The Smartest Guys in the Room

I went to see Enron: The Smartest Guys in the Room last night. I'm a fan of business documentaries, so I expected to enjoy it, and I wasn't disappointed. The film does an excellent job of telling the story of Enron and helping to understand who the players were, and what they did. While I had certainly heard of Ken Lay, Jeff Skilling, and Andrew Fastow before, I now have a much clearer conception of their motivations and roles.

One of the best aspects of the film was its refusal to take the easy way out by just portraying Enron as a case of a few bad people ripping off the virtuous masses. Instead, the filmmakers pointed out the amazing level of complicity (or at least, willful ignorance) necessary to commit the fraud. They even invoked Stanley Milgram's famous experiments to show that ordinary people can become monsters under the right circumstances, which really made you think about how you would act in an Enron-esque scenario.

Speaking of complicity, especially damning was the evidence of wrongdoing by the investment banking industry. I've never placed much credence in stock analysts, and this film has reinforced that attitude. There are just too many conflicts of interest when analysts make recommendations.

I was a little disappointed that more specifics weren't given about Enron's various accounting and trading schemes. For example, the simple descriptions given of Fastow's LJM partnerships sounded so blatantly illegal that I don't understand how the auditors could have even considered allowing it. I guess that was partly the point, but I still feel like I'm missing something. At least concepts like mark-to-market accounting and incidents like the Nigerian barge deal were introduced and explained.

Go see this film. It's really well done, and it'll make you think.