TPM News

Following a few months of courtroom wrangling, Fox Business News has obtained a much-redacted 10,096 pages of Treasury Department documents on the bank bailout. Scrubbed of "proprietary" information and what would presumably be their most explosive revelations, the communiques exchanged between the Bush Administration and executives at Citigroup and AIG read something like "Dumb and Dumber and I Know It Seems Impossible But Even Dumber Than That." The first role would be played by the TARP overseer and cheerleader for the Italian automobile industry Neel Kashkari, whose aides nervously emailed one another as they watched him testify before the House Financial Services Committee on what exactly he was doing with their money.

Nason: How's it going?

Zuccarelli: Bad. Serious questions, too, not "chump" type questions. They're going to start to break Neel down soon, I'm getting worried he's going to start snapping.

Nason: This AIG stuff is tough to watch.

Zuccarelli: They killed him on exec comp. He didn't know answer.
But we wouldn't know how to answer, either, if we'd written the law that appropriated the trillion or so taxpayer dollars that paid bonuses to the clueless executives at AIG and Citigroup:

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Earlier today we flagged that exchange between AIG CEO Ed Liddy and Rep. Gary Peters (D-MI), during Liddy's testimony last week.

Peters asked Liddy about AIG's how AIG's internal risk management procedures could have failed so badly. In response, Liddy said that those procedures "generally were not allowed to go up into the financial-products business" that caused the firm's collapse.

When Peters pressed Liddy on how that could be, the CEO replied:

[Y]ou need to get the people who ran FP -- Mr. Cassano -- and the people who ran AIG before my arrival, and ask them that question.

Peters clearly agrees with us that this is worth some follow up: a spokesman from his office tells TPMmuckraker that they've contacted AIG for a fuller explanation of just how the financial products unit was able to operate in such secrecy.

So you can add Peters' office to the growing list of bodies that's probing, formally or informally, various related aspects of the AIG fiasco.

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We've written a lot about the controversy over whether the Democrats will try to pass big Obama agenda items (most notably health reform) via the budget reconciliation process. But one dynamic that's presented itself in the last week is the schism, of sorts, between Democratic legislators who strongly oppose the maneuver and those who oppose it in general but want to keep the option on the table. How many in that latter category would agree to support it (however reluctantly) if, months down the line, after a long debate, Republicans refuse to sign on to a bipartisan and comprehensive health reform bill?

At a news conference yesterday, House Speaker Nancy Pelosi offered a fairly full-throated endorsement of the idea: "I believe that it is absolutely essential that we come out of this year with a substantial health-care reform," Pelosi said. "I believe that is best served by having reconciliation in the package."

Earlier this week her deputy, Steny Hoyer, released a flyer attacking powerful Republicans who've flip flopped since the days when they supported Bush efforts to ram his agenda through using the same process. And on the senate side, Majority Leader Harry Reid said yesterday that he's not prepared to "take anything off the table."

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Would you be surprised to hear that Republicans are joining Democrats to praise President Obama's new plan for Afghanistan and Pakistan?

Maybe not -- after all, Obama does want to send 4,000 new troops to Afghanistan, bringing the estimated U.S. military presence there to 60,000. But Republicans' ardor for the Obama plan centers on their assumption that it's inspired by George W. Bush's "surge" plan for Iraq. (The GOP, if you remember, continues to credit Bush's 2007 escalation of the Iraq war as the key to "victory" there ... meanwhile, a car bomb explosion in Baghdad yesterday killed 26.)

After the jump, you can see which Republicans are happily crediting Bush's "surge" for inspiring Obama.

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Whatever the 25 bank CEOs descending upon the White House this morning told the president and his economic team, we hope JP Morgan CEO Jamie Dimon repeated one line from the speech he gave at the Chamber of Commerce earlier this month. (It's about 11:30 in.)

One of the main root causes [of the crisis], and this has been going on for a long time, was the huge trade and global financing imbalances which fueled very low rates and excess consumption, and over a long period of time I do not believe you can run those kind of trade deficits...

Dimon was getting at one of the root structural causes of the current crisis -- America takes, the world (China especially) makes, an unsustainable situation sustained above all by an increasingly usurous financial services industry. As the CEO of PNC Financial Services just pointed out, banking is the biggest sector of the American economy -- and it's been to the detriment of everything else.

And while that might seem obvious, intuitive even, Dimon's speech came just three days after Larry Summers told the Financial Times that the global trade imbalance wasn't the problem anymore, that it had been eclipsed by more pressing emergencies, etc. etc.

Naturally Dimon went on to condemn the demonization of Wall Street and corporate America.

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When I was transcribing Michele Bachmann's remarks on Sean Hannity's radio show from Wednesday, calling for an "orderly revolution" to save freedom from President Obama's Marxism, I somehow managed to miss what might have been the most inflammatory moment.

Go to the 7:55 mark:

We can never forget that the Founders were rebelling against a governmental authority that abused their taxation power. And that was the tyranny. That's exactly what's happening right now. And we have to -- we have to rise up and say, "No more. Not on my watch. No more."

In yet another sign that former Rep. Pat Toomey (R-PA) is on the verge of challenging Arlen Specter in the 2010 Republican primary -- a rematch of their 51%-49% battle in 2004 -- Greg Sargent reports that Toomey will appearing at rallies in Pennsylvania alongside a top GOP leader: Samuel "Joe The Plumber" Wurzelbacher.

Toomey will be joining Mr. The Plumber at an upcoming rally against the Employee Free Choice Act. In a way, this might seem superfluous, now that Specter has come out against EFCA and effectively sunk it during this Congress. On the other hand, any candidate should go hunting where the ducks are -- and there should be plenty of conservative ducks at a rally like this.

Did AIG's entire risk management team fall down on the job? Or, like the firm's auditors, were they prevented from doing it?

Yesterday we told you about Bob Lewis, AIG's chief risk officer, who still has his job despite a rather obvious failure to ensure that the firm wasn't taking on an unmanageable level of risk.

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Peace Action, an anti-war coalition that has enlisted four Democratic and four GOP members of Congress in an effort to dissuade President Obama from sending more troops to Afghanistan, just invoked an ominous historical analogy to describe today's new White House war plan.

Kevin Martin, executive director of the anti-war alliance, said in a statement:

It's a shame President Obama believes he can pursue the same militaristic strategy as his predecessors and produce a different result. While President Obama has made some good statements on increasing diplomacy and economic aid to Afghanistan and Pakistan, the emphasis is clearly on military operations. John F. Kennedy was in a comparable situation when he was elected. He chose to escalate then as well, and the consequences of his decision left our country mired in an unwinnable war.

Peace Action is organizing local protests against the escalation of the U.S. military presence in Afghanistan, starting in early April.

Senate Armed Services Committee Chairman Carl Levin (D-MI) just weighed in on this morning's White House rollout of a new plan for Afghanistan and Pakistan -- and he's taking the opposite view of Sen. Russ Feingold (D-WI), who warned the administration against an overly "Afghan-centric" approach.

In a long statement, Levin praised President Obama for starting off "on the right track" before openly questioning Pakistan's commitment to policing its lawless northwestern border with Afghanistan. "I disagree with some administration statements that we can't make progress in Afghanistan without success on the Pakistan side of the border," Levin said. His response is available in full after the jump.

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