“Lawmakers investigating the collapse of Enron turned their attention to Wall Street yesterday criticizing financial analysts for continuing to urge investors to buy Enron stock even as the company headed toward bankruptcy,” writes Richard Oppel in today’s New York Times.

“Several members of Congress suggested that Wall Street firms’ hunger for investment banking business and other conflicts kept them from leveling with investors.”

“Four prominent Wall Street analysts appeared before the Senate Governmental Affairs Committee yesterday and defended their decisions to maintain ‘buy’ ratings on Enron until close to the company’s collapse. They said they had no way of knowing that the company was issuing deceptive financial statements.”

” ‘Without accurate and complete financial reporting from a company,’ said Curt Launer, an analyst with Credit Suisse First Boston, ‘I simply do not have the proper tools to do my job.’ ”

“But other witnesses and some lawmakers said the analysts should have seen red flags in Enron’s financial disclosures as early as two years ago and taken Enron’s refusal to explain its complicated finances as a sign of trouble. ‘Why didn’t these analysts press for answers or see the lack of information as a warning sign?’ asked Senator Susan M. Collins, Republican of Maine.”

“Howard M. Schilit, an accounting expert who runs the Center for Financial Research and Analysis, an independent research firm, scoffed at the excuse that analysts could not have detected problems at Enron. ‘Everybody is saying, “they hid from us,” ‘ he said, but beginning in March 2000, he added, there were a string of warning signs in Enron’s public securities filings.”

“The problem, Mr. Schilit said, is that analysts who question the value of a popular company are branded as controversial. ‘If you want to move up the hierarchy of the Wall Street establishment, you don’t rock the boat,’ he said.”

“Yesterday’s hearing was the first to make a direct examination of Wall Street’s role in Enron’s rise and fall, but lawmakers are expected to spend more time on the matter in coming months.”

T”hey will focus on contentions that Wall Street firms agreed to invest in partnerships central to Enron’s collapse in exchange for underwriting business from the company. They are also expected to examine allegations that Enron officials threatened to stop doing business with the firms if they did not invest in the partnerships.”

“Lawmakers also want to know whether Wall Street officials learned about Enron’s hidden problems through their involvement in the partnerships and yet did not tell the public. ‘The bigger issue is: What did these investment banks know, and when did they know it?’ a Congressional investigator said.”