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We told you Wednesday about the developing fight over the pace of confirmation for Eric Holder, Barack Obama's nominee for Attorney General. And it looks like it's heating up.

Politico reports that several Senate GOPers took the floor of the chamber last night to agree with Arlen Specter, the ranking Republican on the Judiciary committee, who has argued that the January 8th start date for confirmation hearings, set by Democrats, doesn't allow for enough time to scrutinize Holder's record -- in particular his role in the controversial pardon of Marc Rich in the last days of the Clinton administration.

Minority Whip Jon Kyl said:

Nobody is talking about a long, long, long delay. We do ask that we be accorded the same consideration that was given to others in this situation and that there be adequate time to confirm him.

And another Senate Republican, Charles Grassley, agreed:
I understand the Judiciary Committee has a large number of boxes of archived documents relating to his employment at the Justice Department and those materials need to be reviewed. We haven't even gotten Mr. Holder's questionnaire, nomination materials or F.B.I. background investigation yet.

But Democrats fired back in support of Pat Leahy, the Judiciary chair who's pushing to begin hearings quickly.

Sheldon Whitehouse, who sits on the Judiciary committee, argued that the schedule was not out of keeping with precedent. He said that the average time between a presidential announcement of a nominee and the first hearing has been 29 days. If the Holder hearings began January 8th, that would be 38 days after the nomination was announced on December 1st.

And now Leahy himself has issued a lengthy statement reiterating his desire to stick to the January 8th start date.

Leahy argues that the politicization of the department under Bush makes it especially crucial to move quickly:
This is no ordinary time. Over the last eight years, political manipulation and influence from partisan political operatives in the White House have undercut the Department of Justice in its mission, severely undermined the morale of its career professionals, and shaken public confidence in our Federal justice system. Never has it been more important to have an experienced hand as Attorney General. I hope our Republican members will resist the temptation toward partisanship and join with us to consider this appointment fairly and promptly.

Leahy even dredges up an old quote from a Senate Republican, from last year when GOPers were pushing for quick hearings on President Bush's nominee, Michael Mukasey. "Attorney general nominees have been confirmed, on average, in approximately three weeks, with some being confirmed more quickly," said one Republican at the time, according to Leahy.

Late Update: More on that quote from last year, just dredged up today by Pat Leahy, in which a Senate Republican argues for a quick confirmation for Bush AG nominee Michael Mukasey. Turns out the quote was from none other than Jon Kyl, who now is stressing the dangers of a quick process for Holder. Thanks to reader CR for the tip.

You might have seen the news that a former chair of the Nasdaq was arrested yesterday for running what federal investigators called a "$50 billion swindle."

Bernard Madoff was turned in by his sons, who said that their father had admitted to them that his investment advisory business was "a giant ponzi scheme," reports the Wall Street Journal.

But a close look at what happened suggests that Madoff's alleged crime may merely have represented an extreme version of the type of financial chicanery that helped cause the current economic crisis.

In a criminal complaint, an FBI agent wrote that Madoff, 70, had:

deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.

Madoff's firm, Bernard L. Madoff Investment Securities, serves primarily as a middleman between buyers and sellers of shares. But an offshoot of the company manages investments for hedge funds and other institutions, as well as wealthy individuals. According to a civil complaint filed by the SEC, the alleged fraud was run through this investment business.

The steady returns that this business provided appear to have caused skepticism over the years. The Journal reports:
A number of traders suggested [Madoff's] firm could be buying shares for its own account just before it filled orders for customers, an illegal act called front-running. In 2001, Mr. Madoff told Barron's that charges of front-running were "ridiculous."

An executive in the securities industry, Harry Markopolos, contacted the SEC's Boston office in May 1999, urging regulators to investigate Mr. Madoff. Mr. Markopolos continued to pursue his accusations over the past nine years, he said in an interview on Thursday, and according to documents he sent to the SEC that were reviewed by The Wall Street Journal.

"Bernie Madoff's returns aren't real and if they are real, then they would almost certainly have been generated by front-running customer order flow from the broker-dealer arm of Madoff Investment Securities LLC," Mr. Markopolos wrote to the SEC in November 2005.

The criminal complaint filed by the FBI quotes two employees -- believed to be Madoff's sons -- as saying that Madoff was "cryptic" about the activities of the company's investment arm, and kept the investment offices on a separate floor.

Things appear to have come to a head earlier this month, when Madoff told one of his sons that "clients had requested approximately $7 billion in redemptions, that he was struggling to obtain the liquidity necessary to meet those obligations."
[On Wednesday] the sons met with Mr. Madoff ... at his Manhattan apartment, the complaint says.

...At the apartment, Mr. Madoff confessed that his business was a fraud and that he was "finished." He said he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." He told them the firm was insolvent, according to the complaint.

In other words, Madoff got himself into a situation where he didn't have enough money to pay back investors -- jut like those Wall Street banks we just bailed out. That's not to say that the charges against Madoff aren't serious -- it's only to point out that they're not unconnected to the broader economic turmoil.

Madoff, who is said to have started his business with $5000 he saved from working as a lifeguard at Rockaway Beach, didn't enter a plea during a court hearing last night. A preliminary hearing is scheduled for Jan. 12, 2009.

Did Rahm Emanuel speak to Rod Blagojevich about the governor's plans to fill the Senate seat left open by Barack Obama?

That's what a Fox affiliate in Chicago has reported, based on "a source familiar with the investigation" into the Illinois governor.

Fox Chicago News reports that Emanuel, the Chicago congressman who was appointed shortly after the election to be Obama's White House chief of staff, had "multiple conversations" about the issue with the governor himself and with Blagojevich's chief of staff, John Harris -- who this week was charged along with his boss.

The source said it was likely that these conversations were recorded, since they took place after the federal wiretaps had begun.

Of course, it would not be surprising if Emanuel had spoken to the governor about options to fill the seat. Fox Chicago said that the source didn't say whether those conversations involved any quid pro quo or dealmaking.

Obama yesterday pledged to canvass his staff about conversations with Blagojevich's office over the seat, and disclose what he finds out soon. Obama said that none of his staff had discussed any kind of deal for the seat.

Looks like David Axelrod is trying to push back against talk that Valerie Jarrett, a close friend and adviser to Barack Obama, may have abruptly pulled out of the contest for the president-elect's Senate seat because she had an idea of how the governor was approaching the task of filling the seat.

Bloomberg reports that Axelrod, Obama's top strategist, told an audience last night at Harvard's Kennedy School of Government:

[Obama'] preference was always that she serve in the White House, and ultimately he expressed that to her and said look, 'I just need you,' and that's why she made that decision.

Jarrett withdrew from contention days after a Nov. 10 conference call where, according to charging documents filed by prosecutors, Blagojevich talked about appointing "Senate Candidate 1" in exchange for his wife getting a corporate board appointment. Soon afterwards, Jarrett was announced as a White House adviser to Obama.

The Chicago Tribune has identified Jarrett as Senate Candidate 1.

Axelrod added:
No one in their wildest imagination could have imagined the scenario that ensued. There's a vacancy, the governor, apparently, in the complaint of the government had some ideas about what to do with it. We were not involved in that discussion or any discussion of that nature.

This doesn't look great for Jesse Jackson Jr.

The Chicago Tribune reports:

As Gov. Rod Blagojevich was trying to pick Illinois' next U.S. senator, businessmen with ties to both the governor and U.S. Rep. Jesse Jackson Jr. discussed raising at least $1 million for Blagojevich's campaign as a way to encourage him to pick Jackson for the job, the Tribune has learned.

At a luncheon meeting on October 31, Nayak and Rajinder Bedi told many of the attendees that they were organizing a fundraiser for Blagojevich, and that the purpose of the event was to get Jackson named to the Senate seat, two sources tell the Trib.

The meeting led to a fundraiser last Saturday which was attended by Jesse Jackson's brother, a former business partner of one of the businessmen, Raghuveer Nayak.

One source told the paper that he overheard Nayak and Bedi discussing plans with another politically active Indian-American businessman.
Raghu said he needed to raise a million for Rod to make sure Jesse got the seat," the second businessman said. "He said, 'I can raise half of it, $500,000.' The idea was that the other two would help raise the rest.

Nayak and Bedi are politically active in Chicago's Indian-American community. Nayak has raised money for Blagojevich and contributed to Jackson. Bedi is an aide to Blagojevich, who the governor is said to call "my Sikh warrior."

Speaking to a local Fox affiliate outside his home this morning, Jackson responded to the Trib's report.

He called Nayak a "great man" and a" family friend, but then said: "I'm confident that no one on my behalf made a single offer to anyone for anything. I wouldn't accept the position if it were offered under those circumstances."

Jackson continued:
I had not met with Governor Blagojevich in four years until I was granted a meeting on Monday, where I presented the governor with my credentials. What I was unaware of was that the governor was pitting Candidate 1 against Candidate 5, against Candidate 2, against Candidate 3, trying to exact (sic) something out of everyone in the process.

Jackson's own lawyer has all but confirmed that Jackson is Candidate 5. In the charges filed Tuesday against Blagojevich, the governor says he was approached by an "emissary" from Candidate 5, proposing a "pay to play" arrangement for the Senate seat.

The Chicago office of Winston & Strawn has found itself the most recent addition to the list of complaints against Rod Blagojevich. Because of the lengthy ongoing federal investigation into the governor, Blagojevich's political fund is unable to foot the full legal bill; Winston & Strawn is now refusing to continue representation of their client. (WSJ)

The Portuguese foreign minister has offered his country as a place of asylum for at least some Guantanamo detainees and called on other members of the European Union to do likewise. U.S. officials have been hindered in their attempts to shut down the controversial program because of the question over where freed prisoners will go. (FT)

An investigation into misappropriation of campaign funds by a campaign staffer for Rep. Chris Shays' (R-CT) campaign is focusing on Shays' campaign manager, sources say. Accounting for the $3.6 million campaign has been incomplete, although an exact amount for missing funds has still not been finalized. Rep. Shays lost his bid for reelection in Connecticut's 4th congressional district. (Hartford Courant)

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Remember back in September when Congress blocked the Bush administration's initial effort to ram through a bailout bill that would have given Treasury Secretary Hank Paulson virtually unlimited authority to spend $700 billion however he saw fit?

Among the measures that Congressional Democrats successfully held out for -- against the wishes of the White House -- were meaningful oversight mechanisms that would allow Congress and others to track what the Treasury Department is doing with all that money.

That seemed like a victory for taxpayers at the time. But now, over two months later, we've learned a bit about what those oversight mechanisms have been able to provide. And there's real reason to question whether in fact they were designed adequately for the task in the first place.

"It's a mess," Eric M. Thorson, the Treasury Department's inspector general, told the Washington Post last month. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

Perhaps the single biggest obstacle to adequate oversight of Treasury is how little oversight Treasury itself is exercising over the bailout funds, whether through indifference or an inability to hire qualified staff. In the first report issued by the Congressional Oversight Panel (COP) -- the main oversight mechanism that Congress fought to include in the bailout bill, over Paulson's objections -- the authors made clear that they were concerned about Treasury's lack of tracking mechanisms: "Treasury cannot simply trust that the financial institutions will act in the desired ways; it must verify." But COP also suggested that it was prevented from going further by the fact that Treasury wasn't keeping extensive enough records of its allocation of funds to be able to provide much more information.

A different overseer, the Government Accountability Office -- which functions as the investigative arm of Congress -- drew similar, albeit somewhat firmer, conclusions about Treasury's handling of the bailout money. Its preliminary report last week found a litany of problems, perhaps most fundamentally that there were no procedures to ensure that bailout funds are used as intended.

Just as important, the system of oversight doesn't appear to have been set up under conditions that would have allowed it to function effectively. With just three paid staff members (who started only this week -- two days before the panel's first report was to be released), COP was still struggling to get office space as it was preparing the report. Warren confirmed in an email to TPMmuckraker that "time constraints" had played a role in limiting the scope of the report's conclusions, saying that the panel met for the first time only two weeks ago.

Congress dragged its feet in naming the panel's members: although the bailout bill was passed in early October, they weren't named until mid-November. And it hasn't helped that Senate GOP leader Mitch McConnell still hasn't named a replacement for Sen. Judd Gregg, who stepped down last week as one the panel's two Republicans, saying he was too busy.

Still, at least GAO and the Congressional panel have been in place long enough to offer those reports. The single person who's most directly responsible for overseeing Treasury's bailout spending, Special Inspector General for the bailout, Neil Barofsky, was only confirmed this week. That's because one unnamed Republican senator -- it now seems all but certain that it was Kentucky's Jim Bunning -- placed a hold on Barofsky's nomination.

Congress may be talking belated steps to fix the problem. The Senate yesterday passed a bill that would let Barofsky investigate any use of bailout funds that he deems questionable, and hire auditors for the job. And the House has passed an amendment to the auto bailout bill that would require banks to say more about what they're doing with the TARP money.

Still, it appears that the rush to take action affected not just Treasury -- which was clearly scrambling to set up the bailout program without adequate record-keeping -- but also Congress, which failed to ensure that the oversight system it set up was designed as effectively as it needed it to be. And much of the damage may already have been done.

The Bush administration's record on the environment is so abysmal that even a former Bush EPA official had difficulty defending it today.

Environmentalists blasted the administration's policies at a hearing called by the Select Committee on Energy Independence and Global Warming, convened to highlight Bush's use of midnight regulations -- proposals made in the waning days of a presidency when political consequences are minimal -- to ram through rule changes on behalf of business interests.

Then, Jeff Holmstead, the lone witness called by the GOP minority, was given a chance to speak.

Holmstead, once the head of the Air office at the EPA and now a lawyer at Bracewell & Giuliani, gamely attempted to defend his own record, touting an improvement in air quality in his opening statement. But hostile questioning put him on the defensive. The timing of the last-minute proposals, he said, was simply due to human responsiveness to deadlines. And as for global warming, other countries "have not achieved anything either."

Finally, Holmstead gave up. "Maybe we should have a little more polite discussion," he said.

Of the 39 rules proposed in the final days of the president's term, 20 pare back environmental restrictions. (ProPublica has a tally going here.)

Rep. Edward Markey (D-MA), the select committee chair, closed the meeting promising to "shine a light" on the Bush administration's activities.

"We are going to be on their case," he said. "We are going to be there every single minute."

If any of Barack Obama's aides talked to Rod Blagojevich about the Senate seat the president-elect left open, we may be about to find out who it was, and what was said. And that's a lot better than we've been used to over the last few years.

At an appearance moments ago to announce his healthcare team, Obama led off by telling reporters that he has asked his team to gather the facts about contacts with the governor on the subject. "What I want to do is to gather all the facts about any staff contacts that may have taken place" between the governor's office and the transition team, he said. In response to a question, he added that he would present the findings publicly in the next few days.

But Obama said he is "absolutely certain" that if such contacts took place between his team and the governor's office, they would not have included discussion of any kind of "deal" for the seat.

Obama also repeated that he himself never spoke to the governor about the seat. "I did not speak to the governor about these issues," he added.

It's worth noting that Obama's pledge to canvass his staff and present what he's found stands in contrast to the approach taken by President Bush after news reports suggested that a member of his team had improperly leaked the name of a covert CIA operative. Bush at first pledged to get to the bottom of the matter, but soon appeared uninterested in quickly doing so, or in disciplining those members of his administration -- Karl Rove, Scooter Libby, and Richard Armitage -- who were ultimately found to have been the culprits.

We should wait to see if Obama fully delivers on his pledge to reveal what he's found, but so far, he seems to be approaching the issue with greater openness than his predecessor.

The 2008 Republican and Democratic conventions were underwritten by hefty contributions from the institutions and individuals at the center of the country's financial crisis, according to a report released Wednesday by the Center for Responsive Politics and the Campaign Finance Institute. Insurance giant AIG, which has since received more than $150 billion in federal money, gave $1.5 million; mortgage company Freddie Mac, now a government enterprise, donated $500,000. In all, the donations come to about $14 million. (Wall Street Journal/Politico)

The Supreme Court could hold former Attorney General John Ashcroft and FBI Director Robert Mueller responsible for abuse of Muslim and Arab detainees in the days after September 11, 2001, if Javaid Iqbal, a Pakistani Muslim held in solitary confinement in Brooklyn for 6 months, wins the case he has brought against the officials. Iqbal must prove that Ashcroft and Mueller are responsible for his treatment. On Wednesday, the justices "offered no clear indication" that it would stop Ashcroft and Mueller from being named in the suitaccording to the AP. (NYTimes/AP)

Part of the proposed auto bailout plan would reinstate a tax loophole, Silo, which allows companies to avoid paying billions of dollars in taxes. The I.R.S. outlawed the shelter in 2004. A version of the bill passed the House Wednesday, though its fate in the Senate remained uncertain. (New York Times)

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