One month ago, TPM broke the news of a new Sustainable Energy & Environment Caucus being formed in the House to push for environmentally friendly recovery proposals in the stimulus bill.
The SEEC is now stepping up its efforts to ensure that the final version of the stimulus measure keeps its promise of investment in renewable energy and mass transit -- both of them proven job creators. Led by co-chairmen Jay Inslee (D-WA) and Steve Israel (D-NY), 25 members of the SEEC have written a letter to House leaders outlining their priorities.
Amid a flurry of coverage criticizing the shortcomings of the stimulus, the SEEC letter is a healthy reminder that the recovery plan does contain incentives for the nation to wean itself from fossil-fuel addiction ... if the House and Senate can be persuaded not to remove any worthy provisions during conference talks, that is.
We're getting way past flogging a dead horse territory here, but yesterday, in a rich and lengthy rundown on the troubled Merrill-Bank of America marriage, the New York Times had some great new details about John Thain's narcissism and self-delusion (a subject close to our hearts). Still, as entertaining as those are, this is definitely a story in which no one comes out looking good.
As for Thain, the former Merrill CEO, we learn that he believed he was entitled to that $40 million bonus he initially requested, on account of his "deal-making heroics", in the Times' words, in putting together the agreement with B of A.
His actual record, of course, was less heroic. The Times reports that Thain put a lot of effort into self-promotion, bringing in Margaret Tutwiler, with whom he had worked at the New York Stock Exchange, to run communications for the firm. Tutwiler -- a veteran of Republican Washington, who was George H. W. Bush's press secretary and in 2003 ran the State Department's unsuccessful effort to boost America's image abroad -- "largely spent her time cultivating Mr. Thain's image." (Thain, of course, was a major John McCain backer, who was mentioned as a possible Treasury Secretary in a McCain administration.)
Ms. Tutwiler quickly scheduled a series of interviews for Mr. Thain from Merrill's trading floor. As the cameras flashed, he shook hands with the troops. When the cameras left, so did Mr. Thain.
But in terms of substance, the Times makes clear there were numerous missteps. Before the B of A takeover, Thain might have made moves to mitigate the damage done to Merrill by the toxic assets on its books, but didn't.
For months, there were inquiries from hedge funds and other buyers about a range of mortgage assets and securities, but Merrill's mortgage desk was blocked from distributing price lists because Merrill's management refused to agree on market estimates, according to Merrill insiders.
Despite the fact that Mr. Thain inherited these assets, Merrill insiders say they could have been hedged -- moves well within Mr. Thain's purview as head of risk management at the firm. Yet he never did so, according to three people who worked closely with him. An individual familiar with Mr. Thain's thinking said that Mr. Thain didn't believe hedges would have been effective.
Losses in those so-called legacy assets would reach $10 billion in the quarter.
Unsurprisingly, Thain wasn't too popular with B of A rank and file. When news broke of his firing last month, reports the paper, "[s]pontaneous applause broke out across the trading floor and bets were placed on which one of Mr. Thain's highly paid lieutenants would be next."
But at least he kept believing in himself. After his ouster, the Times reports, Mr. Thain paced the halls of Merrill, venting his frustration to at least two people. "I don't know how these people can run this company without me," he told them.
Not that Bank of America and its CEO, Ken Lewis, come out looking much better. Since last month, Merrill and B of A have been squabbling over what the latter firm knew, and when, about Merrill's massive fourth-quarter losses, and its decision to award bonuses -- subjects being probed by the New York and North Carolina attorneys general (B of A has provided "reams of documents" to the NY investigators, says the Times). And the evidence is mounting that Bank of America knew, or should have known, just about everything.
The Times reports:
Although Mr. Lewis contends that he was surprised by the magnitude of Merrill's losses, his financial team on the ground in New York had daily access to Merrill's trading books, which would have allowed them to detect the mounting exposures.
To be specific:
A Bank of America executive was sent to New York from Charlotte to act as an interim chief financial officer and had daily access to Merrill's profit-and-loss statements.
Likewise, Bank of America was well aware of the $3.2 billion in bonuses that Merrill paid to its rank and file in late December. The two companies had agreed in September that Merrill might pay up to $5.8 billion, according to a private agreement reviewed by The New York Times.
That "Bank of America executive," by the way, appears to be J. Steele Alphin, B of A's chief administrative officer and a close confidant of Lewis, who Thain has claimed knew about the bonuses, and who has been subpoenaed by the New York investigators.
And according to one Times source, at a December 9 B of A board meeting, Lewis did not question Thain about Merrill's losses, even though 60 percent of those losses were already visible. Nor did Lewis tell his shareholders, who two days earlier had voted to approve the merger, about the Merrill losses.
Indeed, Lewis may have been kept as much important information from Thain as vice versa. We knew that, after seeing the losses, Lewis had gone to the government during the last two weeks of December, requesting bailout money to help digest Merrill. What we didn't know is that, according to one source, Lewis didn't tell Thain about his talks with the Feds till January 5.
Specter admits, candidly, that House Speaker Nancy Pelosi's (D-CA) critical response to the Senate stimulus means that he and fellow centrist GOPers have pushed the envelope about as far as it can go. But his choice of words is particularly telling (emphasis mine):
In an interview with Minnesota Public Radio on Friday, Norm Coleman was asked what his next step would be if the election trial ends with him still behind. And he didn't rule out an appeals process, which could hold up the certification of a Franken victory even longer.
"I don't know if there is a next step," Coleman said, explaining that it's a question of whether there would still be outstanding issues such as improperly-rejected absentee ballots, double-counted absentees, and other questions.
When pressed further on whether he would appeal, Coleman responded: "If those issues are resolved, there's not much to appeal."
In plain English: Get ready for some appeals.
Meanwhile, Al Franken gave his own interview to MPR. Among other things, he commented on Coleman's decision to take a temporary consulting job with the Republican Jewish Coalition: "I think it may be a more permanent job."
A scandal may be brewing at the Federal Emergency Management Agency, as a debate grows over whether the agency was correct to deny 650,000 applications for housing after Hurricane Ike. FEMA claims that 90 percent of claimants don't understand the organization's mission and the limited scope of the help it can provide. Critics allege that FEMA inspectors are unqualified, poorly trained, and motivated by a flat payment for each inspection they make, giving them an incentive to work quickly. Inspectors are responsible for surveying damage to houses caused by Ike; quick inspections are sometimes unable to properly assess damages. (Associated Press)
Pennsylvania governor Ed Rendell (D) will testify Monday in the trial of state Sen. Vincent Fumo (D) who allegedly defrauded the state Senate and two non-profits out of $3.5 million. Rendell, the star witness for the defense in the trial, is expected to vouch for Fumo's work ethic and the long hours he put in as a state lawmaker, according to defense lawyers. (Associated Press)
Prosecutors filed new charges against former Illinois governor Rod Blagojevich's chief fundraiser. Prosecutors allege in the new indictment that Christopher Kelly used $1.1 million in fraudulently obtained proceeds to pay personal debt expenses, including $383,000 in gambling debts. Kelly is already facing 11 counts of mail fraud and six counts of money laundering related to a bid-rigging scheme for an $8.5 million dollar contract at Chicago's O'Hare International Airport. (Associated Press)
A new Gallup poll shows that President Obama is continuing to enjoy high approval in handling the economic stimulus debate -- and his brand is solidly beating the Congressional Republicans, too.
The numbers: Obama has a 67% approval and only 25% disapproval on how he's handled the stimulus bill, compared to Congressional Republicans' 31% approval and very high 58% disapproval. Congressional Democrats aren't as popular as Obama himself -- explaining the GOP's efforts to tie the bill to Nancy Pelosi, instead of Obama -- but they're still in the black at 48%-42%.
In addition, a 51% majority of independents say it is critically important to pass a stimulus bill, 27% say it is moderately important, and only 17% say it's not important. The numbers among the Republican base, as we might expect, are wildly different: Only 29% say it is critically important, 37% say it's important but not critically so, and 31% say it's not important.
Obama Promoting Stimulus In Indiana, Holding Press Conference In Washington
President Obama is holding a town hall event at 12:05 p.m. ET in Elkhart, Indiana, promoting the compromise stimulus plan in a county suffering from 15.3% unemployment. Then at 8 p.m. ET he will hold a news conference at the White House -- his first presser since being sworn in as president.
Biden Meeting With AFL-CIO Head Sweeney
Joe Biden is meeting in Washington today with AFL-CIO president John Sweeney, and is holding other private meetings.
GOP Finding New Life In OppositionThe Washington Postreports that Republican leaders are seeking a new energy in their minority status, as the party mobilizes to oppose President Obama's economic agenda. "It's not a sign that we're back to where we need to be, but it's a sign that we're beginning to find our voice," said Rep. Paul Ryan (R-WI). "We're standing on our core principles, and the core principle that suffered the most in recent years was fiscal conservatism and economic liberty."
CQ: Moderate Republicans See No Benefit In Helping ObamaCQreports that moderate House Republicans may have a special reason to vote against the White House's stimulus plan: A fear of primary challenges from the right-wing Republican Study Committee. In addition, Rep. Mark Kirk (R-IL) pointed out that there is a certain political freedom that comes now: "We no longer have to worry about being blamed for all of the problems of the president and his administration. Now, it's the moderate Democrats who have to worry about that."
Specter: We Can't Afford Not To Pass Stimulus
In a new op-ed piece, Senator Arlen Specter (R-PA) explains why he has broken ranks to negotiate the new stimulus bill. "I am supporting the economic stimulus package for one simple reason," Specter says. "The country cannot afford not to take action."
WaPo: Speed And Oversight Could Be Mutually ExclusiveThe Washington Postreports that true efficiency in administering the stimulus plan may be close to impossible, thanks to the need for speed combined with staff cuts in the government procurement offices that occurred under both the Clinton and Bush Administration. "You can't have both," said Eileen Norcross, a senior research fellow at George Mason University's Mercatus Center, on the questions of speed and oversight. "There is no way to get around having to make a choice."
Holbrooke: Afghanistan "Much Tougher Than Iraq"
Special Afghanistan envoy Richard Holbrooke warned the Munich Security Conference that the Afghanistan War will be "much tougher than Iraq," with no easy resolutions. "There is no Dayton agreement in Afghanistan," said Holbrooke. "It's going to be a long, difficult struggle."
Feingold Asking Appointed Senators To Help Abolish Appointment Process
Russ Feingold is so far not having much luck in picking up support for his proposed constitutional amendment to abolish gubernatorial appointment of Senators. Feingold is specifically looking for backing from the current crop of appointed Senators, and so far has gotten a No from both Michael Bennet (D-CO) and Ted Kaufman (D-DE), and a "maybe" from Kirsten Gillibrand (D-NY).
Labor Group Launches Radio Ads Thanking Specter, Collins, Snowe, Nelson
Americans United For Change, the labor-backed group that has run attack ads tying anti-stimulus Republicans to Rush Limbaugh, now has a set of new positive ads thanking Senators Ben Nelson, Olympia Snowe, Susan Collins and Arlen Specter for their work in writing the compromise bill. Here's the radio ad praising Specter:
"Fortunately, Pennsylvania Senator Arlen Specter is providing the leadership we need to get the job done," the announcer says. "Senator Specter has with President Obama to reach agreement on a plan that has support from a broad range of groups -- including the US Chamber of Commerce and organized labor."
Obama Arriving Back At White House
President Obama and his family spent the weekend at Camp David, and are scheduled to arrive back at the White House at 5:30 p.m. ET
McCain: Parts Of Plan "Fundamentally Bad For America"
Appearing on Face The Nation this morning, John McCain affirmed that he will not support the current stimulus package -- and seemed to be saying that the package is even bigger than the New Deal. "I think it's a massive -- it's much larger than any measure that was taken during the Great Depression," said McCain. "I think it has policy changes in it which are fundamentally bad for America."
Van Hollen: We'll Hold The GOP Accountable For Opposing Stimulus
Appearing today on Fox News Sunday, DCCC chairman Chris Van Hollen said that the Democrats will be going after Republicans for their opposition to the stimulus plan. "Well, we're certainly going to hold people accountable for their votes and explain to the American people what the consequences are," said Van Hollen. "When you've got millions of Americans losing their jobs, it's hard to defend the position that you don't want to get the economy moving again."
Cornyn: Pelosi Wrote The Stimulus Bill
Also on Fox News Sunday, NRSC chairman John Cornyn laid out the GOP's case that the stimulus plan, in its current form, will be tied entirely to Nancy Pelosi. "But this bill is not the president's bipartisan plan. It's Nancy Pelosi 's plan," said Cornyn. "And she said, 'We won the election. We're writing the bill.' And that's what happened in the -- in the House."
Sanford: America Moving Close To "Savior-Based Economy," Like Russia, Venezuela, Zimbabwe
Appearing on CNN, South Carolina Gov. Mark Sanford (R) said that America should have to work through the current economic problems without government intervention, as opposed to what he sees as a movement to a "savior-based economy." Sanford added that the current economic interventions are "what you see in Russia or Venezuela or Zimbabwe or places like that where it matters not how good your product is to the consumer but what your political connection is to those in power."
Summers: New Bailout Package Coming, Aimed At Increasing Credit Flow
Larry Summers told George Stephanopoulos this morning that the White House's revamped financial rescue package will be rolled out this week -- Summers appeared to confirm a target date of Tuesday -- with the delay happening because of the need to focus on the stimulus package. "The focus will be on increasing credit flow with transparency, accountability and consistency we haven't seen so far," said Summers.
Steele Fires Back At Washington Post
In an appearance on This Week, Michael Steele lambasted the Washington Post for an article questioning payments to his sister by his 2006 Senate campaign, saying the payments were legitimate reimbursements and that he is getting to the bottom of it. "We're going to take it to the FBI. I'm not going to wait for them to come to me," Steele said, adding: "This is not the way I intend to run the RNC with this over my head."
Obama Address: "We Can't Afford To Make Perfect The Enemy Of The Absolutely Necessary"
In this weekend's YouTube address, President Obama gives his support to the newest version of the stimulus plan, and says it is vitally important to pass the bill:
"Legislation of such magnitude deserves the scrutiny that it's received over the last month, and it will receive more in the days to come," says Obama. "But we can't afford to make perfect the enemy of the absolutely necessary. The scale and scope of this plan is right. And the time for action is now."
Steele Address: Cut Taxes, Don't Spend, To Stimulate The Economy
Michael Steele, as the new chairman of the Republican National Committee, is getting in on the YouTube Address motif, too, with this new speech. Steele declares that power has already gone to the Democrats' heads, and he attacks the idea of government spending to boost the economy:
"The fastest way to help those families is by letting them keep more of the money they earn," says Steele. "Individual empowerment: that's how you stimulate the economy."
Stimulus Could Pass Senate Tuesday -- But It Won't Be Over
The Senate is expected to vote on cloture on the new stimulus bill on Monday. Should that succeed, it would then proceed to vote on final passage for Tuesday. At this point, the bill will then have to go to a House-Senate conference committee, which will negotiate the differences between the House and Senate versions, with the goal being to get something passed by the next weekend.
McConnell: This Plan Won't Work; GOP Won't Support It
Mitch McConnell has released a statement saying that while he hasn't seen the full compromise plan, he has seen enough to say that Senate Republicans will still oppose it. "So let me just sum it up by saying no action is not what any of my Republican colleagues are advocating," said McConnell. "But most of us are deeply skeptical that this will work. And that level of skepticism leads us to believe that this course of action should not be chosen."
Boehner: Stimimlus Bill Is "90 Percent Of A Bad Idea"
John Boehner has also released a statement deriding the new plan. "But ultimately this bill should be judged on whether it works, and 90 percent of a bad idea is still a bad idea," said Boehner. "Like the House-passed bill, the proposed Senate bill appears to be focused overwhelmingly on slow-moving and wasteful Washington spending, rather than immediate job creation and fast-acting tax relief. This is not what the American people want; nor is it what the President called for at the start of the process."
Biden: It's Time To "Press The Reset Button" On Diplomacy
Vice President Biden spoke today to the annual Munich Security Conference, promising a fresh start in U.S. foreign policy. "It's time, to paraphrase President Obama, to press the reset button and to revisit the many areas where we can and should work together," said Biden. He also added: "We will engage. We will listen. We will consult. America needs the world, just as I believe the world needs America."
Poll: Sebelius Could Win Kansas Senate Seat For Dems
A new Research 2000 poll shows that Kansas Governor Kathleen Sebelius, who is not at this time a candidate for Senate, ahead of two Republican Congressmen in the open-seat race. Sebelius leads Rep. Todd Tiahrt by 47%-37%, and is ahead of Rep. Jerry Moran by 48%-36%. The last time a Democrat won a Kansas Senate race was in the first FDR landslide of 1932.
The group of centrist senators who have worked for days on a package of proposed cuts to the stimulus bill just finished pitching their final product to the Democratic caucus -- and after a day of pessimistic signals, reports indicate that a roughly $140 billion package of trimmed tax cuts and spending has been okayed by the Democratic caucus.
The Senate is slated to return to floor action tonight, though the time frame for a vote on the slimmer stimulus remains very up in the air. A spokesman for Sen. Ben Nelson (D-NE), who has led the centrist talks alongside Sen. Susan Collins (R-ME), offered two words of caution when asked about a deal: "Not yet."
Remember, though, that unanimous consent is necessary to get anything done in the Senate, so Republican leaders would have to sign off before the economic recovery plan could come to a final vote. GOPers have adopted a slightly fatalist approach to the stimulus debate from the beginning -- as one conservative sighed last night, ultimate passage is "pretty much a foregone conclusion" -- but that doesn't meant that Republicans wouldn't try to slow things down tonight if they see a political upside.