TPM News

The national parties are giving their reactions to today's big legal developments in Minnesota.

Jim Manley, the spokesman for Harry Reid, issued this statement:

"Sen. Reid is looking forward to the final resolution of this case by the Minnesota courts so that Al Franken can finally be seated as the new senator from Minnesota."

Pay close attention to the specific mention here of the Minnesota courts. This would appear to say that Reid believes Franken should be seated after his expected victory at the Minnesota Supreme Court -- and that this shouldn't wait for federal appeals.

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Gregg Levine at Firedoglake has two intriguing posts up about the latest developments in the NY-20 race, the ramifications of which we're still parsing through over here. Gregg writes, "The Dutchess County Clerk's Office has confirmed to FDL that Tedisco's people have filed an ex parte motion in order, the effect of which would be to investigate and overturn today's election results, should the outcome not be to Republicans' liking."

Peculiar! Here's a link the filing. One key section Gregg cites reads:

Ordering the respondent New York State Board of Elections and the Commissioners thereof to certify the name of James Tedisco as elected to the public office of Member of the U.S. House of Representatives, 20th Congressional District, in Dutchess, New York, at the Special Election held therefor on the 31st Day of March, 2009, or alternatively enjoining the improper issuance of a certificate of election for the said public office.

It's unclear whether this is a major development, or a procedural maneuver that will go nowhere. We're trying to get more information and context--New York state election law turns out to be rather complicated! I've placed calls to the Murphy campaign, the DCCC, and the New York State Democratic party, and nobody seems to know what to make of this just yet. Perhaps significantly Jim Tedisco spokesman Adam Kramer writes to say that the motion was filed in the New York State Supreme Court by the state Republican party, and not by the Tedisco campaign.

We'll post updates as they come in.

Just a quick budget update, the Senate did ultimately pass the Thune amendment, which, in its original form, was aimed at preventing climate change legislation from increasing gas and energy prices. However, Barbara Boxer swooped in unexpectedly and made some changes of her own, which allowed the Thune amendment to pass harmlessly.

Meanwhile, Judd Gregg, suddenly concerned with the national debt, introduced a measure that would have prohibited the congress from voting on anything in any way related to the budget that "shows an increase in the public debt, for the period of the current fiscal year through the next 10 years, equal to or greater than the debt accumulated from 1789 to January 20, 2009." But it failed 43-54 with Democrats Jon Tester and Ben Nelson voting with the Republicans.

The more interesting proposal, though, was introduced by Sen. Mike Johanns (R-NE), and would explicitly prevent the Senate from using reconciliation to pass climate change legislation. It hasn't been voted upon yet, but when that happens, we'll let you know.

Last week the Wall Street Journal broke the news that the Justice Department had appointed a lawyer to monitor an accounting fraud-fraught AIG in 2005. And today the paper reports that the House Oversight Committee has demanded the full dossier of records kept by the longtime Washington-based Bryan Cave attorney named James Cole, on what he saw while he was there. Yesterday the committee fired off letters jointly to Bryan Cave and Attorney General Eric Holder demanding all available records -- "to be construed on the broadest sense" -- from Cole's tenure in the post:

Mr. Cole evidently had routine access to the highest levels of the company and participated as an observer in AIG Board meetings. In effect, Mr. Cole had a seat at the table as the company decided to oust two CEO's, developed its strategy in the midst of the housing bubble and subsequent collapse, and made critical decisions concerning restructuring AIG-FP, allocating retention payments, generating options to produce liquidity, and ultimately requesting taxpayer capital injections from the Federal Reserve and Treasury now amounting to nearly $180 billion.

Cole was appointed to monitor the insurer's meetings as part of a "deferred prosecution" agreement with the SEC after investigators unearthed a complex tangle of fraudulent partnerships the company had set up to hide debt on behalf of its client PNC Bank. At the time Cole was retained -- which has so far cost AIG (us) $20 million -- the "independent monitors" installed to sit in on the senior meetings of the 103 companies with whom the government had struck such bargains were the source of much hand-wringing in corporate circles.

So much hand-wringing, in fact, that the Criminal Law Review in 2007 worried:

With respect to the corporation, DPA's "cooperation" provisions typically obligate the corporation to act at the direction and on the behalf of the government in the investigation and prosecution of individuals. This has the potential to turn corporations into agents of the state, with resulting corporate governance and constitutional implications.

Ha, AS IF.

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On a conference call with reporters just now, held in the wake of the election court's ruling to review only 400 ballots for possible inclusion -- and explicitly rejecting Coleman's calls for leniency in the standards and the burden of poof -- legal spokesman Ben Ginsberg made it absolutely clear: "If these rulings stand in any final order of the court, if it will give us no choice but to appeal that order to the Minnesota Supreme Court."

Ginsberg followed up on his previous ridicule of the court's February 13 ruling that required strict standards for letting ballots in -- which he would refer to as the "Friday the 13th Ruling" -- by giving this one a new name: "The Almost April Fool's Day Ruling."

Ginsberg said the court was "subsumed with its own logic" to require strict standards, despite local officials on Election Day being much more permissive. When asked when he realized the court would not bend, Ginsberg said: "Our recognition that the court was not going to change came roughly 97 minutes ago, when we got the order."

"I gather we fundamentally disagree with them," he said later. "And that's why there are appellate courts."

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We've told you that the Feds are looking at that December 2007 presentation that Joe Cassano gave for investors, to determine whether he, along with AIG CEO Martin Sullivan, knowingly gave an unduly rosy picture of AIGFP's exposure to sub-prime losses.

But a review of that presentation suggests that a few other AIG execs may also have shaded the truth, to put it mildly, on a different question.

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The Minnesota election court has just handed down a much-awaited ruling, laying out which previously-rejected ballots might just be counted yet -- and though it's unclear right now whose votes are whose, it doesn't look all that good for Norm Coleman.

The court reviewed 980 copies of rejected absentee ballots that both campaigns had submitted to the court arguing they should be counted under the law. We don't know the exact proportions, and Coleman alone had submitted more than that. Of those, the court has individually selected 400 of those for final review of the originals. But even all 400 of these won't be counted: "To be clear, not every absentee ballot identified in this Order will ultimately be opened and counted."

The ballots will be delivered to the Secretary of State's office by noon Monday, and those that are cleared for inclusion will be counted the next day.

So what kinds of ballots will be counted, and what processes went into determining this?

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Earlier today, we picked out some fascinating-in-hindsight excerpts from a May 2007 presentation given by Joe Cassano, then the head of AIG's financial products unit.

Since then, we've been looking at a similar presentation (via Nexis) for investors given by Cassano and other AIG execs in December of that year. By that time, the collapse of the subprime housing market could no longer be downplayed, and Cassano's appears more anxious than ever to reassure clearly nervous investors about AIG's exposure to losses on its credit default swaps.

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As TPMDC has previously noted, Senate Republicans don't see the need to offer an alternative budget of their own this week -- even as they blast the priorities President Obama has outlined.

But the Congressional Progressive Caucus (CPC) is taking that leap, presenting an alternative budget that includes cuts to outdated weapons projects and defense procurement initiatives as well as a new 0.25% tax on all stock trades that would offset the staggering cost of the financial bailout.

The details of the progressives' budget are available after the jump -- and worth cheering, given the recent news that the CPC is struggling to get a literal foot in the door at the White House.

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As we are quickly coming to understand, AIG Financial Products was siphoning billions from tax coffers the old-fashioned way ages before the collateral calls began flooding in. Essentially, the same unregulated swaps and options contracts in which AIG FP "specialized" a.k.a. "did not understand" lay at the heart of many of the sham "partnerships" corporations and wealthy people use to obscure their capital gains. These partnerships are often referred to as "Son of Boss," we still do not know why, and the IRS has been shutting down them down for years, because it is usually abundantly clear that the rich people who bought said derivatives had no idea what the hell they were for beyond "generating artificial basis" or somesuch euphemism for "pretending they lost money to hide the fact that they actually raked it in." That said, most of the people with enough money to know about tax shelters are/have pretty decent lawyers, so sometimes they think up a pretty good excuse for having invested in a baffling combination of esoteric "swaps" and such. Last month, for instance, a Los Angeles judge struck down a Son of Boss partnership that had spared a pair of local real estate developers an accumulated tax bill of $145 million by investing $2 million in some obscure AIG credit default swaps. But one of the developers, former Sacramento Kings owner and former IRS attorney James Thomas, had a pretty genius alibi.

In 2001 they sought out an abusive tax shelter that has become known as "Son of BOSS." In the Son of BOSS scheme used by Thomas and Fox, they purchased an exotic form of a financial option that they claim would have protected them against a catastrophic decline in real estate values, which they feared in the immediate aftermath of the terrorist attacks of September 11.
A catastrophic decline in real estate values you say? How very "black swan"!* The judge wasn't hearing it though.

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