Since the story broke a few days ago, I've been extremely interested in the arrest of Bernard Madoff, former Nasdaq chief, whose investment business has been revealed as a massive scam with loses of as much as $50 billion. Since I'm in the news business a lurid story with gargantuan bad acts and fabulously wealthy people claiming they're on the way to the poor house is irresistible at some level. But that's not the root of my interest.

What we're hearing is that this was a classic, if vast, Ponzi scheme. So in the annals of the great financial sector collapse of 2008, unlike the various Wall Street firms and high flyers who were ruined because of the Real Estate Bubble, illiquid mortgage-backed derivatives and generalized speculative euphoria, Madoff's operation was just a scam, an old-fashioned fraud, that a lot of big players got suckered into.

But put me down as suspicious -- suspicious that the difference between Madoff's and the other investment implosions we've seen over recent months will turn out to be so clearly one of kind rather than degree.

Did Madoff start his operation as a consciously fraudulent enterprise? Or was he another operator who was massively over-leveraged, made a bunch of bad calls (you don't have to make many if your leverage is high enough), lost virtually everything but then was able to keep operating and taking in money and claiming high returns because he had such insanely tight control over his books? In other words, did he start legit, get into trouble and then evolve, for lack of a better word, into a Ponzi scheme?

To be crystal clear, I'm not claiming any specific knowledge of the Madoff case that's not in all news accounts. This is more of a hunch, based on what I can put together about his career. But it's also because a lot of the firms on Wall Street were so massively leveraged, probably a good deal more than they're letting on even now, and had so much obvious crap on their books that they were claiming had real value, that Ponzi Scheme would probably be a decent description of what they were up to as well.

Elizabeth Warren is the Chair of the Congressional Oversight Panel appointed to oversee and scrutinize the TARP program and that $700+ billion of public bailout money. Long time TPMers know Elizabeth has run the Warren Reports blog at TPMCafe since 2005. The panel has now set up its own website at cop.senate.gov. And Warren has taped what I assume will be the first of many video updates on the panel's work.

A good story from the LA Times about those Southern state senators and the bailout flameout. Notwithstanding the effect on the national economy, let alone a lot of people's jobs, it was all about striking a blow at unions and laying the ground work for the card check battle. A telling statement of the current diseased state of the Republican party.

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John Dean writes an open letter to Pres-elect Obama on the lessons of Watergate.

Morgan Johnson, UAW President in Shreveport on junior Senator David Vitter (R-LA), who's become a point man on killing the automaker bailout (from the Times-Picayune) ...

"I don't know what Sen. Vitter has against GM or the United Auto Workers or the entire domestic auto industry; whatever it is, whatever he thinks we've done, it's time for him to forgive us, just like Sen. Vitter has asked the citizens of Louisiana to forgive him, " said Johnson, president of Local 2166. Otherwise, Johnson said of Vitter, it would appear, "He'd rather pay a prostitute than pay auto workers."

Some money that probably would have come in handy for good old out-going Rep. Chris Shays (R-CT). From the Connecticut Post ...

A federal grand jury investigating the disappearance of up to $300,000 from U.S. Rep. Christopher Shays' re-election campaign has subpoenaed the veteran congressman's former campaign manager, Michael Sohn, of Fairfield, the Connecticut Post has learned.

Sources with knowledge of the probe said the investigation is centering on Sohn's control of campaign funds used to pay vendors and campaign staff.

The campaign scandal has prompted several state Republicans, none of whom wanted to be identified by name, to believe that Sohn may have used Shays' re-election funds to gamble.

Countdown gets a hold of senate Republicans internal strategy memo on torpedoing the automaker bailout. Very revealing -- though hardly surprising.

Roland Martin says Valerie Jarrett's decision to drop out of contention for Obama's senate seat had nothing to do with Blagojevich's scheming.

Does the Treasury Department actually have any authority under TARP to use TARP money to rescue the automakers? Maybe it does, but I'd like to see where it says that. Can someone point me to the language?

Late Update: The GAO thinks so, under an emergency loan provision. As the GAO's acting director testified last week:

First, as it relates to the authorities under the economic stabilization act for the secretary of Treasury, we believe that that legislation is worded broadly enough that would permit the secretary of Treasury to provide the assistance using T.A.R.P. funds. And the secretary has broad discretion to set whatever conditions on the assistance that he would determine necessary.

The irony of course is that the Bush Administration has been arguing that TARP is limited to financial institutions, although it looks like they will now be reversing course.

On a strictly political calculus, in part because of the highly dysfunctional state of the GOP, those Southern Republican senators simply have no interest at all in being even remotely constructive on the auto bailout.

If the UAW was really the party who blew up the auto bailout negotiations, the people screaming the loudest would be the automakers. Yet, all the noise today is coming from Senate Republicans and their surrogates. What does that tell you?

From the Journal (sub.req.) ...

The publisher of the Detroit Free Press, the country's 20th largest paper by weekday circulation, is expected to announce next week that it will cease home delivery of the print edition of the newspaper on most days of the week, according to a person familiar with the company's thinking.

The publisher hasn't made a final decision, said this person, but the leading scenario set to be unveiled Tuesday would call for the Free Press and its partner paper, the Detroit News, to end home delivery on all but the most lucrative days--Thursday, Friday and Sunday. On the other days, the publisher would sell single copies of an abbreviated print edition at newsstands and direct readers to the papers' expanded digital editions

Stiglitz calls for a structured Chapter 11 bankruptcy for the automakers.

A new North-South Civil War over autos? Robert Reich explains.

Looking over our timeline of the Blagojevich investigation, I keep going back to late October. What happened, what information came into Patrick Fitzgerald's possession, that was solid enough to not just bring to a federal judge but to convince the judge to allow the feds to listen in on a sitting governor discussing his plans on whom to appoint to fill the President-elect's Senate seat?

There's a lot of unanswered questions here, but that's one I find especially tantalizing.

Late Update: Some other key events around that time to keep in mind, from the Chicago Tribune's own timeline:

Oct. 23, 2008: The Tribune reports that Wyma, the longtime friend and former congressional chief of staff to Blagojevich, is under investigation by federal authorities, who are probing his lobbying activity for at least one hospital client.

Oct. 30, 2008: Springfield millionaire and longtime political power broker William Cellini, who for four decades played an enormous role in Illinois' political leadership, is indicted on charges he extorted campaign contributions for Blagojevich.

Then last week, the Tribune reported that Wyma has worked with feds to tape Blagojevich.

The wiretaps were authorized on October 21 and October 29.

Too funny. The former Speaker offers to be a liaison to the African-American community for the Republican who knocked off Rep. Bill Jefferson (D-LA).

TPM Election Central reports that Hillary has agreed to the Obama camp's request that she name James Steinberg as deputy secretary of state.