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One of the intriguing elements of the Minnesota election contest that we've been keeping track of is how the campaigns have a knack for taking legal action to help their own voters, and only their own voters. This might just be another example.

A group of seven voters from around Minnesota have now filed a new class action lawsuit to have their votes counted. Their absentee ballots were deemed to have been improperly rejected by the local election officials involved, but were individually vetoed by the two campaigns during that review process, under the terms of the state Supreme Court's controversial opinion that gave them this power.

Attorney Bruce Kennedy, who is representing the seven voters, told TPMDC that one of the ballots was vetoed by the Coleman campaign, two by the Franken team, and he's not aware at this time of the conditions affecting the other four. Kennedy is himself a political hand, having run for Secretary of State with the Independence Party in 2006, but said he is not undertaking this in association with any campaign.

The Franken campaign is now opposing the lawsuit, on the grounds that it has been filed too late in the process, while Coleman is supporting it.

Earlier this afternoon the special three-judge panel in the Minnesota election contest dealt Norm Coleman a defeat, denying his campaign's motion to authorize a full inspection of ballots and voter rolls that would have delayed the start of the trial on Monday.

Had the court granted the request, it would have helped the Coleman team's efforts to look around the state to find ballots for himself or to have ballots for Franken thrown out. If the Coleman team was celebrating yesterday's denial of Franken's effort to dismiss the whole case, this ruling shows that things won't be so smooth for them, either.

This excerpt from their opinion could give us a good idea of the logic the new court will use going forward: "The Court determined that it has jurisdiction over this matter in its Order Denying Contestee's Motion to Dismiss. Contestants, however, have not met their burden of showing that an inspection is needed to prepare for trial."

Translation: We might have found that Franken didn't meet the burden of proof necessary to throw out Coleman's arguments, but in this example Coleman hasn't met the burden necessary to win them.

It turns out the billions in dollars in bonuses paid out by Merrill Lynch even as its new owner, Bank of America, was lobbying for more bailout money weren't the only questionable payments the firm made late last year.

BusinessWeek reports:

On Nov. 13, just three weeks before Merrill shareholders voted to approve the merger with BofA, Merrill's former board approved the payment of 35 cent-a-share dividend to all common stockholders. The payout drained another $565 million from Merrill's coffers at a time when the firm should have been building up cash, instead of spreading it around.

Now sure, one could argue that if Merrill had slashed the dividend to the bone, the brokerage's stockholders may not have voted for the merger with BofA. But Merrill's dividend payout came just weeks after Bofa announced on Oct. 6 it was slashing its dividend in half to 32 cents-a-share--a move the bank said would save it some $1.4 billion in cash each quarter. (The bank has since cut the dividend to a penny-a-share).


The magazine also offers an important, if obvious-when-you-think-about-it corrective to the fast-emerging narrative that Bank of America knew nothing about Merrill's huge fourth quarter losses until mid December (and had no reason to know any sooner.)

Says Bizweek:
Anyone with inside knowledge of Merrill's investment portfolio could have seen that the brokerage's investments in corporate loans and commercial real estate-related securities would all take a hit in the fourth-quarter. And that includes Thain & Co., as well as Lewis' team at BofA, which was conducting its due diligence on Merrill at the time.


No one comes out of this looking good.

We reported yesterday on Republican objections to moving forward on confirming two of Barack Obama's top environmental nominees.

At first the delay was reported as a Senate "hold," but it turned out to be a different breed of slowdown -- Sen. John Barrasso (R-WY) had been quoted as raising the alarm, yet he told us that it was nothing but a misunderstanding. By the evening, the objection had been officially lifted and the environmental nominees were approved.

Now it looks like the same thing is happening with Rep. Hilda Solis (D-CA), the president's nominee to head the Department of Labor.

Read More →

Key moments in the Merrill Lynch saga over the last year:

December 1, 2007 - John Thain begins his tenure as Merrill Lynch CEO, replacing Stanley O'Neal who had resigned after the company announced billion-dollar losses stemming form its mortgage investments.

John ThainSeptember 15, 2008 - A deal is announced for Bank of America to buy Merrill, which, for the previous four quarters, has posted losses totaling $17 billion. The deal comes amid a broader financial crisis connected to the mortgage meltdown: that same day, Lehman Brothers declares the largest bankruptcy in American history, and the following day, American International Group is essentially nationalized.

October 14, 2008 - Bank of America gets $25 billion in bailout funds.

December 5, 2008 - Merrill and Bank of America shareholders vote to approve the takeover.

Ken LewisDecember 8, 2008 - Merrill's compensation committee approves payouts to staff totaling $3-4 billion, at least a month ahead of schedule. Some at B of A complain that the accelerated schedule was an effort to ensure that B of A could not cut the payments when it took over January 1.

Days later - Bank of America learns that Merrill's fourth-quarter losses were greater than expected. B of A begins lobbying the federal government for more TARP money to ease the takeover.

December 29, 2008 - Merrill bonuses paid, in the nick of time (sub. req.).

January 1, 2009 - Bank of America officially takes control of Merrill. It will later rename its brokerage division Merrill Lynch Wealth Management.

Henry PaulsonJanuary 16, 2009 - Treasury announces it will give Bank of America another $20 billion in TARP money, to help it absorb the larger-than-expected Merrill losses.

January 16, 2009 - Bank of America reports a fourth quarter loss of $1.79 billion, including a $15.3 billion loss (sub. req.) posted by Merrill Lynch for the same quarter.

Arguments just ended in today's latest round of the Minnesota hearings, and Norm Coleman's legal team had what can only be described as an awkward moment: One of the three judges began openly heckling them.

Franken attorney David Lillehaug brought up Coleman's claims that absentee ballots were wrongly accepted on Election Day, that people unqualified to vote cast ballots, and that some people voted twice -- all for Franken, of course. Lillehaug said how the Franken campaign has tried to get an answer from the Coleman team how they would know whom any such people voted for.

At this point, Hennepin County (Minneapolis) Judge Denise Reilly cut in. "I was thinking about that as a criminal witness," said Reilly, joking about the idea of summoning in individual voters and putting them on the stand, giving them counsel and demanding testimony on how they voted.

Even worse for Coleman: Reilly was appointed to the bench in the 1990's by a Republican governor.

If there's one corporate honcho who's emerging as the poster boy for all the varied Wall Street sins that the financial crisis has exposed -- not just greed, but callousness, obliviousness and general incompetence -- its Merrill Lynch's former CEO John Thain.

Over the last few days, the revelations about Thain's mismanagement of Merrill have been coming thick and fast -- culminating with his ouster yesterday as an executive at Bank of America, which bought Merrill at the height of the financial crisis last September.

Thain, a top John McCain backer who was tipped as a candidate for a White House post had the Arizona senator won the presidency -- has amassed quite a record in his short time at Merrill. Lavish personal spending, absentee leadership, bonuses for billions in losses -- it's almost been too much to keep track of.

So we've created a handy rundown of Thain's top 10 greatest moments over the last turbulent year. (You might also want to check out our Merrill Lynch timeline to brush up on how Thain's missteps fit in with the larger story of his firm's collapse.)

In rough chronological order, here are John Thain's top 10 greatest moments:

1. The Great Redecoration

Thain pays $1.2 million last year -- well after Merrill's huge losses on mortgage assets are known -- to refurbish his office suite. That includes $800,000 to interior designer Michael S. Smith, who's also redecorating the White House for the Obama family. (More Smith clients: Steven Spielberg, Michelle Pfieffer, and Cindy Crawford.)

Other expenses from the big redecorating project, all signed off on by Thain personally:

Area Rug: $87,784 Mahogany Pedestal Table: $25,713 19th Century Credenza: $68,179 Pendant Light Furniture: $19,751 4 Pairs of Curtains: $28,091 Pair of Guest Chairs: $87,784 George IV Chair: $18,468 6 Wall Sconces: $2,741 Parchment Waste Can: $1,405 Roman Shade Fabric: $10,967 Roman Shades: $7,315 Coffee Table: $5,852 Commode on Legs: $35,115

At this time, reports CNBC's Charlie Gasparino on The Daily Beast, Thain is "preaching the virtues of cost control, telling employees to reduce expenses including car services, entertainment and travel".

2. The Unfortunate Chair Incident

During a summer 2008 meeting with his top financial officer, Thain, angry about Merrill's huge mortgage-asset-related losses, hurls a chair against the wall, shattering a nearby glass panel.

3. Just Can't Quit Those Mortgage Assets

Even after Thain has been forced to beg Bank of America to save his desperate firm, his traders, thinking the market has "bottomed out", keep trading risky mortgage securities. Those, of course, are the very assets that had helped bring on the massive losses, mostly incurred before Thain's tenure, that made the Bank of America deal necessary.

4. The Bonus Fiasco

In October, Thain suggests he should receive a $30-$40 million bonus. By December, he compromises: $10 million. After a blizzard of public criticism, including from New York Attorney General Andrew Cuomo and Senate Majority Leader Harry Reid, he drops his request for any bonus. Later, he denies having asked for one at all.

5. The In-Retrospect-Ill-Advised Ski Trip

In mid December, Bank of America CEO Kenneth Lewis learns that Merrill's fourth quarter losses will be much larger than expected. Lewis gets the bad news not from Thain himself, but from the transition team handling the merger -- perhaps because, after the losses surface, Thain takes off for his ski house in Vail. (A "person familiar with the matter" tells the Journal, hilariously, that Thain was "working and available" while in Vail.)

6. The Failure To Impress The New Boss

Asked by Lewis about the new losses, which will officially come to $15.3 billion, Thain "didn't really have a good grasp of what was going on,", one source tells the Wall Street Journal. Ultimately, the federal government will in January give Bank of American $20 billion -- on top of the bailout funds it had already gotten -- to help it absorb the Merrill losses.

7. The Troubling Lack Of Candor

Under Thain, Merrill appears not have been as forthcoming as it might have been with its new owner about the state of its books. A Bank of America spokesman tells the Journal today: "Their fourth quarter was way beyond anything they said would happen." Even worse, Thain may also have been less than straight with Merrill itself. He doesn't fully inform his own board that, thanks to Merrill's losses, the federal government might need to step in to ensure the B of A deal goes through, according to complaints from board members.

8. The Other Bonus Fiasco

Merrill, with Thain still in charge, accelerates its yearly bonus payments, doling out an estimated $3-4 billion in bonuses before January 1, 2009, when Bank of America will take control. Some at B of A believe the expedited schedule is designed to avoid giving B of A a chance to cut those payments. New York AG Cuomo is now reportedly investigating.

9. The In-Retrospect-Ill-Advised Planned Trip to Davos

Thain plans a trip to Davos to attend the World Economic Forum next week -- even though Bank of America has discouraged the idea.

10. The Final Act

Thain pays $483,320 for 84,600 shares of Bank of America. The following day, he's fired.

Well, at least now he can make it to Davos.

When last we left the Republicans on the Senate Judiciary Committee, John Cornyn (TX) was taking a stand against accountability by insisting that Attorney General nominee Eric Holder promise not to prosecute any intelligence official for possible interrogation abuses at Guantanamo Bay and elsewhere.

Sen. Lindsey Graham (R-SC) took a more pragmatic view of Holder's ability to promise such sweeping immunity before court action on detainee cases is complete. But where is Arlen Specter (PA), Judiciary's senior Republican, in all of this?

Read More →

The answer is 25.

Here's a list of the Democrats who voted in favor of the financial bailout last October but changed their minds yesterday, when the House passed a resolution disapproving of President Obama's request for $350 billion more:

Michael Arcuri (NY), Shelley Berkley (NV), Marion Berry (AR), Dan Boren (OK), Allen Boyd (FL), Dennis Cardoza (CA), Jim Costa (CA), Henry Cuellar (TX), Artur Davis (AL), Brad Ellsworth (IN), Phil Hare (IL), Jane Harman (CA), Ron Kind (WI), Jerry McNerney (CA), Kendrick Meek (FL), Charlie Melancon (LA), Harry Mitchell (AZ), Ways and Means Committee Chairman Charlie Rangel (NY), Laura Richardson (CA), Mike Ross (AR), Dutch Ruppersberger (MD), House Rules Committee Chairman Louise Slaughter (NY), Zack Space (OH), Jackie Speier (CA), Peter Welch (VT)

The genuinely shocking names on that list are Rangel and Davis, a longtime ally of President Obama who didn't feel the need to extend the same trust to him that the Senate did.

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.

TPMLivewire