As Enron Corp.’s bankruptcy continues to take its toll, two subcommittees of the House Financial Services panel have scheduled a joint hearing for next Wednesday to assess the effects of the company’s financial breakdown on commodity markets, as well as the reasons behind Enron’s overstated earnings, its potential mishandling of employee 401(k) pension plans, possible securities fraud and accounting irregularities.

In a related development, House Rep. John Dingell said this week he expects Securities and Exchange Commission Chairman Harvey Pitt and his agency to carry out a “vigorous and fair investigation” into the failure of Enron and “any and all other matters involving your former [accounting] clients,” whose interests Pitt represented for two decades as a private lawyer.

The joint hearing will be sponsored by the Subcommittee on Capital Markets, Insurance and Government-sponsored Enterprises and the Subcommittee on Oversight and Investigations at 10 a.m. on Dec. 12. The two panels have invited the SEC’s Pitt, Enron CEO Kenneth Lay and Arthur Andersen CEO Joe Berardino as witnesses.

The House Financial Services Committee, formerly the House Banking Committee, “[has] got to move past the headlines and get the facts on Enron,” said Committee Chairman Michael G. Oxley (R-OH). The subcommittees plan to give special focus to the financial hit that Enron employees’ retirement savings took because the company overstated its earnings by $583 million for the past four years.

On average, Enron employees have more than 60% of their retirement savings wrapped up in company stock, which has fallen from the lofty level of more than $80 a year ago to 83 cents a share early Thursday, according to Oxley. Department of Labor officials have said that this may be the largest loss ever sustained by a single company’s retirement fund, he said. In addition to Enron workers, millions of others who are invested indirectly through other retirement plans and mutual funds have sustained large losses.

“It looks to me like a whole bunch of innocent people got crushed here,” said Capital Markets Subcommittee Chairman Richard H. Baker (R-LA). “We need to find out whether the retirement savings of Enron workers and the mutual funds of a lot of other people were victims of fraud or any violations of existing securities laws. Do we need better disclosures or accounting standards that give investors the real picture? But what I’d like to know, for starters, is how this happened, could it have been avoided, where were the warnings from the experts, and how do we avoid a similar collapse in the future.”

Given the “far-reaching implications” of the Enron financial turmoil on the national economy, “we need to determine why required disclosures gave no indication of these problems until only recently,” said Oversight and Investigations Subcommittee Chairwoman Sue W. Kelly (R-NY).

The Financial Services Committee and its subcommittees have jurisdiction over the country’s securities markets, the SEC, accounting, banking, insurance and domestic and international monetary policy.

Elsewhere on Capitol Hill, the vocal Dingell chastised Pitt for a speech he gave in October before the American Institute of Certified Public Accountants (AICPA) in which he said the SEC “has not…always been a kinder and gentler place for accountants,” and that “those days [were] ended.” Pitt represented the AICPA and the Big Five accounting firms, including Enron’s auditor Arthur Andersen, during his years in private law practice.

In a Dec. 5 letter to the SEC chairman, the Michigan Democrat said he was “deeply troubled by the tone and tenor of [Pitt’s] remarks” because it sent the “wrong message” to auditors, the SEC staff and to the investing public. “Your message appears to be that the [accounting] rules will not be implemented as vigorously as they should be. I trust that this is not what you meant to convey and that you will correct any misunderstanding… This is critical, given the plummeting confidence of investors in the integrity of financial reporting at this time.”

Dingell also took issue with Pitt’s criticism of former SEC Chairman Arthur Levitt, saying that Levitt’s tenure represented a “high mark at the SEC in fighting financial fraud, and the standard against which you will be measured.”

The lawmaker attached three pages of questions on Enron’s accounting procedures for Pitt and the SEC to “consider in the course of your investigation,” and for which “I will seek answers to at an appropriate time.”

Dingell is the ranking Republican on the House Energy and Commerce Committee, which plans to hold a hearing into the energy trader’s financial collapse when Congress reconvenes next year. Committee staff members already have met with the representatives of the SEC, Arthur Andersen, the Financial Accounting Standards Board and Enron.

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