Monday, February 2, 2009

Speak, Rover! Speak!

TPM Muckraker has a Murray Waas story on Karl Rove's apparent cooperation with both probes he's been subpoenaed on.
Karl Rove will cooperate with a federal criminal inquiry underway into the firings of nine U.S. attorneys and has already spoken to investigators in a separate, internal DOJ investigation into the prosecution of former Alabama Gov. Don Siegelman, his attorney said in an interview.

Rove previously refused to cooperate with an earlier Justice Department inquiry into the firings. The Justice Department's Inspector General and its Office of Professional Responsibility (OPR) said in a report released last September detailing their earlier probe of the firings of the U.S. attorneys that their investigation was severely "hindered" by the refusal by Rove and other senior Bush administration officials to cooperate with the probe.

Rove's attorney, Robert Luskin, said that Rove, however, will cooperate with a federal criminal probe of the firings being led by Nora Dannehy, the Acting U.S. Attorney for Connecticut who was selected by former Attorney General Michael Mukasey to lead the investigation. Dannehy has recently empaneled a federal grand jury to hear evidence in the matter.

So Rover's going to spill the beans on Attorney-gate and the Don Siegelman snowjob? What's the catch, then?

Or maybe there isn't one. Maybe Eric Holder will get his chance to do his job after all. We'll see.

Holder Is In

Eric Holder has been confirmed by the Senate as Attorney General.
The U.S. Senate confirmed Eric Holder as attorney general Monday, voting 75-21 to place him in charge of the Department of Justice.

Holder, 58, is a former federal prosecutor and served as deputy attorney general during the Clinton administration. His confirmation makes him the first African-American confirmed to the post, though he held the job on an acting basis in early 2001.

Monday's vote leaves him set to take over a Justice Department battered by a series of controversies during the Bush administration, from questions about how it laid legal groundwork for harsh interrogations of suspected terrorists to the sackings of top federal prosecutors in several cities.

Still up in the air: Holder actually doing his job and prosecuting Bush officials. I wonder how quickly that will fade from the headlines? Will he even have time? After all he has so much work ahead of him just to get the Justice Department up and running again.

A Man, A Plan, Martinez

Retiring Florida Republican Sen. Mel Martinez is shopping his own version of the stimulus plan that's -- surprise! -- made up primarily of tax cuts.
The proposal includes $430 billion in tax cuts, $114 billion for infrastructure projects, $138 billion for extending unemployment insurance, food stamps and other provisions to help those in need and $31 billion to address the housing crisis.

The draft Martinez put together is a broader approach than what some GOP leaders have suggested.

And of course, the Martinez plan will be acceptably bipartisan to the rest of the GOP and the Blue Dog Dems if it just had a bit less spending and a lot more tax cuts, as it magically becomes the new leftward boundary of the stimulus argument, meaning the bill that passes Congress will be far, far more to the GOP's liking...

...and just like that Obama has to sign the Son Of Bush Tax Cuts later this month. Obama has to know he's getting rolled. How is he going to fight back?

The Gregg Gambit, Part 3

Expanding on this morning's post, BooMan hypothesizes that there's something of a "gentleman's agreement" among Obama, Gregg, and Lynch.
If Governor John Lynch appoints a Republican to replace Gregg, there could still be some benefits. A Republican that committed not to seek election in 2010 would leave Gregg's seat open, and therefore much more vulnerable to Democratic takeover. Additionally, other concessions could be part of any deal, including a commitment to allow an up or down vote on the Employee Free Choice Act or other key legislation that is likely to be contentious in the 111th Congress. It's hard to tell what kind of deals might be going on behind the scenes.
Whatever this deal is, it's the crucial info that is missing from why Obama is doing this. Chris Cilliza believes the deal may in fact be having Gregg as a crucial voice on entitlement reform.
Finally, at the practical level, putting Gregg at Commerce would give Obama someone known and trusted in the Senate whom he could task with selling the need for entitlement reform -- a high priority for the new president that will be a centerpiece of the upcoming fiscal responsibility summit in February. Gregg, who has served in the Senate since 1992, is a past chairman of the Budget Committee -- a perch from which he emerged as a strong advocate for just the sort of entitlement reform Obama is now advocating.
Which means Obama is looking past 2010 to a Senate that he expects to have his 60+ votes on for tackling Social Security and Medicare, and Gregg as his bipartisan point man. Both BooMan and Cilliza make a lot of sense here if Gregg is playing ball...and again, that's a big if.

Cilliza also notes that Gov. Lynch is not the favorite Granite State Dem to be mentioned taking Gregg's seat, but Rep. Paul Hodes is. This keeps getting more and more interesting. Perhaps Lynch will name Hodes directly, but I doubt it. Almost everyone I've read agrees that Lynch is picking a Republican: Bonnie Newman, former NH State Speaker of the House Doug Scamman, or former 13-term NH State Rep. Elizabeth Hager.

We'll see how it shakes out.

The Banks Project

Here in Cincy, the city's buzzing with the possible fate of the area's largest bank, Fifth Third. Insurance company Cincinnati Financial has just unloaded its entire stake in 5/3 stock, and the stock price is hovering around the $2 mark.

Things aren't looking good. Everyone here remembers National City Bank rolled in the dirt for nearly a year before PNC Bank picked it up. People are wondering if 5/3 is next.

Zandar's Thought Of The Day

Have the Republicans gotten the memo that they lost in November and are the minority party in Washington right now, or have the Democrats just completely missed the memo that they won and control Congress and the White House by the largest margin in decades?

In Which Zandar Answers Your Burning Questions

The Great And Mighty Kroog asks:
Now, something must be done to shore up the financial system. The chaos after Lehman Brothers failed showed that letting major financial institutions collapse can be very bad for the economy’s health. And a number of major institutions are dangerously close to the edge.

So banks need more capital. In normal times, banks raise capital by selling stock to private investors, who receive a share in the bank’s ownership in return. You might think, then, that if banks currently can’t or won’t raise enough capital from private investors, the government should do what a private investor would: provide capital in return for partial ownership.

But bank stocks are worth so little these days — Citigroup and Bank of America have a combined market value of only $52 billion — that the ownership wouldn’t be partial: pumping in enough taxpayer money to make the banks sound would, in effect, turn them into publicly owned enterprises.

My response to this prospect is: so? If taxpayers are footing the bill for rescuing the banks, why shouldn’t they get ownership, at least until private buyers can be found?
Well, as the Kroog points out, that's exactly what we're going to get: ownership of the securitized debts and none of the actual assets (stockholders and banksters get to keep those.)

So why is the Obama administration so loathe to call nationalization of the financial industry what it is? After all, they're not going to have a choice: America's banks are across the board insolvent. The sooner Obama nationalizes them, the less financial damage the country takes.

But of course, the more political damage he endures. Obama's guys aren't going to want to be responsible for the end of capitalism in America, of course...but it's too late. We're already throwing trillions at the banks. They're already de facto nationalized.

Why not complete the process as soon as possible?

The Gregg Gambit, Part 2

More evidence this morning that if Republican Judd Gregg is appointed as Commerce Secretary, his replacement to the Senate by Democrat John Lynch will in fact be a Republican.
U.S. Sen. Judd Gregg won't take the job of commerce secretary in the Obama administration if his appointment would tip the Senate balance of power in favor of Democrats, the chamber's Republican leader said Sunday.

"He's indicated to me that he would not accept this appointment if he believed it would lead to a change in the current makeup of the Senate," Minority Leader Mitch McConnell, R-Kentucky, told reporters.

An administration official told CNN on Saturday that Gregg, a third-term Republican known for being fiscally conservative, is the leading candidate to head the Commerce Department. Gregg, of New Hampshire, said in a written statement Friday that he was among those being considered for the post, and White House spokesman Robert Gibbs said no final decision has been made.

If Gregg moves to the Cabinet, New Hampshire's Democratic governor would appoint a replacement. That could give Democrats the 60-seat majority needed to overcome Republican attempts to use filibusters to block legislation.

But McConnell told CBS' "Face the Nation" on Sunday that "whoever is appointed to replace him would caucus with Senate Republicans," indicating his belief that a Republican would be named.

"I think it would have no impact on the balance of power in the Senate," he said.

Is this completely wishful thinking on the part of the GOP, or have they outsmarted Obama and cut a deal with Gov. Lynch? Ol' Mitch here seems confident that Gregg's replacement will caucus with the Republicans, so why do it?

Aren't there qualified Democrats who could fill the position? Why not get one and take yet another opportunity away from a Democratic governor to do something embarrassing and/or stupid in appointing somebody? Haven't the Dems learned after Blago and Paterson that these things can go horribly wrong?

Finally, if Lynch really is going to appoint either a Republican or an Independent who will caucus with the GOP, why the hell is Obama bothering to do this in the first place? Is Judd Gregg that dangerous to Obama's agenda in the Senate that he has to bring him on board as a Cabinet member?

What's going on here?

[UPDATE] Researching this, the word around Lynch is that he plans to name University of New Hampshire president J. Bonnie Newman as Gregg's replacement.

Newman served as assistant secretary of Commerce for economic development in the Reagan administration. She was in charge of administrative operations for the George H.W. Bush White House.

She was chief of staff to Gregg when he was a congressman in the 1980s, and she was one of the first Republicans to publicly endorse Lynch in his 2004 challenge of then-Republican Governor Craig Benson, and co-chaired Republicans for Lynch.

This keeps getting stranger and makes less and less sense from Obama's political perspective the more I think about it. Newman is certainly a Republican. If Lynch is going to be running for Gregg's seat in 2010, he'd have a much easier time running in blue New Hampshire against the conservative Gregg than the moderate Newman, unless the deal is Newman is not going to run in 2010, making her a placeholder.

But if Newman's not running in 2010 and you need a placeholder, why not find a placeholder from your own party? Even Blago managed to get that right. Lynch certainly owes Newman a favor, but this seems to be a hell of a way to repay it.

What makes even less sense is appointing Gregg in the first place. Obama had no problems finding Clinton-era folks to fill his Cabinet. Surely there's got to be somebody from Commerce during the Clinton years who he can appoint. Why Judd Gregg? If Obama's that good of friends with the guy, Gregg's repaying that friendship badly by voting against much of the early legislation Obama has signed into law. If Lynch is going to appoint a Republican, Obama doesn't gain anything from it. Heck, he's actually putting Lynch in a hell of a bind, assuring Lynch has to find somebody who is qualified but doesn't want the job so he can run for it in 2010.

Finally, Gregg doesn't seem like the right person for the progressive Obama administration. Why would he take the job anyway? If Gregg's re-election is that much in doubt, why is Obama doing him such a huge favor by giving him a Cabinet job? Obama certainly doesn't gain a reliable vote in the Senate as a result. Newman would be under tremendous pressure to vote party line against Obama at every turn. Lynch would run and probably win in 2010 anyway. If Gregg was the most qualified person for the position, why didn't you take him in the first place rather than Bill Richardson?

None of this makes any sense at all. There's still some crucial information missing here.

Bad Bank Takes A Back Seat

The Obama Administration is putting their "bad bank" plan on hold for a week as they concentrate on getting the stimulus through the Senate. Instead, new limits on CEO pay for bailed out firms will be on the list for this week.
An industry aid package, including the creation of a "bad bank" concept, will be announced next week, said the source, who is familiar with a weekend's worth of discussions between government officials and representatives of the financial services industry.

The Obama administration and those people have been discussing a number of measures and issues on a concentrated basis since Friday, when speculation first arose that any policy initiative on a bad bank would be delayed.

Though details of the intended Obama administration announcement on Wall Street compensation are unknown at this time, it will be executed through the TARP plan, meaning it will address limits on pay for those firms receiving government assistance, as both Congressional Democrats and senior White House advisors have urged in recent weeks.

Toward the end of the week, President Obama chastised Wall Street firms for handing our large executive bonuses, while petitioning for government assistance and in some cases struggling to survive, calling the situation “shameful” and "outrageous." Congress is now also seriously considering legislation capping executive compensation.

In his weekly radio address Saturday, the President said new initiatives would make sure chief executives "are not draining funds" from their firms that might otherwise be spent on fueling an economic recovery, through loans and other instruments.

Obama's got a lot of work ahead of him, but I'm hoping "bad bank" has been delayed because somebody in his economic braintrust realized it's not going to work.

If anything, the moral hazard alone created by knowing "bad bank" is on the way should have virtually every bank salivating over truly crazy opportunities to not lend money to consumers and businesses, but to invest it in risky and crazy propositions. After all, if the bet goes sour, they can just dump it on Obama's doorstep.

You'd be crazy not to.

StupidiNews, Groundhog Day Edition

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