WASHINGTON - A Senate panel prepared to subpoena former Enron Chairman Kenneth Lay after he refused to appear yesterday, and an investigator into Enron's collapse said virtually everyone from top management down knew that Enron was hiding financial losses.

The Senate Commerce Committee plans to vote on a subpoena this morning - 24 hours after Lay had been scheduled to testify before two congressional committees on the largest bankruptcy in the nation's history.

A House subcommittee set the stage for its own subpoena to demand Lay's appearance if necessary. The Financial Services subcommittee began its hearing into the Enron collapse yesterday.

Lay abruptly canceled his scheduled appearances before the panels on the eve of the hearings.

In testimony prepared for the House panel, William C. Powers, the dean of the University of Texas Law School, said his investigation into Enron's activities found "a systematic and pervasive attempt by Enron's management to misrepresent the company's financial condition."

Powers summarized his report, released over the weekend, and told lawmakers, "There's no question that virtually everyone from the board of directors down" understood that Enron's use of its partnerships was to "offset its investment losses with its own stock."

There was a "default of leadership and management" that began at the top, including Lay and former Enron chief operating officer Jeff Skilling, while Enron's board of directors "failed ... to provide leadership and oversight."

The House subcommittee voted unanimously to authorize, if necessary, a subpoena directing Lay to testify, but for the time being held off further action.

In the Senate, Byron Dorgan, D-N.D., said at a news conference, "We decided that we really had no choice but to issue a subpoena." Lay "should not have expected it would ever be a walk in the park" to testify at a congressional hearing, he said.

Dorgan acknowledged Lay's Fifth Amendment right to refuse to answer questions when he does appear.

The committee chairman, Sen. Ernest F. Hollings, D-S.C., focused blame on the Bush administration, declaring, "We've got an Enron government." Hollings ticked off names of top Bush administration officials, some incorrectly, with ties to the Houston-based company and listed benefits he said Enron received such as loosened energy regulation.

Hollings said a special prosecutor was needed because the Bush Justice Department could not be relied on to investigate objectively.

Meanwhile, Rep. Richard Baker, R-La., chairman of the House Financial Services subcommittee, opened his hearing on Enron by saying the company's "misrepresentations, obfuscation and acts of secrecy" have created a crisis of confidence in corporate America.

Lay canceled his Senate testimony after several senators and House members suggested on Sunday news shows that he and other company executives engaged in criminal acts.

Lay "cannot be expected to participate in a proceeding in which conclusions have been reached before Mr. Lay has been given an opportunity to be heard," his attorney, Earl Silbert, said in letters to the congressional panels that were to hear from him.

"These inflammatory statements show that ... the tenor of the hearing will be prosecutorial," Silbert said.

Enron's former chief financial officer, Andrew Fastow, and ex-Enron executive Michael Kopper have indicated they will refuse to answer questions from Congress. Arthur Andersen auditor David Duncan, fired for his role in document shredding, invoked his Fifth Amendment right not to testify Jan. 24.

Andersen's chief executive testified at a House hearing in December that the accounting firm notified Enron's audit committee Nov. 2 of "possible illegal acts within the company."

On Saturday, Powers' Enron-authorized review of several of the company's estimated 3,000 off-the-books partnerships found that the energy trader's management concealed financial information from the public.

The report on the investigation headed by Powers, the law school dean, said the partnerships "were used by Enron management" to enter into transactions that "apparently were designed to accomplish favorable financial statement results, not to achieve bona fide economic objectives."

"What we found was appalling," Powers said in testimony prepared for yesterday's hearing. "...This is a tragedy that could and should have been avoided." '

Andersen was accused in the report of facilitating a series of complicated transactions aimed at helping Enron conceal big losses and debts. Andersen announced Sunday that former Federal Reserve Chairman Paul A. Volcker would head an effort to overhaul the firm's practices.

Dorgan said the Powers report was "a pretty devastating indictment of things that went on inside the corporation. The report would suggest that as CEO, Mr. Lay certainly was aware of much of this."