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CNN reports that former McCain/Palin staffers are now very unhappy with Sarah Palin and her latest antic: Declaring at an Alaska GOP dinner last week that none of her staffers had been the sort of people she would want to pray with.

Palin told an anecdote of her final preparations before her debate with Joe Biden. Check out the 4:00 mark here:



"So I'm looking around for somebody to pray with, I just need maybe a little help, maybe a little extra," said Palin. "And the McCain campaign, love 'em, you know, they're a lot of people around me, but nobody I could find that I wanted to hold hands with and pray."

One anonymous staffer expressed his outrage to CNN. "It's about us people who were on the plane, who showed extreme loyalty to Palin, continually getting thrown under the bus or slapped in the face by her comments, whether she means it or not," the staffer said, adding that this is the kind of thing that would "cause you to question not only your loyalty but her judgment as a leader."

This whole thing might have gone unnoticed, but for one thing: The Alaska GOP has posted the entire speech on YouTube.

Is New York Attorney General Andrew Cuomo's probe of those AIG bonuses expanding?

Maybe kind of.

The Wall Street Journal reports (sub. req.) that Cuomo plans to subpoena AIG for documents about the credit default swaps that brought the company to its knees.

AIG has claimed that it paid those lavish bonuses because it needed to keep employees of its Financial Products unit in place, so that they could do the difficult work of unwinding the disastrous deals. But in some cases, AIGFP paid back its counter-parties in full, raising questions about how complex the job really was -- and therefore, whether AIG needed to spend so much money to get their employees to stick around and do it.

Bonuses aside, the subpoena request suggests that Cuomo's probe could end up shedding important light on the underlying question of how AIGFP managed to take on so much risk through its credit default swaps that it toppled the company and put the entire financial system at risk.

Cuomo has already obtained from AIG the list of employees who got bonuses, and has said his office is considering security concerns before deciding whether to release it.

Other investigators are also looking into the bonuses, and the swaps deals. A staffer for the House Oversight committee told TPMmuckraker earlier this week that the committee planned to soon probe the question of who at AIG knew about how the swaps were being conducted.

Uh-oh, Sen. Judd Gregg (R-NH) ... it looks like Majority Leader Harry Reid (D-NV) may just ignore your warning not to play "hide the reconciliation ball" during the upcoming congressional budget talks.

Reid told reporters earlier today that he would not rule out using "reconciliation" language to shield health care reform from a Republican filibuster later this year. Roll Call reports the Democratic leader's response: "Let's see what happens in the next three weeks, in the next month ... We need to do health care, and we are going to do health care."

For those of you who are just getting up to speed on the budget debate, here's a quick recap:

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Don't say AIG never put anything in your wallets, taxpayers! The company just sold its Taiwanese securities unit to the Bank of East Asia, for something between ten and twenty million dollars, or between five and nine retention bonuses. Which brings us to the latest twist in the ongoing mystery of America's great black-scholes hole: why is it taking so long to sell off the pieces? Surely the rest of the company's units couldn't be as toxic as the one that had Joe Cassano in charge! Or could they? On Tuesday Ben Bernanke let it slip to Congress that had AIG Financial Products been allowed to bust, its bread-and-butter insurance businesses might have folded as well -- so buried were their balance sheets in lethal "products."

Cue the red tape gestapo!! But isn't insurance regulated? Says Institution Risk Analytics:

Speaking of poor fundamentals, when AIG released information about the amounts and recipients of roughly $100 billion of its government loans from September to December 2008, almost utterly unreported was the fact that the staid, boring, heavily regulated insurance businesses managed to run up losses on securities lending requiring $44 billion of government support.
By contrast, the free marketeers at Institutional Risk Analytics point out, the "credit derivatives widely blamed for bringing down the world's financial system" were only consuming $27 billion. "Could it be that the big story at AIG is the unsoundness of the insurer, not the credit default swaps?" they ask. "Why the misdirected coverage?"

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Organized labor is now making a big push for Democratic candidate Scott Murphy in the home stretch of the special election for Kirsten Gillibrand's old House seat.

SEIU local 1199 has now launched this ad, attacking GOP candidate Jim Tedisco for opposing the stimulus bill, praising Murphy for supporting it -- and making sure to remind viewers that President Obama endorses Murphy:



According to the latest FEC filing, SEIU 1199's political action fund is spending $75,000 on this ad buy.

Financial executives have spent so much time testifying before Congress these days that earlier this week, The Hill offered CEOs a Dos-and-Don'ts guide to staying on lawmakers' good side. Something tells me that the good folks at the Security Traders Association of New York (STANY) haven't read it.

In a letter to the Senate Banking Committee today, the STANY offers a hilariously hyperbolic plea for rejection of the 90% tax on bailout bonuses that the House passed last week. You can read the full letter right here, but here are some key passages ...

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Dick DeGuerin, the hard-charging Texas lawyer who just signed on to represent Allen Stanford, isn't pulling any punches.

In an interview with TPMmuckraker moments ago, DeGuerin denied that Stanford was running a Ponzi scheme. And, referring to federal investigators' raids on Stanford offices as the SEC prepared charges last month, DeGuerin played the Nazi card, declaring:

The SEC came in like a bunch of Storm Troopers, which caused a panic, and caused the banks in Venezuela and elsewhere to nationalize his banks, just take them away.

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MSNBC's Contessa Brewer had much the same reaction to the House GOP's alternative budget as did our own Elana Schor. "Where's the beef?" She sounded off in what her co-anchor called a "rant", but what might have better been described as an accurate assessment of the Republicans' budgetless budget.

Yesterday Christopher "Kit" Taylor, the former executive director of the Municipal Securities Rulemaking Board, became one of the few regulators to publicly apologize for his role in the crisis. Like many public officials, he worried for years about the explosion in the unregulated derivatives market, which he was in the unique position of seeing bankers pawn off on slightly less sophisticated investors than the usual hedge fund guys: school districts, park authorities, power companies and other local government entities. Today Detroit, Jefferson County, Alabama and various towns in California alone are out more than a billion dollars after investing in interest rate "swaptions" and other financial "products" that left them on the hook in a national conspiracy through which banks, lawyers, consultants and corrupt politicos bilked as much as $4 billion a year from state and local government coffers. But "the big firms, he told Bloomberg yesterday, "didn't want us touching derivatives...they said, 'Don't talk about it, Kit.'"

"Every time I talked to the board about swaps, I made it clear that the MSRB had no authority to take action," said Taylor, in an e-mail. "My 'regret' is that MSRB would not speak out loudly that swaps were going to cost taxpayers a bundle if issuers did not clearly understand what they were doing."
Perhaps as penance, Taylor has been a main source for most of the media coverage of municipal finance corruption, currently the subject of a federal probe, and his candor has been hailed by his former colleagues in financial regulation, oh wait not really.

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Nouriel Roubini has weighed in. So have Simon Johnson, Brad DeLong, and Paul Krugman.

Now you, the taxpayers, are being asked for your comments on the government's new bank rescue plan -- not by the Treasury Department, but by the FDIC. Are you disturbed by the re-branding of toxic mortgage-backed securities as "legacy assets"? Are you ready to get past this bonuses business and put your trust in the Obama administration? Here's the link to submit your reaction in detail.

The full release on the public comment period is posted after the jump.

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