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We first reported yesterday on the looming removal of executive pay caps from the stimulus bill during final negotiations between the House and Senate.

As lawmakers were entering a closed-door meeting to sign off on the final details, I asked Sen. Olympia Snowe (R-ME) whether the executive compensation limits were indeed taken out of the measure -- and Snowe said that only one of the original three pay limit plans had survived: her bid to limit executive bonuses, co-sponsored by Sen. Ron Wyden (D-OR). Notably, their plan was the only executive pay cap that was scored as a money-maker for the Treasury.

Did McGraw Hill pull out of a book deal with a top financial blogger because it looked like the book would be critical of Standard & Poor's, the credit ratings agency owned by McGraw?

Portfolio reports that the publisher has dropped Barry Ritholtz's Bailout Nation. And Ritholtz -- a TPM friend and investment expert who runs an institutional research firm -- claims it's because he ripped S&P.

The major credit ratings agencies, S&P perhaps foremost among them, have been widely criticized (by TPMmuckraker, no less) for helping to enable the financial crisis, by sticking grade A ratings on toxic mortgage assets -- a move which pleased the investment banks, who are the ratings agencies' customers.

Ritholtz wrote in his original manuscript that the ratings agencies "conducted a form of 'payola.' "

He continued:

These three rating agencies were the key enablers in the housing crisis and the subprime debacle. They were the pimps to the fixed-income fund managers' johns. The investment banks whored out junk paper, and the ratings agencies were extremely well compensated for their role in helping to create the entire subprime fiasco. But for their imprimatur of triple-A respectability on garbage paper, it could not have danced its way onto the laps of so many drooling buyers.


When McGraw Hill complained, the writer agreed to take out that passage. But, according to Ritholtz, the publisher still wasn't happy, saying it couldn't verify his assertions -- a rationale Ritholtz, speaking to Portfolio, rejects as a manufactured excuse. The book's general take remained critical of the ratings agencies.

In a post on the blog The Big Picture, Ritholtz offers more details about the sequence of events, and claims that the contract he signed with McGraw gave him final edit rights.

He also adds that over the summer, a McGraw Hill publisher told him that the section on the ratings agencies would have to be handled "delicately and diplomatically."

In any case, the deal ultimately fell apart -- and the notion that it was because McGraw Hill couldn't stomach Ritholtz's frank criticism of S&P is tough to shake.

Portfolio adds the publisher's side:
McGraw Hill spokesman Steven Weiss this afternoon said the publisher dropped the book because of a conflict with Ritholtz over editing, not because of his criticism of S&P. "The material needed extensive corroboration across a range of topics. We could not agree on unified approach with the author for resolving the issues," Weiss said. He denied that the publisher dropped the book because of what Ritholtz had written about S&P. "It is simply not true," Weiss said. "We have a range of editorial entities that often report critically about the company and we support and encourage their independent voices."


Ritholtz told Portfolio that other publishers are interested in Bailout Nation. So we may even get to see the full unedited version of the book.

The Franken legal team has worked today to score some more goals against the Coleman case, watering down a key point that Norm has tried to make.

Franken lawyer David Lillehaug reviewed one particular precinct in Coleman's argument that some absentee votes were double-counted, illegitimately benefiting Al Franken, as a result of damaged ballots being copied and certain copies not being labeled properly.

Dakota County elections manager Kevin Boyle confirmed what the county's position is on this: They believe there was no double-counting here. They say that the apparent additional duplicated ballots are from votes that weren't counted to begin with on Election Night, and were only tabulated during the recount.

Coleman needs the double-counting be a simple issue, one that can be easily calculated and then corrected by just subtracting excess votes from the spreadsheet. But if the local officials insist it didn't happen in one case or another, the burden of proof goes up significantly -- if we can't definitively cite which individual votes were double-counted, this suddenly starts to look like an effort to simply chop off Franken votes by fiat.

The Obama administration recently made the dismaying decision to defend the Bush-era Justice Department's use of the "state secrets" privilege in a lawsuit filed by alleged victims of extraordinary rendition. As TPM alum Greg reported yesterday, Sen. Russ Feingold (WI) was the first Democratic lawmaker to openly criticize the Obama DoJ's decision ... and now we have a second.

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I just came from an appearance by House Education and Labor Committee Chairman George Miller (D-CA) and New York City Mayor Mike Bloomberg to promote the $16 billion in school-repair money that Senate centrist negotiators had zeroed out of the stimulus bill last week.

Democrats were optimistic yesterday about keeping the school-building aid, particularly after President Obama referred to it directly in his Monday night news conference. But even as Miller was describing himself as "cautiously optimistic" that the money could be largely restored, the AP was reporting that only $6 billion of the construction money -- sorely important in urban areas such as New York -- would be added back to the stimulus.

Meanwhile, the Journal was reporting a school-building aid level double that size, at $12 billion. Such is the tricky state of the Capitol Hill media ... the prominence of leaks, oftentimes coming from people who stand to benefit by disseminating misinformation, make the truth hard to come by.

But one thing's for sure: that $16 billion for school repairs is getting diminished, at a time when local districts can use every penny of it.

Here's another good exchange, this one between Rep. Maxine Waters and Bank of America's Ken Lewis .

In one moment, Waters -- a longtime foe of rapacious lending practices, asks the CEOs whether, after receiving taxpayer money, they increased the interest rate on the credit card holders.

Lewis admits his firm did....

Here's an important moment:

Rep. Gary Ackerman gets JP Morgan CEO Jamie Dimon to admit that the $25 billion his firm got from the bailout did not trigger any new lending.

Watch the vid -- it's around 3:25 mark.

During the Minnesota trial this morning, the Franken legal team has continued to hammer Norm Coleman for reversing his position on counting rejected absentee ballots -- so much so that he's asking for specific envelopes to be counted that he had successfully thrown out before.

Franken lawyer David Lillehaug has been cross-examining Dakota County elections manager Kevin Boyle, using the questioning as a vehicle to make this larger point. Lillehaug reviewed a Web page that the Coleman campaign has put up, posting the names and home counties of all the thousands of rejected absentee voters for whom they're now advocating:



The page declares: "Check below to see if you are one of the thousands of Minnesotans the Franken campaign is seeking to disenfranchise."

Lillehaug then had Boyle confirm that there are ten individuals on the Dakota County list alone whose ballots were deemed by Boyle's office to have been wrongly rejected and would have been counted -- except the Coleman campaign vetoed them, under the decision by the state Supreme Court that gave the campaigns a veto over improperly-rejected absentees.

"And according to this exhibit, these are the people that Norm Coleman is suggesting the Franken campaign is seeking to disenfranchise?" Lillehaug asked rhetorically.

Read More →

Reuters reports:

Massachusetts' top securities regulator said on Wednesday that the wife of accused financial swindler Bernard Madoff took out roughly $15 million from an account managed by Cohmad Securities days before her husband was arrested and charged with securities fraud.


More as we get it...

Late Update: The Wall Street Journal has more. The information about Ruth Madoff comes from a complaint filed by the office of Massachusetts Secretary of State William Galvin, which is probing the role of Cohmad Securities, a company co-owned by Bernie Madoff.

The complaint says Ruth Madoff withdrew the money from Cohmad.

Reports the Journal:
The complaint seeks to revoke the registration of Cohmad, a New York-based firm that has an office in Boston. The complaint says Cohmad has refused to provide information regarding its activities in Massachusetts, its relationship with Bernard L. Madoff Investment Securities and "Cohmad's apparent role in the transfer of moneys from Madoff Investments to Cohmad personnel."

Last night, it seemed as though the Solis nomination would get put off until after recess. It looks like there will be a Solis vote today, a labor source emails me. (Of course, Congress being Congress delays are always possible.) This comes just in time as the Service Employees International Union along with Latino, environmental and other groups will drop more than 10,000 petitions at the committee's door to advocate for Solis's confirmation. Not surprisingly they have a video along with the petition that you can see here.

Have three thoughts on all of this:

1. Solis did not help herself at the confirmation. By being hesitant on the Employee Free Choice Act and otherwise slightly Palinesque, she didn't do herself or the administration a favor. People who know Solis don't have a good explanation for her performance. Usually, she's nobody's pushover but for whatever reason she seemed weak and that gave the Republicans an in.

2. Tax woes run amok. The law of Washington scandals is that they tend to spread out until they become unwieldy and absurd. Thus the Tom Daschle failure to pay taxes on limo rides became Solis's problem when it was revealed her husband had a tax lien. At a certain point, the scandal gets defined in such a large way that everyone gets caught up in it. I can think of two other instances of this. The first was when Zoe Baird's nomination to be attorney general was derailed in 1993 because of failure to pay taxes for domestic help. A second Clinton nominee, Kimba Wood, also fell for a problem with taxes on domestic help. Janet Reno, not one to use domestic help, was the third and final nominee. Eventually the collective DC zeitgeist declared the once insurmountable problem, to not be a problem as long as you paid up and a slew of nominees were confirmed.

In 1987, Douglas Ginsburg was nominated for the Supreme Court by Ronald Reagan after Robert Bork's nomination was rejected by the U.S. Senate. Ginsburg's nomination had to be withdrawn after it was revealed that he'd smoked pot as a student and as a law professor at Harvard. (Hey, it was a different time.) In the days after Ginsburg's withdrawal a slew of aspiring politicians including Al Gore, Bruce Babbitt, and others admitted their marijuana use and the once prohibitive crime of joints smoked as an adult was rendered, at most, a misdemeanor. Solis got caught up in a smaller version of that dynamic.

3. The fight over Solis is really just a precursor of the looming battle over the Employee Free Choice Act. A person with knowledge of the meeting earlier this week between AFL president John Sweeney and Vice President Joe Biden noted that they discussed EFCA and the administration's continued commitment to it. When the battle is joined--probably in late Spring--Solis's nomination will look like a skirmish.

Late Update: Solis' nomination will get a committee vote at 5pm today. The timeline for consideration by the full Senate, however, remains unclear. --e.s.

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