Bloomberg View columnist Barry Ritholtz interviewed the journalist and author Bethany McLean, a contributing editor at Vanity Fair and best known for writing one of the first stories critical of Enron when she was at Fortune.
McLean, co-author of the Enron book “The Smartest Guys in the Room” with Peter Elkind, first joined Fortune as a fact checker in the 1990s, she told Ritholtz. “It was the last golden age of journalism,” she said.
She wrote a column called “Companies to Watch” about stocks that could rise. But she noted that the stocks usually fell after the wrote about the companies and recognized that she was being sucked into Wall Street hype. “I felt burned,” said McLean, leading her to seek out short sellers.
McLean wrote about Enron after talking to a short seller but even then didn’t realize the full ramifications of what was going on at the company. “I was too naive to think fraud,” she said. “I focused on Enron’s price and its P/E ratio and people didn’t understand how it made money…Fraud would have surprised me.”
She said that CEO Jeff Skilling was convincing to others because of his personality and his charm.
McLean argued that if her article had not come out, Enron would still have collapsed. “What brought it down was a funding crisis,” she said. “My article highlighted at the time that its broadband business was collapsing…It was becoming more apparent that what [Skilling] was saying was at odds with what was happening.”
To listen to the entire conversation, go here.
