tax havens – charges the company has denied. Hindenburg’s Jan. 24 report eroded more than $100 billion in the value of listed Adani shares.
Also read: 186 US banks at risk of failure similar to Silicon Valley Bank, says research; here’s why
What is Enron moment
The term “America’s Enron moment” refers to the scandal and subsequent bankruptcy of Enron Corporation in 2001, which exposed widespread accounting fraud and corporate malfeasance. Enron was one of the largest energy companies in the world, but its executives engaged in a complex accounting scheme to hide losses and inflate profits, leading to the collapse of the company and the loss of billions of dollars for investors and employees.
The scandal shook public confidence in corporate America and led to increased scrutiny of financial reporting and accounting practices, as well as the passage of new laws such as the Sarbanes-Oxley Act to prevent similar abuses in the future.
Even though Singh didn’t specify, America’s second Enron moment could be the systemic crisis that swept through markets in 2008, taking down Lehman Brothers and prompting government bailouts of large financial institutions.
Also read: European banks brace for potential contagion amid fallout from Credit Suisse and US bank failures
Global banking turmoil
The US financial system suffered a major setback with the collapse of two US banks, including the Silicon Valley Bank, and Signature Bank. This triggered concerns among investors about other potential risks and led to a widespread sell-off in banking stocks.
The incidents have triggered fears among investors about other potential risks that could be lurking in the banking system. The resulting panic led to a sell-off in banking stocks and other financial assets, with investors seeking safer havens for their money.
The collapse of these banks has also had ripple effects across the industry. The Credit Suisse Group AG was one of the hardest hit, and it faced significant challenges in its efforts to recover from the crisis. In response, UBS Group AG stepped in to acquire the beleaguered bank, hoping to prevent a more severe financial meltdown.
