TPM News

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.

You've got to hand it to Rod Blagojevich -- he really does have a way with words, and with placing his story into the great American narrative.

"December 9 to my family, to us, to me, is what Pearl Harbor Day was to the United States," Blago told the Associated Press. "It was a complete surprise, completely unexpected. And just like the United States prevailed in that, we'll prevail in this."

In the immortal words of U.S. Senator John "Bluto" Blutarsky: "Was it over when the Germans bombed Pearl Harbor? Hell no!"

Paterson Expected To Announce Gillibrand For Senate Today New York Gov. David Paterson will be holding a press conference at 12 p.m. ET to announce whom he is appointing to Hillary Clinton's Senate. Paterson has reportedly picked upstate Congresswoman Kirsten Gillibrand.

Obama's Schedule For Today This morning President Obama and VP Joe Biden have a presidential daily briefing at 9:15 a.m. ET, a meeting with both the Democratic and GOP Congressional leadership at 9:45 a.m. ET, and an 11:20 a.m. ET meeting with members of the National Security Council. Obama then has a series of closed meetings in the afternoon: A meeting with Joe Biden and his economic team at 12:40 p.m. ET; lunch with Biden at 1 p.m. ET; a meeting with Biden and the budget team at 2 p.m. ET; and a meeting with Tim Geithner at 3:30 p.m. ET.

Today: More Litigation In Minnesota The court battles continue today in the Minnesota Senate race, with a 1 p.m. ET hearing on motions for summary judgment. After yesterday's rejection of Al Franken's effort to get Norm Coleman's election-contest lawsuit dismissed immediately, this could be the next opportunity to trim down the various claims in the lawsuit.

Senate Confirms Six More Obama Nominees The Senate last night confirmed six nominees to serve in the Obama Administration: Susan Rice as ambassador to the United Nations; Ray LaHood as Sec. of Transportation; Shaun Donovan at HUD; Mary Schapiro as chair of the SEC; Lisa Jackson as EPA administrator; and Nancy Sutley to head up the White House Council of Environmental Quality.

Obama Keeping BlackBerry, Under Special Conditions President Obama has arrived at a carefully-negotiated compromise in his efforts to keep his BlackBerry. Among other conditions, only a small group of senior staff and friends will have his e-mail address, his own messages will be designed to not be forwardable, and any e-mails will be subject to the Presidential Open Records Act, which could eventually put them into the public domain.

WaPo: McCain The Maverick Is Back The Washington Post reports that the pre-2007 John McCain, the one who would occasionally irk his hard-line GOP colleagues by making peace with the Dems, appears to have made a comeback. The change in mood was most apparent when he castigated Republicans who were delaying Hillary Clinton's nomination to be Secretary of State, reminding them that the country had just had an election.

McCain To Meet With Palin Soon John McCain told Larry King that he remains close with Sarah Palin, dismissing the idea that there's any bad blood between them. "Look, we're very close friends," McCain said, "and I talk to her all the time and look forward to seeing her, I think, in a week or so."

The Albany Times Union and other outlets are reporting that New York Gov. David Paterson will appoint upstate Congresswoman Kirsten Gillibrand to Hillary Clinton's former Senate seat.

Gillibrand was first elected in 2006 in a narrow win against incumbent Republican Rep. John Sweeney, then won by a landslide in 2008 against wealthy businessman Sandy Treadwell. Gillibrand proved to be a prolific fundraiser herself in that race, spending over $4 million.

So Paterson gets to a) court women voters, b) court upstate voters, and c) recruit a candidate who can bring in a lot of money in case of a tough race.

It makes sense.

I won't claim to have sorted through the whole Caroline Kennedy Schlossberg-David Paterson mess---how could two smart people have let things get so out of hand?--but I'll pass along what I heard tonite from a New York Democrat who is close to the situation. This person did not know why Caroline pulled out of the running but insisted that John Kennedy's daughter was under the impression that she was still very much a contender from Wednesday afternoon when she decided to withdraw, according to the source, through Wednesday night right until 12:00 AM in the wee hours of Thursday morning when she officially wrote the governor and pulled the plug on her short-lived bid to be appointed senator to replace Hillary Clinton. "I don't know why she did," said this source, referring to her withdrawal and adding that she'd made the decision in the afternoon on Wednesday and spent most of the rest of the day mulling it over.

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Al Franken just had his first real legal setback in a while, with the special three-judge panel handling Norm Coleman's legal contest denying his legal team's motion to dismiss the case.

The court rejected the Franken team's legal arguments that they didn't have the constitutional authority to conduct a far-reaching election contest over a race for federal office, ruling that they do in fact have the authority and that Franken's team hadn't met the very high burden of proof necessary to throw out the lawsuit on its face.

This wasn't all that surprising, as Franken's arguments seemed a little too ambitious to succeed so easily. Next up is a hearing on motions for summary judgment, scheduled for 1 p.m. ET tomorrow, at which the court might be able to work its way through some of Norm Coleman's various legal claims.

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It looks like Senate Democrats are poised to try again on Lisa Jackson and Nancy Sutley, the Obama environmental nominees whose confirmations were slowed down by Republicans signaling their frustration over White House climate adviser Carol Browner.

As Senate environment committee chairman Barbara Boxer (D-CA) put it to TPM today, "Once we go public with [the GOP delay], it should go away."

And sure enough, drawing attention to the Republican objections did the trick. Sen. John Barrasso (R-WY) clarified what Boxer termed his initial opposition to the environmental nominations, deeming it nothing but a misunderstanding. We won't know for sure until Democrats call up Jackson and Sutley again, but if no objection is heard, consider it further proof that sunshine is the best disinfectant.

Local media in western Pennsylvania is reporting that FBI agents have raided the offices of a defense contractor in the area, which has received millions of dollars in earmarks at the request of earmark king Rep. John Murtha (D-PA).

According to The Hill, picking up on the local reports, Murtha engineered $8.2 million in federal defense earmarks last year on behalf of the company, Kuchera Industries and Kuchera Defense Systems.

A local TV station adds that the IRS was also involved in the raid, and that Bill Kuchera's home and "game preserve," a 161,00 acre property, were raided as well.

The report also notes, intriguingly, that signs on the property call it a "U.S. government test facility."

In recent years the politically active company has given Murtha more than $56,000 in contributions, according to The Hill. And CEO Bill Kuchera served on the board of a non-profit founded by a former Murtha aide.

The paper adds:

Kuchera has several Pentagon contracts that could be worth more than $100 million over a decade, including parts used in air-to-air and surface-to-air missiles, and robots used in dangerous war zones to patrol vehicles for booby traps and bombs.

Murtha's career was nearly derailed in the 1980's after he was caught on tape telling an undercover FBI agent he might want money for his district in exchange for legislative favors -- and he regularly appears on good-government groups' lists of the most corrupt members of Congress.