TPM News

The Minnesota election court has just handed down a much-awaited ruling, laying out which previously-rejected ballots might just be counted yet -- and though it's unclear right now whose votes are whose, it doesn't look all that good for Norm Coleman.

The court reviewed 980 copies of rejected absentee ballots that both campaigns had submitted to the court arguing they should be counted under the law. We don't know the exact proportions, and Coleman alone had submitted more than that. Of those, the court has individually selected 400 of those for final review of the originals. But even all 400 of these won't be counted: "To be clear, not every absentee ballot identified in this Order will ultimately be opened and counted."

The ballots will be delivered to the Secretary of State's office by noon Monday, and those that are cleared for inclusion will be counted the next day.

So what kinds of ballots will be counted, and what processes went into determining this?

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Earlier today, we picked out some fascinating-in-hindsight excerpts from a May 2007 presentation given by Joe Cassano, then the head of AIG's financial products unit.

Since then, we've been looking at a similar presentation (via Nexis) for investors given by Cassano and other AIG execs in December of that year. By that time, the collapse of the subprime housing market could no longer be downplayed, and Cassano's appears more anxious than ever to reassure clearly nervous investors about AIG's exposure to losses on its credit default swaps.

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As TPMDC has previously noted, Senate Republicans don't see the need to offer an alternative budget of their own this week -- even as they blast the priorities President Obama has outlined.

But the Congressional Progressive Caucus (CPC) is taking that leap, presenting an alternative budget that includes cuts to outdated weapons projects and defense procurement initiatives as well as a new 0.25% tax on all stock trades that would offset the staggering cost of the financial bailout.

The details of the progressives' budget are available after the jump -- and worth cheering, given the recent news that the CPC is struggling to get a literal foot in the door at the White House.

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As we are quickly coming to understand, AIG Financial Products was siphoning billions from tax coffers the old-fashioned way ages before the collateral calls began flooding in. Essentially, the same unregulated swaps and options contracts in which AIG FP "specialized" a.k.a. "did not understand" lay at the heart of many of the sham "partnerships" corporations and wealthy people use to obscure their capital gains. These partnerships are often referred to as "Son of Boss," we still do not know why, and the IRS has been shutting down them down for years, because it is usually abundantly clear that the rich people who bought said derivatives had no idea what the hell they were for beyond "generating artificial basis" or somesuch euphemism for "pretending they lost money to hide the fact that they actually raked it in." That said, most of the people with enough money to know about tax shelters are/have pretty decent lawyers, so sometimes they think up a pretty good excuse for having invested in a baffling combination of esoteric "swaps" and such. Last month, for instance, a Los Angeles judge struck down a Son of Boss partnership that had spared a pair of local real estate developers an accumulated tax bill of $145 million by investing $2 million in some obscure AIG credit default swaps. But one of the developers, former Sacramento Kings owner and former IRS attorney James Thomas, had a pretty genius alibi.

In 2001 they sought out an abusive tax shelter that has become known as "Son of BOSS." In the Son of BOSS scheme used by Thomas and Fox, they purchased an exotic form of a financial option that they claim would have protected them against a catastrophic decline in real estate values, which they feared in the immediate aftermath of the terrorist attacks of September 11.
A catastrophic decline in real estate values you say? How very "black swan"!* The judge wasn't hearing it though.

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Sen. James Inhofe (R-OK) doesn't much care about greenhouse gas emissions, but that doesn't stop him from taking full advantage of his platform as the ranking member on the Environment and Public Works committee. For instance, just today he commented on climate change legislation--unveiled by Henry Waxman and Ed Markey in the House, not the Senate--with customary good cheer:

"I look forward to a full, open and honest debate over the 600-plus page Waxman-Markey climate tax bill," Senator Inhofe said. "It appears that this legislation is yet another version of the same story: a job-killing tax increase on American consumers that jeopardizes America's energy security, while doing nothing to address climate change. In short, it's all economic pain for no climate gain."

That bolded section ought to come with an asterisk at the end of it--because as he made clear...also today, he doesn't actually think climate change exists. Watch it:

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Here's what Douglas Feith, undersecretary of defense for policy during the Bush Administration, told the New York Times in response to the prospect of torture-related charges being brought against him in Spain:

I didn't even argue for the thing I understand they're objecting to.

Feith was, in the newspaper's words, "baffled by the allegations."

The case at issue has been sent to prosecutors for review by Baltasar Garzon, the activist Spanish judge who ordered the arrest of Augusto Pinochet in the late 1990s. The gist of the lengthy complaint is this: that six former Bush officials -- including Feith, Alberto Gonzales, and John Yoo -- created a legal framework that allowed for the torture of detainees at Guantanamo.

So is Feith right to be "baffled" by his name popping up among those facing potential charges? Let's go to the record:

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It's clear that both parties expect a close race in today's special election for Sen. Kirsten Gillibrand's old House seat, because they're both downplaying expectations -- though Dems seem just a bit more confident.

The DCCC has released a detailed memo talking about all the obstacles they face here: The big GOP advantage in voter registration, Republican state House Minority Leader Jim Tedisco's name identification against the first-time Dem candidate Scott Murphy, and the early views from pundits that they would have a tough time holding it.

On the other hand, the memo boasts of just how far Murphy has come: "After more than $2 million in negative advertising against Murphy, how did NY-20 become competitive in eight short weeks? Quite simply, he ran a better campaign." They also credit Murphy's support for the Obama agenda, as having taken him this far: "This campaign was a fight between Murphy's message of bipartisan progress on the economy and Tedisco's embrace of Republicans' 'just say no' obstructionism."

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Bloomberg reported a frightening fact this morning: The U.S. government has spent committed nearly as much on to bailing out financial firms -- $12.8 trillion, when you total up guarantees and loans given by the Treasury, Fed, and FDIC -- as the nation's entire $14.2 trillion domestic product.

But that's not the only eye-popping bailout number that was released today. In a Senate Finance Committee hearing today, panel chairman Max Baucus (D-MT) noted that the Troubled Assets Relief Program (TARP) has put taxpayers on the book for at least $2.9 trillion. That number is almost equal to the U.S. government's total spending during the 2008 fiscal year, which you can find in Table 5 of this document.

Baucus described the bailout as a shadow U.S. budget "dedicated solely to saving the financial system, and that is truly surreal."

Yesterday we noticed the focus of the Case Against AIG And The Reckless Executives Inhaling Our Money had begun to shift from the exotic, futuristic sounding world of synthetic credit derivatives to the Old Economy business of dodging taxes. In fact, the two are inextricably intertwined -- AIG FP was by far the biggest underwriter of the inscrutable options that could generate the kind of phony capital gains losses that rich people and companies use to get out of paying taxes. To really understand what Cassano and his gang were up to, it helps to have a working knowledge of the company's history of run-ins with the IRS. Again and again AIG has been involved in schemes the IRS has deemed illegal, forcing the insurer and its clients to cough up some billions of dollars in back taxes over the past decade. The only real factor obscuring the magnitude of the malfeasance at AIG was arguably the many hundreds of banks, corporations and individuals who played along.

UPS: The platonic "ideal" tax structure AIG has been a go-to source for IRS shortchanging expertise at least since 1983, when it helped UPS form a Bermuda "reinsurance" subsidiary in 1983 to divert certain "excess value" charges into an ingenious tax haven from which the IRS, following a five year legal battle eventually recovered $1.44 billion of $2.3 billion in uncollected taxes. After the jaw-dropping penalty was announced, the insurance trade journal National Underwriter quoted KPMG partner Mark Anderson saying he still looked to AIG's UPS tax haven as an "ideal" when structuring his own clients' tax havens.

KPMG: The accounting industry folds But the taxman came for KPMG next, after discovering the firm had peddled tax shelter schemes -- a few of which came bundled with liability "insurance" to protect the tax benefits from AIG FP -- to hundreds of companies, including the baseball card manufacturer Upper Deck, which ended up suing AIG after coughing up almost a hundred million dollars in taxes after KPMG coughed up its client list as part of a half billion dollar plea agreement. Seventeen ex-KPMG executives were indicted in the "S2" tax shelter case, which was prosecuted in the aftermath of accounting scandals that nearly decimated all the industry's entrenched players. They didn't decimate AIG, however, which refused to make good on Upper Deck's insurance.

What Happens To A Prosecution Deferred... Shortly thereafter AIG FP's inimitable chief Joseph Cassano was charged in assisting PNC Financial in a similar fraud, though the three firms avoided formal criminal indictments by coughing up fees in deferred-prosecution agreements that in AIG's case anyway, meant the company was required to pay a government-appointed attorney to report on the company's operations.

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Bernie Madoff isn't the only Ponzi schemer on New York's Upper East Side, at least according to prosecutors. Last Thursday, Lawrence Salander, a prominent art gallery owner, joined Madoff on that illustrious list when he was charged with bilking a slew of high-profile clients, including John McEnroe and Robert DeNiro, out of $88 million on high-priced art deals, over more than fifteen years.

Salander never fired any US Attorneys, or helped bring down the financial system -- so far as we know. But we thought he was worth our attention because the charges against him are part of a surge in Ponzi cases brought by authorities since the start of the year. That uptick appears to be the result, in part, of the financial crisis, which, as in Madoff's case, caused investors to withdraw their money en masse, leaving schemers without enough capital to keep up the charade. Call him another mini-Madoff.

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