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The SEC is deep in the midst of beating itself up over its failure over many years to catch Bernard Madoff's alleged $50 billion Ponzi scheme. Just yesterday, agency chair Mary Schapiro told Congress in a letter that "there needs to be a full accounting, both of Mr. Madoff's activities and why we did not detect the fraud, which we regret."

But is it in danger of making the same mistakes the second time around as the first?

The SEC's civil case against Madoff, hurriedly filed in December 2008 after Madoff allegedly confessed to his lawyer, is being conducted out of the agency's New York regional office, where Madoff's business was based. But it was the New York office that conducted the 2006 inquiry into Madoff that famously came up dry. That inquiry, which found only a few technical violations and recommended that Madoff register as an investment adviser, is now itself one focus of the investigation by the SEC's inspector general into how the agency failed to catch Madoff.

According to one former SEC enforcement veteran, in other cases where the agency opened a second investigation after a regional office was found to have slipped up the first time around, the second probe has sometimes been run out of the Washington headquarters, to ensure that it retains public confidence. That wasn't done here.

Asked about the matter by TPMmuckraker, an SEC spokesman declined to comment.

But there may be even less distance between the two Madoff investigations.

The current case is being led by Andrew Calamari, the Associate Regional Director for the New York office, who last month publicly called the Madoff case "a stunning fraud that appears to be of epic proportions." Calamari's name is listed prominently on the agency's civil complaint.

But Calamari appears tied to the ill-fated 2006 effort. Doria Bachenheimer, an Assistant Regional Director in the New York office "reviewed and approved" the decision to close that inquiry, according to a "Case Closing Recommendation" document obtained by the Wall Street Journal.

And an organizational chart produced by the agency in 2006, and obtained by TPMmuckraker, indicates that Calamari is Bachenheimer's supervisor. That reading of the chart was confirmed to TPMmucraker by the ex-SECer.

It's not clear that Calamari played any active role in the failed 2006 inquiry. But at the very least, the fact that he supervised the staffer who wrongly approved closing it -- and the fact that there's no evidence he raised red flags about her work -- might suggest he's not the ideal person to handle the followup, especially given the high public profile the case has taken on.

Calamari referred an inquiry from TPMmuckraker to the SEC's press office, which again declined to comment.

The sad news that Supreme Court Associate Justice Ruth Bader Ginsburg is being treated for pancreatic cancer raises the possibility that President Obama may face his first Supreme Court nomination sooner than anyone imagined. Ginsburg, a thoughtful liberal, named to the bench by Bill Clinton in 1993, has many friends and admirers in Washington and people wish her well and hope she can stay in her post.

Still, the speculation has already begun in the Beltway about who could be named to the post. Since there is only one woman on the nine-member panel, the president would be under enormous pressure to make sure the court doesn't become all-male for the first time since 1981 when Sandra Day O'Connor was sworn in. Since Ginsburg was a leading womens rights advocate there would be all the more pressure on Obama to name a woman.

Among the possible female candidates the president could consider are Elena Kagan, the Harvard Law School dean who has been named to be solicitor general. Nancy Gertner, a district court judge in Massachusetts. If Obama's interested in returning to the historic tradition of appointing a politician to the bench, the possibilities include Jennifer Granholm, the governor of Michigan and a Harvard Law School graduate and former state attorney general. Janet Napolitano is the former attorney general and governor of Arizona and now Secretary of Homeland Security. Diane Wood is a federal judge in Chicago. Sonia Sotomayer, a federal judge in New York, if named, would be the first Hispanic justice. The aborted nomination of Harriet Miers to the Supreme Court in 2005 suggests that the Senate and public would not settle for a second-class nominee just for gender reasons but there's no reason to think that Obama, a former Constitutional law professor, would be interested in a personal friend over a widely respected figure.

The Coleman legal team is continuing to review the rejected absentee ballots one by one, spending this afternoon questioning Pine County Auditor Cathy Clemmer. One particular ballot came from a man whose ballot was tossed because he was not a resident of the county.

Well, he was a resident of the county -- in the county jail, awaiting trial for an unspecified charge. He requested a ballot from jail, and Clemmer admitted that the application should have been forwarded to his adjacent home county. Instead, the bailiff delivered him a ballot for Pine, which was later rejected because of his home address.

"By the time it was returned, was Mr. Grewe still in--" said Coleman lawyer Joe Friedberg, "still in custodia legis?"

The answer: Yes, the voter was still in the joint.

Now it may well be that this individual was legally allowed to vote, if he wasn't a convicted felon at that time. But just imagine the media outcry that would have occurred if a Democrat were waging an election lawsuit and tried to get this one counted.

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Amidst all the debate over the stimulus package, Tom Daschle's limos, and when the White House puppies will arrive, it's worth keeping an eye on TARP, the Troubled Assets Relief Program that was supposed to get us out of this mess in the first place. The TARP's genesis from three-page memo to $700 billion fund is history but not so Neel Kashkari, the 35-year-old interim Assistant Secretary of the Treasury for Financial Stability that Henry Paulson appointed to run the program. Kashkari continues to run it having been asked to stay on by the Obama team until a replacement is found. Finding a replacement for Kashkari has not been easy just as it's been difficult to round out all the assistant secretary positions at Treasury because of Geithner's delay in confirmation. (That was when a tax problem led to delay instead of self immolation.) I hear that diversity issues are holding up some of the appointments as well as trying to find people who are both versed in banking but are untainted by the current mess and, most importantly, are not coming directly from firms that are asking for TARP funds. We're still reporting on the names of some of the people who may be coming in. I'm told one Wall Street executive turned the job down several times before the administration took no for an answer. Expect a new TARP head next week when Geithner unveils more comprehensive plans for repairing the financial system.

Meanwhile, at a Senate Banking committee hearing today, the program was lambasted by a Congressional watchdog. The GAO has a report saying the program is poorly run and the public has been misled about how the Treasury priced assets. More here. Neil Barofsky, the independent TARP inspector , told the committee that he wants a criminal investigation. "That's going to be a large focus of my office," he said.

The Senate labor committee has postponed its vote on Hilda Solis' nomination to become Labor Secretary, with no clear date set to reconsider her confirmation.

Solis has been put through the wringer by Republicans aiming to slow up the Employee Free Choice Act, a core priority of the labor movement. But today's sudden postponement had a lot more to do with a USA Today inquiry that prompted Solis' husband to pay $6,400 yesterday in order to settle long-outstanding California tax liens.

Asked how much of the labor committee's move was attributable to the USA Today report, one GOP source said simply: "100%."

White House spokesman Robert Gibbs told reporters today that "we're not going to penalize [Solis] for her husband's mistakes," but Republicans are unlikely to leave the matter at that. After the jump is the full Solis statement from Sen. Edward Kennedy (D-MA) and Mike Enzi (WY), the labor committee's chairman and senior Republican.

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Looks like Sen. Tom Coburn (R-OK) reads TPMDC ... he's now threatening to hold up progress on the stimulus bill today until Democratic leaders allow a vote on 15 of his amendments limiting funding in the bill.

And at the top of Coburn's list is the $2 billion in funding for a "near-zero emissions" coal plant -- money that could go straight to FutureGen, the Illinois-based "clean coal" project that the Obama administration had said it would keep out of the stimulus.

Coburn's office has rustled up yet another reason to put the brakes on the FutureGen cash: impeached former Illinois Gov. Rod Blagojevich (D) has lavished hundreds of thousands of dollars on lobbyists to restart the cash flow to the project since the Bush administration canceled FutureGen funding one year ago.

It's unclear as of now whether Coburn's threat will win him a vote on the FutureGen amendment, but we'll keep you posted.

The working draft of proposed spending cuts to the Senate stimulus bill, obtained by TPMDC, offers a valuable guide to the agencies and programs that are in line for a trim by the time the legislative process is concluded.

The list is constantly changing -- and as an aide to Sen. Ben Nelson (D-NE) told me, now comes closer to $100 billion in cuts. Senate Democratic leaders suggested during a press briefing this afternoon that they were open to making targeted cuts, although Majority Whip Dick Durbin (D-IL) opened his remarks by saying that every $100 billion "we lop off" the bill represents jobs left un-created and un-filled.

Among the areas being eyed for cuts by the centrists, here are the most notable and/or controversial:

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A very strange thing just occurred in the Minnesota election trial, with Al Franken's lawyers trying to raise the possibility that unnamed Coleman workers may have tampered with ballots.

Yesterday, Franken attorney David Lillehaug began presenting a case that a number of ballots had been lost in Washington County during the recount, improperly giving Norm Coleman a net "gain" of ten votes. This is important because a potential remedy for this would be to default to the Election Night totals for affected precincts.

Lillehaug continued to examine county elections officer Kevin Corbid today, and had Corbid narrate a curious story from Election Night. At about 2 a.m., two men showed up who said they were from the Coleman campaign, saying they wanted to observe the process of ballots coming in. Corbid said the men stayed for several hours -- they were still there in the parking lot when he himself left the office at 5 a.m. -- and mostly stayed in the lobby.

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Sens. Ben Nelson (D-NE) and Susan Collins (R-ME) have come up with a list of about $100 billion* in programs they want slashed from the stimulus package, according to a working draft of a staff paper outlining the cuts. The linked document includes a list of $77.9B. But an aide to Sen. Nelson tells TPMDC that the latest negotiations come closer to the $100B mark.

Among the biggest cuts under discussion: $24.8 billion in state stabilization money for education, which was intended to plug existing budget holes; $15 billion in state incentive grants for education; and $1.4 billion for the National Science Foundation, which is wracked by a porn-viewership flap. Pell Grants were the biggest program to survive the debate over cuts, with $13.9 billion staying intact.

Senate Democratic leaders are likely to bring this package up for a floor vote today, aiming to achieve a filibuster-proof margin in support of these cuts before pushing to pass the entire stimulus by day's end. Hang onto your hats.

*Late Update: It's important to note that the list is a working draft. Negotiations on which programs to cut or save are moving so rapidly that the list is best viewed as a guidepost for what spending trims are being eyed by Nelson and Collins' centrist alliance, which unofficially includes upwards of a dozen senators at this point.

"They're looking at further cuts in addition to what you see on that," a Nelson spokesman told me, estimating that the current total in sliced spending is now closer to $100 billion. He declined to confirm which elements of the cut list have been removed or increased in size.

With Senate Majority Leader Harry Reid (D-NV) aiming to pass the stimulus before tomorrow, the final list of cuts could come to a vote within the next several hours.

Later Context Update: No matter what you think of the worthiness of the programs Nelson and Collins want to slice, their political goal is clear -- getting enough support to bring the stimulus bill out of reach of a GOP filibuster.

After meeting with President Obama, Collins said she has his support for a bill in the neighborhood of $800 billion. Since the stimulus is topping out above the $900 billion mark now, that would mean that the Nelson-Collins cuts have become the best hope for getting the recovery plan over the finish line.

Remember that weird moment during yesterday's Madoff hearings, when the SEC's top lawyer, Andy Vollmer, declined to answer questions, and kinda sorta implied he was asserting executive privilege, before backing off that claim when pressed by lawmakers? The moment that provoked Rep. Gary Ackerman's blunt assessment: "We thought the enemy was Mr. Madoff. I think it's you"?

One staffer described the Vollmer moment to TPMmuckraker as a "bombshell" within the agency's headquarters.

And it looks like the SEC is a little embarrassed about it -- and about the general evasiveness of other agency brass in their testimony yesterday.

Check out this letter, which the SEC's new chair, Mary Schapiro, sent to the committee last night.

Schapiro tells lawmakers that the hearing "cannot have been satisfactory for you." She admits that there needs to be a full accounting of what went wrong, and offers to meet with the lawmakers, at their earliest convenience, to "determine a course forward that will meet all of our interests."

As for the Vollmer issue itself, an agency spokesman confirmed that he wasn't claiming the privilege, but couldn't offer any further explanation, saying he'd get back to us.

TPMLivewire