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Senators Chris Dodd (D-CT) and Kent Conrad (D-ND) are still fending off questions about special-rate loans they received from Countrywide Financial.

Countrywide's been at the center of the mortgage meltdown, and the GOP is cranking up the pressure on the two Democratic lawmakers.

Dodd told reporters yesterday that a loan officer specifically told him and his wife they were getting "VIP" consideration in 2003 when they took out two loans on their Connecticut home and Capitol Hill townhouse.

But Dodd said he didn't think to ask precisely what that meant. Even though he is chairman of the Senate Banking Committee, which oversees the mortgage industry, Dodd said he "assumed" that "it was more of a courtesy thing."

From the New York Times.

"Somebody told you you were in a V.I.P. program," a reporter said, "And you didn't think you were getting ... "

Mr. Dodd cut off the reporter and finished the question himself. "A special deal on a loan?" the senator asked. "No."


According to Portfolio, which broke the story last week, the lower rates Dodd received saved him "about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home."

Calculating the exact benefit is a challenge, and some suggest Dodd's perk was far less. The Washington Post reports:
Dodd borrowed $506,000 at 4.25 percent to refinance a Capitol Hill townhouse, originally purchased in 1999, and $275,042 at 4.5 percent to refinance a home in East Haddam, Conn.

Rather than requiring him to pay the full amount to obtain the reduced mortgage rates, as other customers must, Countrywide waived three-eighths of a point, or about $2,000, on the first loan and a quarter-point, or $700, on the second.


Meanwhile, Sen. Conrad has moved quickly to quell the criticism. Through the special program -- known as the "F-O-A program", or "Friends of Angelo, named for Countrywide CEO Angelo Mozilo -- Conrad got a good deal on loans for both a Delaware beach vacation home as well as an eight-unit investment property he owns in Bismarck with his brothers.

Conrad said he gave $10,700 to Habitat for Humanity to compensate for any benefit he may have received on the vacation home loan. And this week, he said, he paid off the final $32,000 on the investment property.

Conrad spoke to Mozilo about his mortgage in 2002, but the deals under scrutiny were not finalized until 2004. Yet like Dodd, Conrad also said he was unaware of any discount. "I had absolutely no clue they had done that," he said yesterday.

"My conscience is absolutely clear," he told the Times.

Recent weeks have seen a rash of activity from some of the old players involved in the investigation of shamed Washington insider Jack Abramoff, including the uber-lobbyist himself. Here are complete listings from the Associated Press and TPM's own ongoing tally of the Abramoff ripple effect. (Associated Press)

Committee hearings in the House and Senate are revealing evidence of abuse, possible torture, handicapped legal proceedings and innocent detainees in prisons like Guantanamo Bay. The Senate Armed Services Committee released documents detailing the U.S. military's policy of hiding detainees from outside humanitarian groups such as the Red Cross. (McClatchy)

Sen. Barack Obama-antagonizer and polygraph-test failure Larry Sinclair is responsible for charging the presidential candidate with past sex trysts, drug use and accusations of murder, mainly through an oft-visited YouTube video. Public records show Sinclair has a hefty, 27-year-old rap sheet and is wanted in Colorado. Nevertheless, the National Press Club is giving Sinclair time to speak today in Washington D.C. (Politico)

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As we reported yesterday, the China-drilling-off-Cuba story that has been a talking point for high level Republicans for the last few weeks is an urban legend. And the GOP is slowly acknowledging that:

From Roll Call:

"We're not using the China talking point anymore, but we will continue to point out that it is absurd that Cuba is developing its deep-water energy resources while Democrats are blocking America from doing the same," said Michael Steel, spokesman for House Minority Leader John Boehner (R-Ohio).

Yesterday we learned about the CIA's larger involvement in developing torture techniques at Guantanamo Bay -- techniques previously thought to have been developed primarily by the military.

In an epic eight-hour, three-panel hearing, the Senate Armed Services Committee examined dozens of documents and grilled former Pentagon officials involved in developing the interrogation methods introduced in 2002.

(Among several good articles on the hearings, a good place to start isSpencer Ackerman's article at the Washington Independent.)

Key to the hearings were the minutes of a meeting between CIA counter-terrorism lawyer Jonathan Fredman and a group of military and intelligence officials who convened at the base in Cuba to discuss the use of harsher interrogation techniques on detainees at Guantanamo Bay. The techniques derived from a training regimen U.S. Special Forces troops used prepare troops to withstand torture --Survival Evasion Resistance Escape, or SERE.

The SERE program -- first introduced to many by a 2005 article by the New Yorker's Jane Mayer -- is not an interrogation program. Nor is it an intelligence-collection program. Instead, it's an obscure program across the different military services' special-forces wings that teaches troops how to withstand torture if captured. Instructors subject students -- under the rigorous watch of psychologists and physicians -- to various torture techniques, including waterboarding, prolonged stress positions, sleep deprivation and sensory manipulation. Waterboarding "is an overwhelming experience that induces horror, triggers a frantic survival instinct," Malcolm Nance, a former Navy SERE instructor who was himself waterboarded, testified to Congress in November. "As the event unfolded, I was fully conscious of what was happening: I was being tortured."

On July 25, 2002, the Defense agency that oversees the SERE program, known as the Joint Personnel Recovery Agency, or JPRA, was contacted by a representative of Pentagon General Counsel William Haynes for information about SERE practices for the "exploitation process" -- that is, getting detainees to cooperate with their interrogators. The next day, JPRA's chief of staff, Air Force Lt. Col. Daniel Baumgartner, sent Haynes a lengthy memorandum explaining how the program worked.

. . . Baumgartner's memorandum was not the last time SERE techniques were introduced into the interrogation bloodstream. On the week of Sept. 16, 2002, JPRA officials invited a contingent of senior Guantanamo-based officers to a briefing session at Ft. Bragg, N.C. Haynes and his legal counterparts at the Central Intelligence Agency, Justice Dept. and the vice president's office visited Guantanamo the following week for an update on interrogations. The minutes of that meeting record that the commander of the detention facility "did take Mr. Haynes and a few others aside for private conversations."

Just the week after that, a senior CIA lawyer, Jonathan Fredman, instructed Guantanamo officers on various SERE-pedigreed torture methods, including waterboarding. "If the detainee dies," Fredman said, "you're doing it wrong." In response, the chief Guantanamo Bay attorney, Lt. Col. Diane Beaver, said, "We will need documentation to protect us."


The Washington Post today emphasized that the meeting records, specifically Feldman's statements, revealed the CIA's larger involvement in advising on the torture techniques, the creation of which was previously thought to fall mainly under the purview of the Defense Department.

Baumgarten and Beaver testified about their involvement:

Before the Senate panel, Baumgartner said he did not realize that Haynes wanted to use SERE techniques on enemy combatants. "I had no idea how it would be used," he testified. "When tasked by my higher headquarters... I can't really turn around and tell the flag officers and the senior executive service people no."


Beaver testified today for the first time since Haynes declassified her guidance in mid-2004. She said she intended for the techniques to be used under supervised and restricted circumstances. It turned out that not a single other military lawyer submitted written guidance in support of the SERE-derived techniques. "In hindsight," Beaver told the Senate panel, "I can only conclude that others chose not to write on this issue in order not to be linked to it. For me, that was not an option."


Meanwhile, Haynes attempted to distance himself from the policy.

Haynes, who retired from the Pentagon in April, after his nomination to the federal judiciary foundered, pled ignorance. "No, sir, I don't remember it at the time," Haynes said when asked if he had received Baumgartner's memorandum. "But I saw it a long time ago... it's possible I saw it at the time."

Pressed by Levin on how he could not have seen a memorandum concerning terrorism detentions and interrogations, Hayes replied, "the recipient is the Office of the Secretary of Defense General Counsel, which [was] not my precise title."


For more coverage, also see Ackerman's live blog of the hearing as it took place.

We pointed out this morning the New York Times story that suggested KBR was over charging the military on Iraq-related contracts and threatening to cut off services to combat troops if the bills weren't paid.

Now here's another one about KBR's billing. This time from the Department of Defense Inspector General. And it looks at the company's role in the clean-up efforts after Hurricane Katrina.

The Houston Chronicle reports:

The Pentagon Inspector General said he could find no documentation in Navy contracting files to back up KBR claims it paid fair and reasonable prices to subcontractors that served meals in New Orleans.

"The prices KBR agreed to pay were greatly inflated," the 86-page audit said.

"The Navy paid approximately $4.1 million for meals and services we calculate should have cost $1.7 million, more than a $2.3 million difference," said the audit, signed by Assistant Inspector General for Acquisition Management Richard Jolliffe.

. . . Altogether, the audit requested that the Navy seek refunds of at least $8.5 million for "inappropriate" payments to KBR.

A reporter for the Los Angeles Times landed a rare interview with the Iraqi known as "Curveball," the now-discredited source on whom the Bush Administration rested much of its case for Iraq having weapons of mass destruction.

Living in Germany and speaking out for the first time, "Curveball" says everyone has been lying about him:

"I never said Iraq had weapons of mass destruction, never in my whole life," he said. "I challenge anyone in the world to get a piece of paper from me, anything with my signature, that proves I said there were weapons of mass destruction in Iraq."

How did the Bush administration get it so wrong?

"I'm not the source of these problems," he said.

We've been trying to find the original source for that mysterious meme about China drilling for oil off the coast of Cuba and Florida.

It's flat out wrong. The AP debunked it a few days ago after Vice President Dick Cheney tried to pass it off in remarks to the U.S. Chamber of Commerce about high energy prices.

But it lives on. GOP operative Mary Matalin repeated it on CNN just last night.

We've traced the evolution of the non-fact and found it emerged a few months ago with an inexplicable spate of letters to the editor at small and regional daily newspapers. Within weeks it was popping up as a talking point among many Republican lawmakers and getting traction from conservative pundits.

In most instances, the Republicans point to the (fake) story as reason to suspend the current moratoriums on offshore drilling that are largely based on environmental concerns. It may also serve to gin up opposition to the Cuban regime, a sentiment that has been vital to GOP support in Florida.

It is true that Sinopec, the Chinese oil company, along with a half dozen other foreign firms, signed an agreement with the Cuban government to possibly explore for drilling opportunities offshore. The Sinopec deal was forged back in 2005, and any actual drilling has been delayed until at least 2009.

A 1977 agreement between Cuba and the United States set the maritime boundary at the halfway mark along the 90-mile stretch from Key West to the Cuban coast. Cuban drilling about 50 miles off the coast of Florida could begin next year.

Cheney said he got the misinformation from a George Will column published on June 5.

By then, it was already a common talking point for GOP lawmakers. Also on June 5, Rep. Jean Schmidt (R-OH) spoke on the House floor and said: "The Chinese are drilling off the coast of Florida with their new energy partner, Cuba."

On May 23, David Gay, a Republican Congressional candidate from New York, said: "I think it is appalling that we allow Cuba and China to drill in the Florida Straits, meanwhile forbidding our own selves from seeking the common good, in this case, a way to lower the price of gasoline."

No doubt the notion was helped along by Weekly Standard writer Fred Barnes, who cited it unsourced in a column widely distributed by Yahoo.

A few weeks before that, our old friend Sen. Larry Craig (R-ID) cited the alleged Chinese drilling in a May 1 press release.

Our Nexis search also found a reference to Chinese drilling from Rep. Thelma Drake (R-VA) in an April 12 op-ed in the Daily Press of Newport news.

It was in late March that the whole thing initially picked up steam. As though on cue, letter-to-the-editor writers nationwide began complaining about China's alleged drilling in the Gulf and fired off missives to their local papers.

On March 29. Jerry Lightsey in Texas wrote the Austin American-Statesmen, saying:

"China is drilling offshore from Cuba in waters where we should be."
Then a few days later on April 2 a man named Don Code of Reno wrote the Reno Gazette-Journal.
"As I write this letter, China is drilling oil in our own back yard, in the Gulf of Mexico for Cuba. They are drilling in the exact same spots we would be drilling in, but the tree huggers won't let us."
On April 6, from the letters to the editor page of the St Louis Post-Dispatch, Edward Wolfe of Kirkwood, who described himself as a retired physician, wrote:
"China is drilling off the coast of Cuba only 90 miles from the U.S., some of it being done laterally into our ocean spaces."
April 8 Letter to the editor to the Leaf-Chronicle in Clarksville, Tenn. Jim Weague wrote:
"We cannot drill in the Gulf of Mexico, although China and Cuba are drilling there right now."


Before late March, we could find only trace evidence of this story, in obscure places online like this one here. What triggered this sudden, widespread and misinformed outrage? Was there some sort of email blast that went out?

Maybe the March 17 news story from McClathy planted the seed. The story didn't say that China was drilling, but it raised the spector:

HAVANA, Cuba -- Imagine oil rigs drilling in deep waters just 45 miles off the coast of South Florida. Refineries process the oil in Cuba and sell it across the Caribbean and beyond. Canadian and Mexican companies supply billions of dollars in equipment and services.

This could happen, as Havana invites foreign companies to explore its probable oil and natural-gas reserves while Washington's embargo against the communist-led island keeps U.S. companies locked out.

South Florida is watching closely, amid debate over drilling near its shores and concerns about U.S. energy policy. Oil companies increasingly seek to tap Cuba's deep-water reserves, now that oil prices are soaring and profits are more likely.


But all those letters all at once seems like an awful big coincidence.

Senators released financial disclosure forms last week, and among them were a series of amendments to earlier years' disclosure forms from Sen. Lisa Murkowski (R-AK).

You might remember Murkowski for the sweetheart deal she failed to disclose in her forms last year. Murkowski had purchased a piece of property along the Kenai river from Bob Penney, a politically-prominent local developer connected to the Sen. Ted Stevens (R-AK) investigation, for about $120,000 under market-value. Murkowski failed to disclose the purchase, and later claimed it was for "personal use," though this still did not make it exempt from disclosure. She later amended her disclosure forms to reflect the sale and finally reversed the sale, selling the property back to Penney for the purchase price.

She has now amended her 2004, 2005 and 2006 disclosure documents to reveal roughly $100,000 of as yet-undisclosed income in the latter two years and some $60,000 of undisclosed income in 2004.

In all three years, Murkowski was receiving $60,000 a year in payments on a promissory note, stemming from the sale of her 50% share of 313 E. Street, a property that was held by New Frontiers Ventures, LLC, which was co-owned by Murkowski, her husband and her parents, Gov. Frank and Nancy Murkowski. The property was sold to Garcia Investment Group, LLC in 2003.

A note on the disclosure forms state that New Frontiers Ventures was later dissolved on December 31, 2006.

In 2005, Murkowski sold her 'Alaska Pasta Company' to Hope Nelson, a member of the Alaska Federation of Republican Women who, in May 2007, also helped organize a birthday party for Sen. Murkowski. Nelson made a down payment of $45,000, and has since paid $40,800 a year on a promissory note.

From the AP:

A federal appeals court has ordered a new trial for a former Bush administration official convicted in the Jack Abramoff lobbying scandal.

David Safavian, former chief of staff for the General Services Administration, was convicted of lying to investigators about his relationship with Abramoff. He was sentenced to 18 months in prison but the sentence was put on hold while the appeal played out.


He did cry at his sentencing.

What would the U.S. military do without KBR, its largest logistical contractor?

That's not something the military ever wants to find out. The U.S. occupation of Iraq would collapse within days without KBR, which provides food, fuel, and potable water along with critical services ranging from complex engineering to cleaning out the port-o-potties.

And KBR knows it. A story on the front page of today's New York Times lays bare the leverage that KBR holds over the U.S. military.

In short, KBR can charge the U.S. government anything it wants under the implicit threat that the firm will halt logistical services to troops in Iraq. If the military doesn't pay up in full, KBR has warned, "it would reduce payments to subcontractors, which in turn would cut back on services."

That's according to Charles M. Smith, the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the Iraq war. Smith, speaking out for the first time, said he was ousted from his job after he tried to question KBR's massive billing.

The Army itself admits to the Times that it really had no choice but to pay KBR.

"You have to understand the circumstances at the time," said Jeffrey P. Parsons, executive director of the Army Contracting Command. "We could not let operational support suffer because of some other things."


Smith said that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.

As chief of the Field Support Contracting Division of the Army Field Support Command, he was in charge of the KBR contract from the start. Mr. Smith soon came to believe that KBR's business operations in Iraq were a mess. By the end of 2003, the Defense Contract Audit Agency told him that about $1 billion in cost estimates were not credible and should not be used as the basis for Army payments to the contractor.

"KBR didn't move proper business systems into Iraq," Mr. Smith said.

Along with the auditors, he said, he pushed for months to get KBR to provide data to justify the spending, including approximately $200 million for food services. Mr. Smith soon felt under pressure to ease up on KBR, he said. He and his boss, Maj. Gen. Wade H. McManus Jr., then the commander of the Army Field Support Command, were called to Pentagon meetings with Tina Ballard, then the deputy assistant secretary of the Army for policy and procurement.


After Smith was pushed out, the Defense Department hired a contractor to approve KBR's billing. (The department's own auditors had agreed with Smith that KBR was not properly documenting its billing.)

U.S.-paid contractors now outnumber U.S. troops in Iraq. Many contractors are recruited from poor Asian countries and paid far less than Americans would demand.

We've heard before about the "profound systemic problems" with KBR's billing. But Smith's account is the first time we've heard about an implicit threat to cut off services to troops.

KBR doesn't have the best record of providing troops' services. The company was criticized in March for making troops sick by failing to provide clean water. And top military officials have given false statements to Congress to quell controversy over the company.

But there's not much the military can do about it. Installing another company with the infrastructure inside Iraq needed to provide the same services would be an all-but insurmountable undertaking. So Smith's account should really come as no surprise.

"In the end," Mr. Smith said, "KBR got what it wanted."

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