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Remember that weird moment during yesterday's Madoff hearings, when the SEC's top lawyer, Andy Vollmer, declined to answer questions, and kinda sorta implied he was asserting executive privilege, before backing off that claim when pressed by lawmakers? The moment that provoked Rep. Gary Ackerman's blunt assessment: "We thought the enemy was Mr. Madoff. I think it's you"?

One staffer described the Vollmer moment to TPMmuckraker as a "bombshell" within the agency's headquarters.

And it looks like the SEC is a little embarrassed about it -- and about the general evasiveness of other agency brass in their testimony yesterday.

Check out this letter, which the SEC's new chair, Mary Schapiro, sent to the committee last night.

Schapiro tells lawmakers that the hearing "cannot have been satisfactory for you." She admits that there needs to be a full accounting of what went wrong, and offers to meet with the lawmakers, at their earliest convenience, to "determine a course forward that will meet all of our interests."

As for the Vollmer issue itself, an agency spokesman confirmed that he wasn't claiming the privilege, but couldn't offer any further explanation, saying he'd get back to us.

Remember that saying about catching more flies with honey than with vinegar?

Yesterday we wrote that the House Financial Services committee, chaired by Rep. Barney Frank, had invited the CEOs of eight big banks -- including Bank of America, Goldman Sachs, Citi, and JP Morgan -- to testify. But, we noted, the committee wouldn't say whether any of the CEOs had accepted the invitation -- leaving the possibility that they might just say no. Any thought given to issuing subpoenas, we wondered.

It looks like that won't be necessary. Steve Adamske, a spokesman for the committee, confirmed to TPMmuckraker that all eight CEOs would indeed testify. Adamske said that subpoenas weren't necessary, since the political optics of not showing up would be too harmful for the banks. He said committee staff is working with the banks to schedule the CEOs' appearances.

So it looks like we'll get to hear straight from the horses' mouths about what the banks have been doing with the bailout funds. Sometimes asking nicely gets results.

We already knew, that, after it got wind of Merrill Lynch's massive fourth-quarter losses back in December, Bank of America had thought about pulling out of its deal to buy the troubled investment bank -- before being talked into it by the federal government.

But today, the Wall Street Journal adds some fascinating detail (sub. req.) about the level of hardball that the government played in making sure the deal went through.

Bush Treasury Secretary Henry Paulson and Fed chief Ben Bernanke reportedly warned B of A CEO Ken Lewis that if his firm pulled out, Merrill would collapse. They added that such a move, in the Journal's words "could undercut confidence in Bank of America, both in the markets and among government officials."

But that was just the start. Two days later, on a conference call, Bernanke told B of A that if it abandoned the Merrill deal, and came back to the Feds in the future seeking more bailout money, the government would consider removing the firm's executives and directors.

The threats, of course, seem to have worked, since Bank of America went ahead with the deal -- getting an additional $20 billion in bailout money to help digest Merrill.

Bernanke and Paulson may have been right to take such a hard line. But the episode suggests the level of control of day-to-day control that the government has had over the financial sector, since stepping in to rescue it last fall. Nationalizing the banks is still seen, in the mainstream debate as an extreme solution. But if the Feds are essentially making major operational decisions for the big banks, some would say they've been nationalized already -- it's just that no one wants to it.

The Minnesota Supreme Court just finished hearing arguments in Al Franken's lawsuit to obtain an immediate certificate of election, and it has become clear that the court faces a very tough choice: Issue an election certificate now, which would have a theoretical chance of being undone later by pending litigation, and to do so against the commonly-understood meaning of state statutes -- or have Minnesota go without two seats in the Senate for months.

The justices grilled everybody involved. Justice Paul Anderson asked lead Franken lawyer Marc Elias whether the certificate is truly necessary, and whether the court has to intervene. "The Senate has plenary authority to seat whoever they want," Elias replied. "They could declare me the next Senator. But like this court, the Senate has rules."

Elias' argument is that the Senate has rules pertaining to certificates of election, as we saw in the Roland Burris case, and that Minnesota is unconstitutionally shirking its obligation to send a certificate in time for the Senate to meet.

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If you enjoyed rolling your eyes at the GOP's antic attempts to hold up Eric Holder's Senate confirmation, get ready for the Judiciary Committee hearing next week on Elena Kagan's nomination.

Kagan, the former dean of Harvard Law School, would be the first female solicitor general. She comes to the job with stellar credentials, but that hasn't stopped conservative senators (joined by the the Christian Coalition, naturally) from signaling that they intend to fight her hard on her past support for limits on military recruiters' access to law school campuses.

In fact, GOP senators have a history of blocking Kagan -- in 1999, as Judiciary panel chairman Patrick Leahy (D-VT) notes her, they "pocket-filibustered" her nomination to become a federal judge under Bill Clinton by refusing to hold a committee hearing.

But any Republican itching to filibuster Kagan should give a call to Brad Berenson, who worked under Alberto Gonzales as associate White House counsel to George W. Bush. He's all for Kagan. In fact, he wrote to the Judiciary Committee last week that ...

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There's finally going to be a committee vote today on the nomination of Hilda Solis to be Secretary of Labor. It's about time. The administration had to appoint an interim secretary because this was taking so long Republicans on the Senate Health, Educaiton, Labor and Pensions Committee have been dragging their feet, alleging that her position on the board of directors of Americans Rights at Work, a pro-labor group might have amounted to lobbying. They wanted to know if Solis actually lobbied Congress which, as one ARAW-connected person told me, was absurd because if anything she was a rather passive board member.

The Republicans are really using the Solis nomination to fight the Employee Free Choice Act. Today's Los Angeles Times notes that Republicans now want Solis to avoid lobbying for the bill even after she becomes Labor Secretary which is like asking Tim Geithner to stay neutral about the stimulus package or Robert Gates to take a pass on Afghanistan funding. Of course when Elaine Chao was labor secretary under George W. Bush they had no problems with her advocating for the defeat of EFCA. See her Wall Street Journal op-ed here written during the last days of her tenure.

USA Today is reporting that more than two dozen groups have registered to lobby for their share of the stimulus pie since the economic recovery bill first came before Congress last month.

That rush to secure spending for favored projects isn't necessarily surprising, but there's a new wrinkle for lobbyists this time around: the Obama administration's insistence on keeping earmarks out of the stimulus. As noble as that sounds, USA Today explains, it may have the unintended effect of driving lobbyists underground to chase stimulus money that will be distributed through federal grants:

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President Obama talks about seeking bipartisan accord ... and he reaches out to GOP senators ... but how many Republicans are even open to the need for fixing the economy through government spending?

As The Washington Independent's Dave Weigel points out, that question seems to have been answered in a Senate vote last night. When Sen. Jim DeMint (R-SC) offered an alternative stimulus plan that would replace all government spending in the stimulus with a series of tax cuts, 36 Republican senators voted for it.

To emphasize the point, that means all but four GOPers were perfectly happy with scrapping the core assumption of the president's plan. Here, then, are the four Republican senators whom Obama has the best shot at working with: Susan Collins (ME), George Voinovich (OH), Arlen Specter (PA), and Olympia Snowe (ME).

New details are emerging about the government's extreme eagerness to ensure that Bank of America didn't walk away from its deal to buy Merrill Lynch back in December. The Wall Street Journal reports (sub. req.) that Federal Reserve chairman Ben Bernanke threatened that if the deal fell through, the government would remove Bank of America's directors in the event that it needed more bailout funds. The details suggest the control that the federal government has enjoyed over the financial sector since last fall's bailout. (Wall Street Journal)

A former employee of the Interior Department was sentenced yesterday to probation and fined $2,000 for his role in a scandal at the Minerals Management Service. Milton Dial received the minimum sentence for one charge of violating federal interest laws and the judge even apologized to Dial for sentencing him at all, saying that, "high executives in our government violate all the time" and go unpunished. Dial's crime is connected to a wider scandal involving the preferential awarding of contracts by DOI that has already ensnared several current or former department managers. (KATC)

A contractor for the U.S. Army pleaded guilty yesterday to manslaughter after shooting a handcuffed Taliban member in Afghanistan. The case was the first in which a contractor working in either Iraq or Afghanistan was prosecuted under the Military Extraterritorial Jurisdiction Act of 2000, a law that allows such prosecutions. The case could set a significant precedent for other contractors working abroad. The contractor acted after he heard that the Taliban man had caused significant and eventually fatal injuries to a colleague. (Washington Post)

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Now this is welcome news. Congress gave its lickety-split approval yesterday to a bill that would extend a subtle but crucial authority to Neil Barofsky, the federal prosecutor who is serving as the inspector general investigating the Troubled Assets Relief Program, a.k.a. the financial bailout.

If you remember, Sen. Chuck Grassley (R-IA) raised a stink last week when he heard that Barofsky was delayed in getting data from bailed-out banks due to the limits of an obscure law called the Paperwork Reduction Act. The bill that Congress okayed last night, however, appears to make Grassley's concerns very moot.

It states that Barofsky's office does not need advance approval from the Justice Department to perform the following duties specified in the 1978 Inspector General Act:

(A) carry a firearm while engaged in official duties as authorized under this Act or other statute ...

(B) make an arrest without a warrant while engaged in official duties as authorized under this Act or other statute ... for any offense against the United States committed in the presence of such Inspector General, Assistant Inspector General, or agent, or for any felony cognizable under the laws of the United States if such Inspector General, Assistant Inspector General, or agent has reasonable grounds to believe that the person to be arrested has committed or is committing such felony; and

(C) seek and execute warrants for arrest, search of a premises, or seizure of evidence issued under the authority of the United States upon probable cause to believe that a violation has been committed