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The sheer complexity of the $825 billion economic stimulus bill unveiled in the House yesterday means that it may take some time for stakeholders in the effort to digest the Democrats' spending choices. But the environmental community was on the ball right away, shooting out statements that were sadly little-noticed in the flood of news.

Green advocates mostly like the stimulus, particularly its investment in modernizing the nation's electricity grid and remodeling buildings to promote energy efficiency. But the transportation portion of the bill left several major environmental groups very underwhelmed -- and rightly so.

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Yesterday we noted the news that a secret court had ruled that a law passed by Congress empowering the president to eavesdrop without a warrant was constitutional.

But there was debate over the broader implications of the ruling. The New York Times suggested that it could give "legal credence to the Bush administration's repeated assertions that the president has constitutional authority to act without specific court approval in ordering national security eavesdropping."

But other commentators disagreed, arguing that the decision bore only on the law under review.

Now the Times has modified its take in a new story, which cautions higher up that the ruling "did not directly address whether President Bush was within his constitutional powers in ordering domestic wiretapping without warrants, without first getting Congressional approval,"

Still, the picture remains murky. One law professor tells the paper that "while the ruling did not address Mr. Bush's surveillance without warrants directly, 'it does bolster his case' by recognizing that eavesdropping for national security purposes did not always require warrants."

But a national security law expert disagrees, saying: "I think this kind of maintains the status quo. I don't think it is a surprise that the FISA court found that the legislation was constitutional."

Remember how, back when Congress was negotiating with the Bush administration over the terms of the bailout, one of the major sticking points was Rep. Barney Frank's insistence that taxpayers receive equity in the companies we were saving, so that we could at least get our money back down the road? Well, Frank largely won on that point. We're now all part owners of Goldman Sachs, Bank of America, Citigroup, and all the rest.

But that only leaves more questions. What kind of a deal did Treasury Secretary Henry Paulson strike on our behalf with these firms? And more broadly, given the astronomical amount of money we're talking about and the massive deficits we already face, we need to know how we should think about what we've done. Have we invested the $350 billion that Congress has given so far, with a realistic expectation of at least being re-paid -- as Paulson, who has called it "an investment, not an expenditure," argues. Or is it more accurate to think of that sum as already spent and unrecoverable, simply the cost of preventing financial armageddon?

It's too soon to know how much of that money we'll get back, because the answer depends on the fate of the market -- something we all know better than to try to predict. But it's worth considering some of the key factors that will determine that answer.

In terms of Treasury's investment, it seems clear we got a bad deal.

TARP injected capital into the banks largely by buying preferred stock at a dividend rate of 5 percent per year -- that rises to 9 percent after 5 years -- in return for an equity stake in the companies. We also got warrants to buy common stock in the future at a fixed price. But given the risk involved in the transaction -- investing in banks that were on the brink of collapse -- experts say we should have gotten more than 5 percent. "We could have gotten better terms," Simon Johnson, the former chief economist for the IMF, and now a fellow at the Peterson Institute for International Economics, told TPMmuckraker.

Demetri Papademetriou, president of the Levy Economics Institute, agrees. He points out that the governments of Britain, France, and Greece all conducted similar stock purchases, and got a dividend rate of 10 percent.

And Bloomberg recently calculated that, although Treasury invested twice as much as Warren Buffett did in Goldman Sachs, it gained only one fourth of the value.

Papademetriou believes that an ideological aversion to anything that smacks, however mildly, of central planning, partly explains why Paulson failed to drive a hard bargain. "There is a reluctance from the US government to be very involved in the private sector," he said.

Barry Ritholtz, the chief market strategist for Fusion IQ, an institutional research firm, says "incompetence" on Paulson's part is as much to blame. "There no such thing as half pregnant, and there's no such thing as half a virgin," he says. "If you're gonna do it, you can't say, we're gonna do it but we're gonna do a shitty job."

Of course, the department has argued from the start that making a good investment wasn't its goal. In a December speech to mortgage bankers, Treasury's bailout czar, Neel Kashkari, declared: "We're not day traders, and we're not looking for a return tomorrow. We are looking to try to stabilize the financial system, get credit flowing again."

But that gets us into the broader question -- for which there's no easy answer -- of how to think about the TARP money.

It's not right, say most experts, to think of this simply as government spending, akin to spending on, say, the Iraq war. The idea, of course, is that once the mortgage market stabilizes, the companies in which we've invested will eventually be able to write down their toxic assets, sell them off, and return to profitability. That will allow them to liquidate -- essentially, to buy back -- the stock we've bought, (something they're required by the terms of the deal to do before they can raise more capital). We'll have profited from the dividends, and will also be able to exercise our warrants to buy more stock at an advantageous price. That's why Frank insisted on equity in the first place.

But some say that may not happen. We simply don't know the true amount of bad debt that these banks have on their books -- and it's not clear that Treasury did either when it struck the deals.

But the signs aren't good. In early December, the Associated Press calculated that the warrants we bought via TARP, valued at a total of $27 billion, are now worth less than $18 billion. So if we exercised those warrants in December, we'd have been out over $9 billion.

And since then things seem to have gotten worse. Bank of America announced this week it needed a second bailout -- in the end, $20 billion -- because it hadn't realized just how toxic were the assets it took on in when it bought Merrill Lynch.

So even though Treasury says its goal wasn't to turn a profit but rather to stabilize the market, it's unclear whether it'll succeed in that -- right now, most signs suggest it hasn't yet. And that's the key question: If that longer-term stabilization doesn't happen, of course, we won't get much of our investment back, because the companies in which we've invested will fail, or be unable to turn a profit.

"These companies are insolvent. They have more liabilities than assets." says Ritholtz. The exact situations differ from firm to firm, but Ritholtz says that Citigroup, for example, in which we've invested $45 billion, "is sitting on tens of billions of toxic assets. So why would stock go up?" Ritholtz calls it "highly unlikely" that Citigroup will eventually have something to pay back. As for AIG, for which we're in $85 billion, he believes it's "inconceivable."

The situation isn't helped by the low level of transparency about their true positions that many of these companies appear to practice. Audit Integrity, which conducts accounting and governance risk analysis for public companies released a report last month finding that many of the big banks we've lent to -- including Citigroup, Goldman Sachs, Bank of America, and JP Morgan Chase -- "are likely in worse condition than publicly disclosed," because of the high likelihood that they'll restate their earnings, or provoke government regulatory action or stockholder litigation.

As if to prove the point, on Tuesday Goldman raised its estimate of expected losses stemming from its toxic assets to $2.1 trillion, up from $1.2 triillon last March.

So where does all this leave us? Congress is getting set to hand over another $350 billion for more bailouts, but this time it's insisting on more help for homeowners facing foreclosure. By stabilizing the mortgage market, that could also help Wall Street -- allowing us potentially to recoup our investment.

So that $350 billion already spent may not be gone. But it's by no means clear what we'll end up getting for it.

Norm Coleman's legal team has now filed a motion to intervene against a class-action lawsuit that has been lodged by 64 voters, who all appear to have been Franken supporters, who say their absentee ballots were wrongly rejected and should be put into the count.

As we've reported, the Franken team has been reaching out to supporters whose ballots are still uncounted, helping them to go to court.

Coleman's lawyers might have a point in arguing that this matter properly belongs with the court handling his lawsuit against the election result. But one line in the filing is pretty telling: "Coleman is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect his interests."

In plain English: If these votes are counted, I'll be in even worse trouble than I am already.

Late Update: The state Supreme Court has referred this lawsuit to the election-contest court, essentially agreeing with Coleman's lawyers on one of their points. Note that this action does not comment on the merits of the voters who filed the suit -- they simply agreed as to what the proper venue is for examining this.

The Senate has answered Norm Coleman on his requests to reopen his offices: You may in fact reopen -- for the purposes of cleaning out your desk.

Coleman had been arguing that the closure of his office after his term expired was hurting Minnesota, as his staff was unable to help constituents while the seat stayed vacant. The Senate has responded by allowing Coleman to reopen until February 4, so that his staffers can gather up the pending constituent-service cases and transfer them to the remaining members of the state's Congressional delegation.

Of course, the underlying reason that the seat is vacant right now, and Minnesota therefore lacking in full constituent services, is that Coleman is keeping Al Franken's win bottled up in court, and he and the Senate GOP are objecting to any provisional seating. But it's good to see that Minnesotans' needs are being addressed to at least some extent.

Mary Frances Berry, the target of a racist "joke" by then-DOJ voting-rights chief John Tanner, has responded to the insult, and to Tanner's credulity-straining semi-apology.

Berry, the former chair of the US Commission on Civil Rights, spoke Wednesday at a legal conference held by the American Constituion Society, entitled: "The Road from Lincoln to Obama: The Constitution and the New Birth of Freedom."

She began her remarks like this:

Welcome. Today I have to tell you that even though I am black, I am not bitter. (Scattered laughter).

Bitter some of the time, but not here.

And I would tell you that the guy who made the comments sent me an email last night, in a supposed apology, which is even funnier, but I won't take up the time.


Here's the video:

According to a Justice Department report released this week, Tanner told a colleague over email that he liked his coffee "Mary Frances Berry style -- black and bitter." Seems like the right way for Berry to play it.

An employee of the U.S. Department of Agriculture is accused of running a prostitution ring from her work computer in the agency's Kansas City office. Laurie Lynn McConnell, a 26-year-old statistician, allegedly ran the ring in three states with the help of a 36-year-old co-defendant who does not work for the USDA. The pair faces between five and 20 years of jail time if convicted. (Kansas City Star)

The White House has found 14 million missing email messages, according to a lawyer with the Justice Department. The announcement came just hours after a federal judge ordered White House employees to do a comprehensive search of computer workstations, preserve portable hard drives and look over any emails sent between 2003 and 2005. The emails will be transferred to the National Archives, as is legally required of the White House. The emails were sought after because they may contain details of the Valerie Plame affair and the firing of U.S. attorneys. (Washington Post)

The same Pentagon official who went on record as saying that the U.S. government tortured a terror suspect now says that that suspect will likely never be prosecuted. Susan Crawford, the convening authority of military commissions at Guantanamo Bay, said the treatment of Saudi detainee Mohammed al-Qahtani fit the legal definition of torture and so she did not refer his case for prosecution. Qahtani was allegedly meant to be the 20th hijacker on 9/11. (AFP)

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In a move that piqued our interest here at TPMmuckraker, Sen. Schumer, during his questioning of Eric Holder, cited the racist email sent by John Tanner, who was at the time the head of the voting rights section, about Mary Frances Berry, the then-chair of the US Commission on Civil Rights.

Schumer called the statement "all the more shocking becasue it's a supervisor in the civil rights division who said this."

Tanner sent a letter of apology to Berry earlier this week.

Here's the video:

Ok, so that headline wasn't really on point. But now that you're reading...

In his questioning of Eric Holder this morning, Sen. Chuck Schumer really doubled down on the theme of politicization at DOJ under Alberto Gonzales -- a theme that, as we noted, has served as the constant backdrop to the hearings so far.

Schumer declared that "the likes of Alberto Gonzales and Bradley Schlozman sullied and demoralized a great legal institution, probably the finest civil service institution in the country, that they really dragged through the mud.

As for GOP efforts to suggest Holder could act similarly, Schumer called the comparisons "ludicrous," then initiated the following clever and enlightening exchange to demonstrate Holder's comparative independence:

Schumer: As I look at your background and your record, it's clear that you are less connected and less beholden to the new president than most attorneys general in the last fifty years. Let's review for the moment. I have a few quick questions for you.

Have you ever been President-Elect Obama's personal lawyer, like William French Smith had been for years for Ronald Reagan?

Holder: No, I have not.

Schumer: Have you ever been a staffer for Barack Obama, like Ed Meese had been for Reagan?

Holder: No, I have not, senator.

Schumer: Have you ever served as official counsel to Barack Obama, like Alberto Gonzales had for George Bush?

Holder: No, I have not, senator.

Schumer: And has Barack Obama ever dispatched you to the hospital room of a sick government official, to get him to authorize an illegal wiretap program?

Holder: No, he has not.

Schumer: Yeah I didn't think so. Alright, and I take it you're not a close relation to the new president, like Bobby Kennedy was to Jack Kennedy?

Holder: No, we're not related by blood though people to say we look alike.

Schumer: I don't think so. Although you're both very handsome.

Holder: I'd heard he's handsome and was going to try to draft on that.

Schumer: OK, let me ask you this, have you ever been a professional politician like John Ashcroft or Dick Thornburgh?

Holder: No, I've never run for office.


Here's the video of the exchange:

In its waning days, the Bush administration has suffered a few adverse rulings from the courts on the broad issue of executive power.

But it looks like it's about to get a major one in its favor on the issue of warrantless wiretapping. The New York Times reports:

A federal intelligence court, in a rare public opinion, is expected to issue a major ruling validating the power of the president and Congress to wiretap international phone calls and intercept e-mail messages without a court order, even when Americans' private communications may be involved.


In other words, at least according to this court, the administration didn't need to get a warrant after all for its controversial domestic spying program. As the Times puts it, the decision "may offer legal credence to the Bush administration's repeated assertions that the president has constitutional authority to act without specific court approval in ordering national security eavesdropping."

The Times explains that the court did not directly rule on the legality of the NSA's controversial secret wiretapping program, conducted between 2001 and 2007, which the same paper first revealed in 2005. Rather, in 2007, Congress passed the Protect America Act, which gave the executive branch the power to listen in on international communications. The constitutionality of that law was challenged by a telecom company. The FISA court, in a secret decision last year, upheld the law, and now an appeals court has agreed.

All the same, this is the first time that an appeals court has ruled on the constitutionality of the president's power to eavesdrop, and the decision could be a boost for other telecom companies who are being sued for cooperating with the program.

Late Update: The ruling itself has now been released, and several commentators, including Salon's Glenn Greenwald, make the case that the Times erred in its characterization, and that the ruling bears on a narrower question. Writes Greenwald:
[I]t merely concluded that the warrantless eavedsdropping powers authorized by Congress under the (now-expired) Protect America Act do not violate the Fourth Amendment because, the court found, there is an exception to the Fourth Amendment's warrant requirement for foreign intelligence gathering. It's a bad ruling (and should be reviewed by the Supreme Court), but it has nothing to do with the President's authority to override statutes generally or violate FISA specifically...


So this ruling may not be as far-reaching as the Times appeared to suggest.

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