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The House Oversight committee held hearings today on the role of Fannie Mae and Freddie Mac in the housing crisis and financial meltdown. And, no surprise, committee members didn't exactly heap praise on the troubled mortgage giants.

Committee chair Henry Waxman: "The CEOs of Fannie and Freddie made reckless bets that led to the downfall of their companies. Their actions could cost taxpayers hundreds of billions of dollars."

GOP Rep. Darrell Issa: "Outright fraud and greed wasn't isolated to just Wall Street. Fannie and Freddie shared in this disgrace as it drove much of the poor decision making that have led us to where we are today."

From the Wall Street Journal:

Lawmakers cited thousands of documents collected by the committee that Waxman said "show that the companies made irresponsible investments" that destabilized the firms and forced the government to put the companies in conservatorship in September.

Specifically, the panel released a June 2005 presentation made by former Fannie CEO Daniel Mudd that suggested the firm should move away from the traditional mortgage market in order to take advantage of the growing subprime and non-prime loan businesses.

"If we do not seriously invest in these 'underground' type efforts and the market changes prove to be secular, we risk: becoming a niche player; becoming less of a market leader; becoming less relevant to the secondary market," the presentation slides say.

Fannie, the slides continue, could "meet the market where the market is" by accepting higher risk and more volatile earnings

Daniel Mudd, CEO of Fannie Mae, offered this defense to the committee: "We couldn't afford to make the bet that the changes were not going to be permanent," he said.

Lawyers for Don Siegelman -- the former Alabama governor who was convicted in 2006 on corruption chrages, despite evidence that the prosecution was politically motivated -- have made their first oral arguments in their appeal.

The Associated Press reports that the the defense lawyers are leading with a different argument, that the conviction should be overturned "partly because jurors communicated with each other during the trial."

It continues:

Siegelman attorney Sam Heldman also told the panel of the 11th U.S. Circuit Court of Appeals in Atlanta that prosecutors did not prove Siegelman had a "quid pro quo" agreement to appoint [HealthSouth CEO Richard] Scrushy to a hospital board in exchange for contributions to a state lottery campaign.

As we've told you before, the US Attorney in the case continued to advise prosecutors even after formally recusing herself becasue her husband is a GOP operative and Karl Rove ally.

In what is likely the start of a trend, Citizens for Responsibility and Ethics in Washington (CREW), the DC-based good government group, has released a statement calling on Blagojevich to resign as Illinois governor.

It's fair to say that if the allegations in the charging documents are true, the governor has shown neither responsibility nor ethics.

We don't know for sure who Senate Candidate 5 is. But we'll likely find out. So it's worth understanding what his or her (though it appears to be his) alleged role in the affair is.

For Candidate 5, the most damaging passage in the document is this:

On December 4, 2008, ROD BLAGOJEVICH spoke to Advisor B and informed Advisor B that he was giving Senate Candidate 5 greater consideration for the Senate seat because, among other reasons, if ROD BLAGOJEVICH ran for re-election Senate Candidate 5 would "raise money" for ROD BLAGOJEVICH, although ROD BLAGOJEVICH said he might "get some (money) up front, maybe" from Senate Candidate 5 to insure Senate Candidate 5 kept his promise about raising money for ROD BLAGOJEVICH. (In a recorded conversation on October 31, 2008, ROD BLAGOJEVICH described an earlier approach by an associate of Senate Candidate Five as follows: "We were approached 'pay to play.' That, you know, he'd raise me 500 grand. An emissary came. Then the other guy would raise a million, if I made him (Senate Candidate 5) a Senator.")

That last part, in which the governor says he was approached by an "emissary" from Candidate 5 proposing a pay-to-play deal for Barack Obama's vacated Senate seat, is the key. Though it's worth noting, of course, that Blagojevich hardly has a reputation for honesty. There is also this passage:
Later on December 4, 2008, ROD BLAGOJEVICH spoke to Fundraiser A. ROD BLAGOJEVICH stated he was "elevating" Senate Candidate 5 on the list of candidates for the open Senate seat. ROD BLAGOJEVICH stated he might be able to cut a deal with Senate Candidate 5 that provided ROD BLAGOJEVICH with something "tangible up front." ROD BLAGOJEVICH noted he was going to meet with Senate Candidate 5 in the next few days. ROD BLAGOJEVICH told Fundraiser A to reach out to Individual D, an individual who ROD BLAGOJEVICH is attempting to obtain campaign contributions from and who, based on intercepted phone calls, ROD BLAGOJEVICH believes to be close to Senate Candidate 5. ROD BLAGOJEVICH told Fundraiser A to tell Individual D that Senate Candidate 5 was very much a realistic candidate for the open Senate seat, but that ROD BLAGOJEVICH was getting "a lot of pressure" not to appoint Senate Candidate 5. ROD BLAGOJEVICH told Fundraiser A to tell Individual D that ROD BLAGOJEVICH had a problem with Senate Candidate 5 just promising to help ROD BLAGOJEVICH because ROD BLAGOJEVICH had a prior bad experience with Senate Candidate 5 not keeping his word. ROD BLAGOJEVICH told Fundraiser A to tell Individual D that if Senate Candidate 5 is going to be chosen to fill the Senate seat "some of this stuffs gotta start happening now . . .right now. . . and we gotta see it. You understand?"

ROD BLAGOJEVICH told Fundraiser A that "you gotta be careful how you express that and assume everybody's listening, the whole world is listening. You hear me?" ROD BLAGOJEVICH told Fundraiser A to tell Individual D if there is "tangible political support (campaign contributions) like you've said, start showing us now." Fundraiser A stated he will call Individual D on the phone to communicate ROD BLAGOJEVICH's message. ROD BLAGOJEVICH responded that "I would do it in person. I would not do it on the phone." ROD BLAGOJEVICH told Fundraiser A to communicate the "urgency" of the situation to Individual D.

So it certainly seems clear that the governor believed Candidate 5 would play along -- though that's not proof that he was correct in that assumption.

Senate Candidate 2 appears to be Illinois Attorney General Lisa Madigan.

From the charging document:

On November 6, 2008, ROD BLAGOJEVICH talked with Spokesman. ROD BLAGOJEVICH told Spokesman to leak to a particular columnist for the Chicago Sun-Times, that Senate Candidate 2 is in the running for the vacant Senate seat. According to ROD BLAGOJEVICH, by doing this, he wanted "to send a message to the [President-elect's] people," but did not want it known that the message was from ROD BLAGOJEVICH.

Thereafter, ROD BLAGOJEVICH and Spokesman discussed specific language that should be used in the Sun Times column and arguments as to why Senate Candidate 2 made sense for the vacant Senate seat. A review of this particular Sun Times column on November 7, 2008, indicates references to the specific language and arguments regarding Senate Candidate 2 as a potential candidate for the Senate seat, as discussed by ROD BLAGOJEVICH and Spokesman.

So let's look at that November 7 item. Written by Michael Sneed and headlined: "Tipsville", it reads (via Nexis):
The latest from Blagoville: Is Gov. Rod Blagojevich toying with tossing Barack Obama's U.S. Senate seat to Illinois Attorney General Lisa Madigan, who wants Blago's job? - It's his pick . . . and it would get rid of a rival. - It may endear him to powerful House Speaker Mike Madigan, Lisa's dad, who is Blago's political foe. - It would enable Gov. Blago to choose a new Illinois attorney general. - Hmmm: Even though this sounds like looneyville . . . stay tuned.

It's worth making clear: Candidate 2 is not accused of wrongdoing.

Pat Fitzgerald also talked at his recent press conference about his request to the Chicago Tribune to hold off on a story they were planning to publish on the investigation -- a request the paper granted.

About eight weeks ago, before we had the bug installed, and before we had the wiretap up, we were contacted by the Tribune to comment or confirm or deny on a story that they were going to run. Had they ran that story, we thought we'd never have the opportunity to install the bug or place the telephone tap. And we made an urgent request for the Tribune not to publish that story. That is a very rare thing for us to do, and it's an even rarer thing for a newspaper to grant. We thought that the public interest request that the story not run. It was a very difficult conversation to have because we weren't allowed to describe what we were doing. And I have to take my hat off that the Tribune withheld that story for a substantial period of time, which otherwise might have compromised the investigation from ever happening.

Here's the video:

The cooperation from the Trib is ironic because, as we noted earlier, part of Fitzgerald's investigation involved Blagojevich pressuring Tribune owner Sam Zell to remove editorial board members who had written articles against the governor. And Blagojevich was left with the impression that Zell was willing to do so.

Here's a statement from the Tribune:
The Chicago Tribune investigated allegations of misconduct involving Illinois Gov. Rod Blagojevich independent of the U.S. attorney's criminal probe.

As a standard practice, our reporters contact individuals involved in these stories for confirmation and comment prior to publication. Consequently, we contacted the U.S. attorney's office in the course of our reporting.

On occasion, prosecutors asked us to delay publication of stories, asserting that disclosure would jeopardize the criminal investigation. In isolated instances, we granted the requests, but other requests were refused.

The Chicago Tribune's interest in reporting the news flows from its larger obligation of citizenship in a democracy. In each case, we strive to make the right decision as reporters and as citizens. That's what we did in this case.

An FBI agent just said at a press conference that when Blagojevich was woken by a phone call from the FBI this morning, informing him that agents were coming to arrest him, he asked: "Is this a joke?"

Here's the video:

At a press conference to announce the charges against Blagojevich, Pat Fitzgerald said:

But the most cynical behavior in all this -- the most appalling -- is the fact that Governor Blagojevich tried to sell the appointment to the Senate seat vacated by President-Elect Obama. The conduct would make Lincoln roll over in his grave.

Here's the video:

It's good to have America's favorite prosecutor back on the scene.

Is Senate Candidate 5, who appears to have been particularly willing to play ball with Blago, Rep. Jesse Jackson Jr?

The unnamed candidate appears to be a man. From the charging documents:

Rod Blagojevich told Fundraiser A to tell Individual D that Rod Blagojevich had a problem with Senate Candidate 5 just promising to help Rod Blagojevich because Rod Blagojevich had a prior bad experience with Senate Candidate 5 not keeping his word. (our itals)

That rules out Valerie Jarrett -- already assumed to be Candidate 1 -- Tammy Duckworth, Lisa Madigan, and Rep. Jan Schakowsky.

There's also this from the charges:
On December 4 ... ROD BLAGOJEVICH noted he was going to meet with Senate Candidate 5 in the next few days.

Now look at this from the Chicago Tribune on December 6:
Jackson, the South Side and south suburban congressman, said Blagojevich's office is looking to set up a meeting between him and the governor, who has the sole power of filling the vacancy.

"Every indication, I believe, is in the next four or five days a meeting will take place," Jackson said.

And indeed, Jackson and Blagojevich met yesterday.

And as of December 3, National Journal reported at the time, he had already met with Rep. Luis Gutierrez as well as some of the female candidates.

That's a long way from proof that Candidate 5 is Jackson. But it's at least suggestive.

From page 44 of the Blagojevich charges, about the deal the Tribune company was seeking on behalf of the Cubs:

During the call, Rod Blagojevich's wife can be heard in the background telling Rod Blagojevich to tell Deputy Governor A 'to hold up that fucking Cubs shit ... fuck them'"

Guess she's a White Sox fan.