TPM News

Remember that little conflict of interest problem for John Sununu that we revealed last month?

The former New Hampshire GOP senator, who sits on the Congressional Oversight Panel that monitors the TARP funds, was recently named to the board of a firm that's a subsidiary of Bank of New York Mellon -- which not only got TARP money itself, but also administers the program for the Treasury Department.

Sununu insisted to the Associated Press, which picked up on our report, that this really wasn't a conflict. But it looks like at least some of Sununu's fellow panel members disagree.

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If you're a regular reader, you know that Eric Kleefeld's done a remarkable job tracking the ins and outs and absurdities and melodramatics of the court fight that may or may not settle the disputed election between Norm Coleman and Al Franken.

While that case is being decided, though, it's worth reflecting on the significance of Minnesota's junior senate seat--about how important that seat might have been if Franken had won a more decisive victory (or if the recount hadn't taken so long), and how things will change when that victory is finally affirmed. Indeed, Franken himself may prove more important to advancing President Obama's agenda than will just about any other single issue.

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Here are the line-ups for the Sunday talk shows this weekend:

• ABC, This Week: Sec. of the Treasury Tim Geithner.

• CBS, Face The Nation: President Obama.

• CNN, State Of The Union: Gen. Davis Petraeus; Richard Holbrooke, Special Representative to the Afghanistan/Pakistan region.

• Fox News Sunday: Sec. of Defense Robert Gates; Canadian Prime Minister Stephen Harper.

• NBC, Meet The Press: Sec. of the Treasury Tim Geithner; Sen. John McCain (R-AZ).

Some Friday afternoon catharsis ...

In one of those perfect matches of writer and subject, Matt Taibbi responds to that op-ed writing AIG-er Jake DeSantis -- and says all the things you'd probably forget to say if you ever ran into deSantis, but then would think of in the shower when it was too late.

The race is coming down to the wire in Tuesday's special election to pick a replacement in Kirsten Gillibrand's old House seat. It's too early to know for sure -- special elections are naturally hard to poll or predict, because of the low and uneven turnout patterns -- but it now appears that Democratic candidate Scott Murphy may be the slight favorite in a race that many observers (and participants) expected would be tough to hold.

As noted before, Democratic candidate Scott Murphy now holds a 47%-43% lead in the latest Siena poll, after having started the race 12 points down with no name recognition. But now, he may well be the slight favorite in the race.

Essentially, the race has turned into a referendum on a cluster of issues: President Obama's popularity in a swing district, the stimulus plan, and the Republican position that the AIG bonuses were all the Dems' fault.

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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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