Editing Andrew Fastow (section)

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In August, Skilling, who had been promoted to CEO of the entire company in February 2001, abruptly resigned after only six months, citing personal reasons. When reporters for ''[[The Wall Street Journal]]'' discovered an Enron "senior officer" had recently sold his interest in several partnerships that had done business with Enron, they initially thought that officer was Skilling. However, Enron spokesman Mark Palmer revealed that the "senior officer" was actually Fastow.<ref name=Eichenwald>{{cite book|title=Conspiracy of Fools|last=Eichenwald|first=Kurt|author-link=Kurt Eichenwald|publisher=[[Broadway Books]]|year=2005|isbn=978-0-7679-1180-1|title-link=Conspiracy of Fools}}</ref>

After a former Enron executive leaked a copy of the offering memorandum for one of Fastow's partnerships, [[LJM (Lea Jeffrey Matthew)|LJM]]–named for Fastow's wife and two sons–to the ''Journal,'' reporters bombarded Enron with further questions about the partnerships. The scrutiny died down after the [[September 11 attacks]], but ramped up anew two weeks later with pointed questions about how much Fastow had earned from LJM. This culminated in a series of stories that appeared in the ''Journal'' in mid-October detailing the "vexing conflict-of-interest questions" about the partnerships, as well as the huge windfall he had reaped from them.<ref name=Eichenwald/><ref name=McLean>{{cite book|last=McLean|first=Bethany|author-link=Bethany McLean|author2=Peter Elkind|title=The Smartest Guys in the Room|publisher=Portfolio Trade|location=New York|year=2003|isbn=978-1-59184-008-4|title-link=The Smartest Guys in the Room}}</ref>

On October 23, during a conference call with two directors delegated by the board, Fastow revealed that he had made a total of $45 million from his work with LJM–a staggering total, since he claimed to spend no more than three hours a week on LJM work.<ref name=Eichenwald/><ref name=McLean/> On October 24, several banks told Enron that they would not issue loans to the company as long as Fastow remained CFO. The combined weight of these revelations led the board to accept Lay's recommendation to remove Fastow as CFO on October 25, replacing him with industrial markets chief and former treasurer Jeff McMahon.<ref name=Eichenwald/> He was officially placed on leave of absence, though the board subsequently determined that it had grounds to fire him for cause.<ref name=McLean/>

It was later revealed that Fastow had been so focused on creating SPEs that he had neglected the most rudimentary aspects of corporate finance. Under his watch, Enron merely operated on a quarterly basis. Fastow never implemented procedures for tracking the company's cash or debt maturities. As a result, McMahon and a "financial SWAT team" put together in the wake of Fastow's ouster discovered Enron had almost no liquidity.<ref name=Eichenwald/><ref name=McLean/>

Fastow's approach to hiding losses was so effective that the year before Enron declared [[bankruptcy]], the Enron stock was at an all-time high of $90. As it turned out, the company was already well on its way to financial collapse, to the point that it was all but forced to seek a merger with rival [[Dynegy]]. By then, Enron's financial picture had declined so rapidly that the prospect of the Dynegy merger was the only thing keeping it alive. Dynegy tore up the merger agreement on November 28 in part due to the liquidity problems revealed after Fastow's ouster, and Enron declared bankruptcy three days later. By then, Enron's stock had dwindled to 40 cents per share, but not before many employees had been told to invest their retirement savings in Enron stock.