Rep. Charles Rangel (D-NY) used campaign funds to pay parking tickets in the Washington, D.C. area, according to campaign finance records. Although it is not illegal to use campaign funds to pay off tickets written during campaign activities, it is still not clear if all $1,540 in fines were accrued during campaigns. (Congressional Quarterly)
An FBI probe into Rep. Tim Mahoney (D-FL) has begun and will investigate whether the outgoing congressman is guilty of any wrongdoing for placing his then-mistress on the congressional payroll. Mahoney insists that he did nothing illegal. (ABC News)
California Attorney General Jerry Brown is suing the Bush administration in order to block midnight regulations that would curtail protections put in place by the Endangered Species Act. The new rules would, among other things, allow federal agencies to issue permits for mining and logging operations without the consultation of biologists. (Associated Press)
Former Attorney General Alberto Gonzales -- under whose tenure the Justice Department often appeared to take its orders from the White House political office -- sat down with the Wall Street Journal in an effort to clear his name. But we're guessing he did himself more harm than good.
Gonzo appeared genuinely unable to grapple with why he might be unpopular. "What is it that I did that is so fundamentally wrong, that deserves this kind of response to my service?" he asked.
And he wasn't above wallowing in self-pity, making a comparison that would likely rankle families of 9/11 and Iraq war victims: "[F]or some reason, I am portrayed as the one who is evil in formulating policies that people disagree with. I consider myself a casualty, one of the many casualties of the war on terror."
What about that infamous hospital visit, in which Gonzales, at the time the White House counsel, along with White House chief of staff Andy Card, pressed then-AG John Ashcroft to sign off on a secret government program while Ashcroft was hospitalized -- and, by some accounts, going in and out of consciousness -- after gall bladder surgery? Gonzo has no regrets. "I found Ashcroft as lucid as I've seen him at meetings in the White House," he said.
He also took a shot at James Comey, the respected former DOJ official who revealed details of the hospital visit in Congressional testimony: "He didn't have the decency to notify anyone what he was about to testify," Gonzales said of Comey. "That was extremely disappointing."
And Gonzo put the blame for the memos authorizing torture squarely on John Yoo, the then-DOJ lawyer who wrote them -- even though even though there's no evidence that Gonzo, as White House counsel, raised any objection.
Reports the Journal:
John Yoo, the then-Justice official who had been assigned to draft the memos, had strong feelings and no one could have pressured him to write the memos a certain way, Mr. Gonzales said.
Gonzo also told the Journal he's at work on a book about his tenure at DOJ to set the record straight. He doesn't have a publisher, but is writing it "for my sons, so at least they know the story."
And he's not having much success in his post-government career. Says the paper:
The Harvard Law School graduate, onetime corporate lawyer and Texas judge also hasn't been able to land a job. He has delivered a few paid speeches, done some mediation work and plans to do some arbitration, but said law firms have been "skittish" about hiring him.
This probably won't come as a surprise. But some of the major culprits in the financial crash -- former CEOs or top execs at banks whose billion-dollar losses helped precipitate the turmoil -- don't seem to be paying much of a price for their catastrophic mismangement.
Dick Fuld, the former CEO of Lehman -- whose collapse in September directly ushered in the broader panic -- is already plotting a comeback. According to the Financial Times, he's thinking about starting a "small advisory boutique to help companies with strategic and financial issues." The venture would "harness [Fuld's] contacts in US companies," says the paper.
Meanwhile, two former Wall Street honchos appear to be living the high-life after seeing taxpayers step in to rescue their troubled firms.
The New York Post reports today that Peter Kraus, a former top executive with Merrill Lynch, just bought a $37 million Park Avenue apartment -- "featuring 11-foot-high ceilings, three fireplaces, three maid's rooms, a library, a gallery and a family room/gym." In September, Kraus got a $25 million golden parachute from Merrill when it was sold to Bank of America, even though he had only started work there that month. B of A received $25 billion in taxpayer money as part of the bailout.
And back in March, Jimmy Cayne, the ousted CEO of Bear Stearns, bought two adjacent apartments at the Plaza, perhaps New York's swankiest locale, worth $28.24 million. That same month, his collapsed former firm was bought by JP Morgan Chase, with major government backing. Cayne reportedly spent much of his time playing golf and bridge while Bear Stearns was reeling last year.
Next to these characters, the case of Ken Thompson, the former Wachovia CEO, may appear minor. But Thompson, who was forced out of Wachovia after the bank posted a $708 million loss in the first quarter of this year, nonetheless seems to have held onto some of his reputation as a member in good standing of the business elite: he remains on the board of Hewlett Packard. Wachovia has since been taken over by Wells Fargo.
And even Daniel Mudd, the former head of mortgage giant Fannie Mae -- now controlled by the US government -- still seems to have bright career prospects. The Financial Times has reported that he frequently travels to New York City for job interviews.
For Republicans opposed to campaign finance regulations, it appears that enforcing the law is just so last year.
Bloomberg reports that the Federal Election Commission's three GOP members all voted against fining the Chamber of Commerce for illegally spending money in 2004 on attacks against John Edwards, that year's Democratic vice-presidential nominee. The 3-3 final vote tally meant the commission took the rare step of rejecting an FEC counsel recommendation to impose the fine.
The November Fund, a 527 group run by the Chamber, had been found to have broken campaign spending laws by using $3 million it received from the chamber to attack Edwards over his trial lawyer background. Bloomberg notes that 11 other 527s were accused of violating campaign spending laws, and all but the Chamber paid a fine.
Bloomberg explains how it happened:
The commission initially agreed in March 2005 that the November Fund illegally accepted contributions in excess of the $5,000 limit for political action committees and that the chamber made illegal corporate contributions. In November 2007, the commission authorized its counsel to negotiate a settlement, including an agreed-upon fine.
Four new members joined the commission the following year, and in October 2008 the three Republicans balked at approving the final agreement.
In a "statement of reasons" released after the vote, two of the commission's Democratic members wrote that they were "gravely concerned", and called the vote a "dramatic departure" from "the commission's prior enforcement efforts and the law itself."
Paul Ryan, a lawyer with the Campaign Legal Center, which generally supports campaign finance regulations, told TPMmuckraker in an interview that the decision should not be interpreted by 527 groups as a license to spend money freely in future elections. He pointed out that the commission will likely undergo some turnover in 2009, with the probability that a future commission could be more willing to enforce campaign finance laws.
"I'm not ready to throw in the towel and say hundreds of millions of dollars will be back in 2012," said Ryan.
AIG Fraud SafeGuardÂ® - Personal financial loss can come in many forms: identity theft, investment schemes, dishonest advisors, forgery, etc. Coverage is available to help protect you and your family. (itals ours)
We're not talking big numbers here. An AIG spokesman told TPMmuckraker that the company had so far received 85 "notices" of claims related to Madoff, which cover up to $100,000. Even if you assume that all those claims will be paid out at the $100,000 maximum (which they almost certainly won't), that only puts the company on the hook for $8.5 million -- pocket change for a firm of AIG's size. The company could yet receive more claims, but the total dollar amount at issue would likely remain relatively small.
Still, Madoff's fall appears to have been precipitated by the spiraling financial crisis -- he was unable, it appears, to meet obligations to the rush of investors spooked by the turmoil and wanting to withdraw their money. So it's ironic that, thanks to that same crisis, we all could technically be on the hook for his alleged crimes.
The Federal Election Commission has deadlocked on a recommendation by its counsel to fine a group for illegal spending practices in the 2004 presidential election. The commission's 3 GOP members all voted against penalizing the U.S. Chamber of Commerce for illegally spending money to attack Democratic Vice Presidential nominee John Edwards. Two of the Democratic members of the FEC charged in a "statement of reasons" that the decision by the GOP members undermines "the commission's prior enforcement efforts and the law itself." (Bloomberg)
Michael Bay, director of the movie "Transformers," will again team up with the Defense Department for filming of the sequel. The second "Transformers" movie will be "the biggest joint military operation movie ever made," according to Bay's liaison officer from the Army. The movie, which will feature a plethora of military vehicles, is currently being shot at White Sands Missile Range in New Mexico. (Wired)
The alleged fraud of Bernard Madoff will likely lead to greatly increased scrutiny of hedge funds. Rep. Paul Kanjorski (D-PA) has announced a hearing to examine the alleged scheme and how it went undetected for so long. The likely result of congress' involvement, say experts, will be greater regulation for hedge fund of funds, which channel money to organizations like Madoff's and handle over 40 percent of hedge fund money. (Financial Times)
Almost since the news broke that Bernard Madoff had confessed to running a "$50 billion Ponzi scheme", one of the key unanswered questions has been, what happened to all that money?
The short answer is, we don't know yet. "It is still too early to say with any certainty what was going on inside Madoff's business," said Stephen Harbeck -- who heads the SIPC, which is serving as the receiver for Madoff's now-defunct brokerage firm -- at a press conference outside U.S. bankruptcy court last week.
It's worth noting at the outset that the $50 billion figure, which came from the SEC complaint quoting Madoff's own confession, may be inflated. The Associated Press has calculated that investors cumulatively have said they have lost $30 billion.
That's not exactly pocket change. And despite Madoff's lavish lifestyle, it would be virtually impossible for him to have blown through that amount, or even a significant fraction of it, on his own or his family's personal expenses.
Madoff has promised to give an accounting of all his assets by the end of the year. But until the legions of forensic accountants with the FBI, the SEC, and other investigative bodies complete their enormous task of independently tracing the funds, we'll likely remain largely in the dark.
Still, piecing together various reports, several possible answers are beginning to emerge, which, taken together, may go some way to explaining the mystery.
Living the High Life
Madoff may have used some small amount of client money to fund his and/or his family's lifestyle. He owns an apartment on the Upper East Side of Manhattan, estimated at over $5 million, a $3-million beachfront mansion in the Hamptons, a $9.4-million home in Palm Beach, Florida, and a villa on the French Riviera. He also has shares in two jets, and a 55.5-foot yacht. But it bears repeating, this spending can't have accounted for more than a small fraction of the total amount that Madoff investors lost.
Foreign Bank Accounts
Madoff may have stashed some of the money in overseas accounts. The Observer of London reported over the weekend that accountants going over Madoff's books think he regularly directed large sums to offshore accounts in the Caribbean and Europe. But again, there probably wasn't too much in there, or Madoff would likely have tapped it rather than allowing the whole alleged scheme to collapse when he couldn't meet obligations to investors who wanted to withdraw money earlier this month.
Robbing Peter To Pay Paul
More substantially, Madoff's alleged Ponzi scheme appears to have been based on using money provided by new investors to make payouts to existing investors. In other words, much of the money may have been withdrawn by investors who believed they had turned a legitimate profit. And if those gains prove to be a result of Madoff's deception, they would likely be re-appropriated as part of the forthcoming effort to compensate the alleged victims.
Hiding His Losses
Madoff may also simply have lost some of the money through bad trades, and tried to use a Ponzi scheme to cover it up. Note that the criminal complaint filed against him earlier this month says that he confessed to having "had personally traded and lost money for institutional clients, and that it was all his fault." (itals ours)
Still, right now, there are more questions than answers. As Robert Lenzner, a financial reporter for Forbes, who has been covering the story closely, said on CNBC this afternoon: "Nobody can figure out how this was done."
The New York Timesreports that several former government officials who helped organize the savings and loan bailout of the early 1990s are now putting that expertise to use by working as lawyers or lobbyists helping banks get a piece of the financial bailout -- or even by investing in some of the bad assets to be offered for sale.
Much of this, it appears, amounts to little more than an example of the decades-old revolving door between government and private business. But the paper reports that at least one former top government official is advising both the Bush and Obama teams on how to respond to the crisis, while at the same time being involved in efforts to profit from it.
Some of these former federal officials, like L. William Seidman, the first chairman of the R.T.C., are serving as advisers -- sharing ideas with Treasury Secretary Henry M. Paulson Jr. and the transition team for President-elect Barack Obama -- even while they are separately directing investors or banks on how to best profit from this advice.
"It is an enormous market," said Mr. Seidman, who has already joined two such potential money-making efforts and is evaluating proposals to participate in a third. "I am enjoying this."
As the chair of the Resolution Trust Corporation and the FDIC in the early 1990s, Seidman directed the government's disposal of the assets of failed savings and loans. So no one's suggesting that Paulson, and advisers to Obama, shouldn't be able to call on him for advice this time around.
But it would be nice to know more about what kind of ideas Seidman, and others like him, are sharing with current and future policymakers, and how those ideas line up with their own flourishing financial interests. And that's only more true given what we've learned about the inadequate efforts to monitor what the federal government has done with the bailout money and to protect against conflicts of interest.
The committee responsible for looking into possible impeachment proceedings against Illinois governor Rod Blagojevich will not subpoena advisers to President-elect Barack Obama. U.S. Attorney Patrick Fitzgerald has stated that subpoenaing Valerie Jarrett and Rahm Emanuel, along with Representative Jesse Jackson Jr. (D-IL) and Nils Larsen, a Tribune Company executive, would interfere with the criminal investigation into the governor. (Washington Post)
The Occupational Safety and Health Administration can be added to a list of government agencies apparently undermined by political appointees of the Bush administration. The resignation of an agency epidemiologist, after a report on the hazards of beryllium was shown, before publication, to lobbyists for beryllium producers, has drawn attention to the excessive influence of business interests at OSHA. (Washington Post)
Two airlines are preparing to dispute fines imposed on them by the Federal Aviation Administration. Southwest Airlines and American Airlines both claim that fines levied against them are unfair. Southwest faces $10.2 million in fines for flying planes that hadn't been inspected for fuselage cracks, while American may face penalties of up to $30 million for operating planes with potentially faulty wiring. (Wall Street Journal)
Here at TPMmuckraker, we've kind of been steering clear of her since the election. But lately, who'd have thunk it, we started missing her. So, given the prominent role she may yet play in national GOP politics in the future, we thought we'd check in on what she's been up to since returning to her day job. And from the looks of it, her familiar penchant for eye-catching if ill-advised media stunts, and her impressive ability to deny on Tuesday what she had passionately affirmed on Monday, appear to be in good shape.
Of course, we all saw the interview she gave -- and her unfortunate choice of backdrop for it -- right after pardoning a turkey just before Thanksgiving.
OK, for those of you who can't get enough, here it is one more time...
But it hasn't been all fun and turkey slaughterhouses for Palin. First, earlier this month, Palin, who marketed herself during the campaign as a maverick-y exemplar of reform-minded openness and transparency, filed disclosure reports for free trips she had taken as governor. Nothing wrong with that -- except that the trips took place in 2007, and according to Alaska law, reports must be filed within 30 days of the trip. A spokesman attributed it to staff oversight.
That's just the beginning. Remember that second Trooper-Gate investigation, conducted by the state personnel board -- whose members, of course, are appointed by the governor? The one that found, in contrast to the independent probe conducted by the legislature, that Palin broke no laws in connection with the affair? Well, back in October, while Palin was still a candidate for vice president, her lawyer said publicly that she wanted a transcript of her testimony released.
But it appears that position is "no longer operative." Palin has now changed her mind, and is refusing to release the transcript. In an email to an Anchorage Daily News reporter, her press secretary wrote: "This matter is closed. We see no public purpose in artificially prolonging this controversy."
And speaking of panels whose members Palin appointed and which then issued favorable rulings for her...
You might remember that during the campaign, the governor took some heat for boasting about enacting a pay cut for herself while mayor of Wasilla, without mentioning that the cut was soon exceeded by a raise, leaving her making more than when she started.
Well now the issue of her pay is back in the news. Last week, a special panel charged with looking at the question of pay raises for the governor, other senior administration officials, and legislators -- -- whose members were appointed by, you guessed it, Palin -- released its recommendations. And, surprise surprise, it advised raising Palin's pay by 20 percent -- as well as boosting that of the others under consideration.
After some lawmakers pointed out that the governor's pay had been raised by a whopping 46 percent as recently as 2006 -- the year Palin was elected governor -- her spokesman, Bill McAllister, tried to tamp down the complaints. "Her view is, it's just not appropriate to accept a pay raise in the middle of the term," he told the Associated Press -- but appeared to be leaving open the possibility that Palin might see her way to accepting the pay hike after her first term ends in 2010, when she'll likely seek reelection.
Which reminds us ... only another year to wait, in all likelihood, before we get to see Palin running for office again! Now that's something to look forward to.