TPM News

Joseph Bruno, the Republican former Majority Leader of the New York State Senate, was indicted by a federal grand jury today on eight counts of public corruption, reports the Times Union of Albany.

Bruno, who as the Senate leader had been a crucial and high-profile figure in New York politics for well over a decade, had been the subject of a three-year FBI investigation focused both on his personal and professional dealings.

The paper provides the details:

The investigation had dogged Bruno during the last two years of his political career as information surfaced publicly about the FBI's deep foray into his real-estate dealings, investments, political decisions and his ownership and breeding of thoroughbred horses. Bruno's ties to labor unions, and his secretive work as a private business consultant for an unknown number of private clients, including a Connecticut investment firm, were at the heart of the probe.

...

The investigation began three years ago, when FBI agents from a white-collar crime unit in Albany began examining a series of private jet flights provided to Bruno by people with whom he did business both politically and privately, a source close to the case said.

The chartered jet flights, in some cases worth thousands of dollars per hour, ferried Bruno to private vacations in South Florida, political fundraisers, government functions and at least once to Kentucky horse country.


Bruno will go before a judge at 1:30, and the US Attorney in the case, Andrew Baxter, has scheduled a press conference for 2:30.

Late Update: The Justice Department has put out a press release announcng the indictment. Here is its key passage:

The charges arise from Bruno's alleged receipt of almost $3.2 million from five groups of individuals and related entities, either directly or through so-called consulting companies, between 1993 and 2006. While New York state legislators are part-time officials permitted to pursue other employment or business activities, the indictment alleges that Bruno improperly exploited his official position and concealed conflicts of interest, contrary to state ethics and reporting laws, with respect to his private "consulting" business.

According to the indictment, Bruno received approximately $2 million from two financial services firms. These payments were essentially fees relating to labor union benefit funds that invested or conducted brokerage transactions with the firms, ostensibly as a result of referrals by Bruno. The unions, whose benefit funds were solicited by Bruno, had frequent business before the New York State legislature and other state agencies, and Bruno took discretionary official actions benefitting the unions. The union officials solicited by Bruno were responsive to his "business" proposals because of his official position and his perceived ability to influence legislative or other state actions on behalf of their unions. In required financial disclosure statements, and in other contexts, Bruno concealed the fact that he enriched himself by exploiting relationships with unions that benefitted from his official actions. For example, rather than reporting that he was paid for soliciting union benefit funds, Bruno misleadingly reported most of his income as fees for "consulting."

Bruno was also paid approximately $1.2 million in "consulting" fees by three individuals and a myriad of related entities. Some of those entities had interests before the New York State legislature and other state agencies, and several benefitted from official acts of Bruno. According to the indictment, Bruno did not perform legitimate work commensurate with these substantial "consulting fees", which were, in essence, gifts from these individuals or related entities. Bruno failed to report these payments as gifts, as required under state ethics and reporting laws. Bruno also misrepresented to two of these "consulting" clients that he had received clearance from the Legislative Ethics Committee to receive payments from them when, in fact, Bruno had never sought ethics opinions relating to these particular outside activities.

At a pre-trial hearing in the Minnesota election lawsuit just now, Franken attorney Kevin Hamilton made a striking accusation: That the Coleman campaign has been doctoring evidence.

As an example, Hamilton showed two photocopies of a rejected absentee ballot envelope, one of which he said was the unaltered original, and the other taken from Coleman's legal filings in his attempts to get more of the rejected ballots opened. The Coleman copy was missing the section in which a local election official explained why it was rejected.

"We would not be able to stipulate to the authenticity of a document where the key portion has been cut out," Hamilton complained.

Coleman attorney James Langdon expressed his absolute surprise. "What he has pointed out is news to me," said Langdon. "There has been no effort on our part to be anything other than absolutely truthful."

Langdon speculated that there may have been a photocopying problem.

The court took no action on this for now, instead asking the parties to first try to work out any differences on evidence between themselves.

New York Gov. David Paterson just held his press conference in Albany to announce the appointment of upstate Rep. Kirsten Gillibrand to the United States Senate seat formerly held by Hillary Clinton.

Paterson started off the speech as he often does, telling an amusing anecdote about how he first met Gillibrand at the state Capitol when he was Lt. Governor, only to end up being in the middle of the 2003 Northeastern blackout. He then touted Gillibrand's work on government reform and economic issues, and for her work on the Armed Services and Agriculture committees.

In her acceptance speech, Gillibrand seemed to back away a bit from her previous "A" rating from the National Rifle Association -- which had led Rep. Carolyn McCarthy to openly threaten a Democratic primary challenge -- by pledging to work with McCarthy on a bill to require better background checks to keep guns out of criminals' hands.

Overall, Gillibrand sought to reach out from her relatively obscure upstate district to the rest of the electorate: "Over the next two years you will get to know me, but much more importantly I will get to know you."

As Politico reports, House Republican leaders took advantage of today's bipartisan meeting with President Obama to introduce their own alternative economic stimulus plan. Unsurprisingly, the theme is tax cuts, tax cuts, tax cuts.

Instead of a tax credit for individuals making $75,000 or less or families making less than $150,000, Republicans would like to reduce the tax rate by 5 percent on those Americans in the lowest tax brackets, from 15 percent to 10 percent and 10 percent to 5 percent.

House Republican Leader John A. Boehner and his no. 2, party Whip Eric Cantor, pitched the plan to Obama during the Friday morning meeting. Boehner tapped Cantor to come up with ideas, and this plan is the result of that work.

Boehner, in remarks on the White House driveway, warned that "government can't solve this problem."


The president's vow to keep 90% of the stimulus-related jobs in the private sector wasn't enough, guys? Aw.

The Bush administration's participation in the personnel tactic known as "burrowing" has been well-reported in recent weeks. The practice isn't unique to the Bush crowd; during presidential transitions, political appointees eager to stay on the government payroll often wriggle their way into secure civil service positions -- despite the differing political beliefs of the White House's new occupant.

But because the central objective of burrowing is for political appointees to fly under the radar while Washington changes hands, it's often hard to tell when the practice is actually occurring. Consider the case of Kathie Olsen, who just made a very curious move: going from the No. 2 post at the National Science Foundation to the far less influential job of "senior advisor" in the NSF's Office of Information and Resource Management.

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Already, a consensus of experts has formed to tell TPMmuckraker and others that President Obama's executive order on presidential records, issued Wednesday, could impact efforts to pry loose key documents from the Bush White House.

And the man who served as President Clinton's lead attorney for executive privilege issues yesterday went further, suggesting that that was exactly Obama's goal.

Neil Eggleston, a White House counsel under Clinton, told TPMmuckraker that in his view, the Obama White House issued the order with specific ongoing cases in mind -- that is, with the goal of bolstering those efforts to obtain Bush's records.

Congress and good-government groups are currently fighting to get access to key Bush White House documents that might shed light on a range of subjects, from the level of White House involvement in the US Attorney firings, to the Valerie Plame leak probe, to the decision to invade Iraq. "This is absolutely about all those issues," said Eggleston.

At its heart, said Eggleston, Obama's order is about "who gets to assert executive privilege." It says that former presidents can claim such privilege, but they have no automatic ability to prevent the release of their records if the current administration deems it to be in the national interest. That echoes the view of other experts who have examined the order, including the conservative legal scholar Doug Kmiec, who spoke to TPMmuckraker yesterday.

In a sense, said Eggleston, it's a directive to the National Archivist. "It says: 'Archivist -- if Bush calls up and says don't release certain papers, don't listen to what he says, listen to what I say.'"

Eggleston, now a partner at Debevoise and Plimpton's Washington office, cautioned that if a decision were made to release certain Bush records, and the former president chose to go to court to stop it, it's not absolutely certain that he would lose -- since no executive order can alter the constitution's executive privilege guarantee. But he said that the order would at the very least be likely to sway a court towards openness.

So if we do eventually learn the full story of the Bushies' involvement in the US Attorney firings, and get access to information about their record on a range of other issues, it looks like we may have the new president to thank.

Here's another interesting wrinkle from Rep. Kirsten Gillibrand's (D-NY) imminent promotion to the Senate: She appears to have switched her position on gay marriage from a standard "safe" Democratic stance, to now being a full supporter.

Empire State Pride Agenda has put out a press release saying that Gillibrand has spoken to them, and they are glad to say that New York will have its first Senator who endorses full marriage equality. This is a big change for Gillibrand, who previously had a conventional Democratic position of endorsing civil unions and non-discrimination laws, but not being for gay marriage.

To be sure, Gillibrand's voting record on gay rights was not anything that could be called bad. There weren't too many votes on gay issues in the last two years, but she did vote for the Employment Non-Discrimination Act, as well as the hate crimes bill.

Gillibrand's House district voted twice for George W. Bush, then narrowly flipped to Barack Obama in 2008. So one can see why Gillibrand was less than willing to support gay marriage. But if we're looking at this from the assumption of political opportunism, this in turn gives us a new realization: We are now in a world in which endorsing gay marriage can actually be a politically beneficial choice in a statewide setting.

Inauguration officials have admitted that the music played by a quartet including Yo-Yo Ma and Itzhak Perlman was in fact taped. Carole Florman, a spokeswoman for the Joint Congressional Committee on Inaugural Ceremonies acknowledged on Thursday that the cold temperatures on Tuesday morning made a live performance impossible. The taped sounds were recorded by the quartet two days earlier. (New York Times)

Lawyers for embattled Illinois governor Rod Blagojevich are considering a lawsuit to halt an impeachment trial they describe as "completely unfair." Blagojevich himself has said that he has no intention to mount a defense unless the trial's rules are changed by the Illinois Supreme Court so that he may call witnesses and subpoena documents. (Associated Press)

An upcoming report by the Government Accountability Office focusing on the Veterans Affairs Department is expected to highlight the Bush administration's inability to properly plan for the treatment of veterans. The report, to be released Friday, finds the budget for the VA to be seriously flawed, understating by millions of dollars the costs for treating thousands of patients. (Associated Press)

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Yesterday we told you about how Merrill Lynch paid out billions in bonuses to staff even as its new owner, Bank of America, was begging the government for another bailout to help it digest Merrill's massive losses on mortgage assets.

And today, buried in a New York Times story about the downfall of former Merrill CEO John Thain -- whose ouster as a Bank of America exec was announced yesterday -- is an intriguing nugget that suggests just how attached Merrill was to those toxic assets.

Reports the Times:

At a news conference announcing the merger, Mr. Lewis praised Mr. Thain. Mr. Lewis said Mr. Thain's new role had not been decided, adding: "That's a credit to John. It usually does not happen that way. And it was never about him, it was always about the deal."

But after Merrill appeared to be safely in Bank of America's arms, Merrill's traders began buying risky mortgage assets, thinking that the market had bottomed out, according to two people familiar with the firm's trading. Merrill also began to run up losses on equity derivatives and other instruments, they said.


That news conference to announce the "merger" took place September 15th.

So Merrill traders resumed buying mortgage assets after the crisis in the housing market was already abundantly clear. After the government had taken over the mortgage lenders Fannie and Freddie. After Lehman Brothers had announced it was filing for bankruptcy. After the US government had effectively taken over AIG. Above all, after Merrill itself had been bought by Bank of America, with help from $25 billion of government money.

And all those developments triggered by hundreds of billions of dollars in losses thanks to investments in bad mortgage assets.

And here's the larger point: Merrill's massive fourth quarter losses, which prompted B of A to seek a second government bailout, weren't caused only by investments made before the collapse of the mortgage market, and the extent of the financial crisis, became apparent. Rather, they were in part the result of continuing to buy bad mortgage assets into the fall.

No one would trust me to invest so much as the contents of their piggy bank. But I'd like to think that, by mid-September, even I'd have known that mortgage assets might not be the best bet.

Greedy and dumb. That's a toxic combination.

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