The Senate Judiciary committee has released its witness list for the confirmation hearings of Attorney General nominee Eric Holder, to begin Thursday:

The list:

The Honorable John W. Warner, Former United States Senator from Virginia
The Honorable Eleanor Holmes Norton, Congresswoman from the District of Columbia

Panel I:
Eric H. Holder, Jr.

Panel II:
The Honorable Louis J. Freeh, Former Director, Federal Bureau of Investigation
Chuck Canterbury, National President, Fraternal Order of Police
John Payton, President and Director-Counsel, NAACP Legal Defense and Educational Fund, Inc.

Witness to be designated by the Minority
Witness to be designated by the Minority

It'll be interesting to see who Arlen Specter and friends decide to call, since they've signaled a desire to scrutinize Holder's record -- in particular his role in the Marc Rich pardon -- very closely.

Prosecutors in the Dusty Foggo case are urging the judge to make public secret grand jury testimony, saying that the American people has a right to know the extent of Foggo's misconduct, the AP reports.

They also argued that the testimony should be considered by the judge at Foggo's sentencing hearing, which is scheduled for next month.

Prosecutors won't say what the specific information that they want released from the transcripts is.

Foggo, the former number three official at the CIA, pleaded guilty to wire fraud in connection with a scheme to help his old friend Brent Wilkes to obtain agency contracts at inflated contracts. Former GOP congressman Randy "Duke" Cunningham is serving a jail sentence for taking bribes from Wilkes.

During her interview on CNN, Elizabeth Warren got to spend a little less time dealing with inane knee-jerk responses from anchors, and a little more time explaining the crux of the issue: that the Treasury Department isn't tracking its bailout spending.

Some excerpts:

This isn't rocket science. This isn't some strange thing we're asking for. If you're gonna take that much money from American taxpayers, you've gotta have the banks tell what they're going to do with it. We have to have some way of telling if its working. and if you don't have accountability, if you don't have metrics in place, you're really just kind of handing it out there and hoping for the best.

And:

Treasury did not say: tell us what you're going to do with the money. Tell us how you used it. That just hasn't happened. There's no basic accountability in the system.

Warren also laid out the intriguing idea of establishing a product safety commission for financial products, just as we have for toasters, car seats, and other consumer products.

And she ended with an Eliot Ness-like pledge to keep up the fight. Asked by CNN's Tony Harris whether she'd continue to try to track the bailout spending, she replied, with brio: "You bet!"

Here's the whole thing:

Here's Elizabeth Warren's interview with CNBC about her report on the TARP spending.

It's notable mainly for her setting one network anchor straight about the fact that, even though, "money is fungible" it would still be possible to track for Treasury to track its bailout spending.

Warren: You and I could sit here with pencil and paper and come up with a minimum of ten metrics in about ten minutes. If you just hand the money over and say gee moneys money then you won't see whether or not there's been any difference. And if that's the case then it really is just blank checks to financial institutions.

She also has an admirably calm response to Larry Kudlow's sophomoric contention that asking banks to monitor what they're doing with our money is "central planing."

We just highlighted a Bloomberg story in which Joseph Stiglitz and other economists story slammed Treasury Secretary Henry Paulson for not driving a hard enough bargain on behalf of taxpayers when investing the TARP funds.

So it's probably only fair that we post Paulson's response, from an interview Bloomberg TV just conducted with Paulson:

Well, what we were looking to do was not to replicate one off private sector deals. The market was under great stress and the private sector was extracting very, very severe terms and what we were attempting to do, which I think we did successfully was design a program that would be accepted by a large group of healthy banks with terms that replicate what you would get in normal market conditions. And the other point I will make here - this is an investment and I find it highly, highly likely that the taxpayer will get this money and get this money back with a profit because these are preferred, these are - as long as the financial system remains intact and stable, which it will, that these will come back to the taxpayer.

And our objective was not to say how tough a deal can we give to the banks because then what we would have is we would have a - not a program for healthy banks. We would have a failing bank program and it would have a much different complexion. And again, I think history will show that the financial system needed a lot of capital and if you leave it to the banks to say I really need capital, what you're going to get is you're only to get them when they're desperate. And otherwise, what they're going to do is shrink and not play the role we need them to play and pull in their horns. And we needed to get a program that would be accepted by a lot of banks and would provide very much needed capital. So that was the philosophy of the program.

Lately at TPM, we've been wondering about exactly what kind of deal taxpayers got on that whole $700 billion bailout that the Treasury isn't doing much to track.

And along comes Bloomberg with a report that suggests we might not want to know the answer.

The lead data point:

[Treasury Secretary Henery Paulson] invested $10 billion in Goldman Sachs in October, twice as much as [Warren] Buffett did the month before, yet gained warrants worth one-fourth as much as the billionaire.

So Buffett's investors got a better deal than taxpayers. Bloomberg explains:

Paulson left money on the table in three ways, according to [former IMF chief economist Simon] Johnson: accepting fewer warrants than Buffett did; setting the certificates' price trigger, or strike, above market values; and receiving an annual yield on the preferred shares that is half of what Buffett will get for the first five years.

And Bloomberg has some damning quotes about Paulson's investing. Johnson calls them "just egregious," adding: "You want to do it the way Warren does it."

And according to Nobel prize winner Joseph Stiglitz: Paulson said "he had to make it attractive to banks, which is code for 'I'm going to give money away.'"

Stiglitz continued: "In many ways, it's not only a giveaway, but a giveaway that was designed not to work."

And he added: "If Paulson was still an employee of Goldman Sachs and he'd done this deal, he would have been fired."

As for the issue of limits on executive pay, which Congress insisted on including in the TARP, the Warren report says:

While some executives at some financial institutions have voluntarily reduced their compensation, there is no uniform program in place. Treasury has the power to set the "terms and conditions" of any purchase it makes using the TARP funds.

Treasury had opposed the limits from the start, arguing that they would discourage banks from participating in the program.

In places, the panel appears outright angry -- understandably -- at Treasury's stonewalling on key questions:

The Panel's fourth area of inquiry focused on what financial institutions have done with the taxpayer money they received. As indicated in question 1 above, Treasury appears to believe the question is beside the point because their goal for the CPP is to stabilize the financial system and to restore confidence in financial institutions.

This, they believe, will eventually increase the flow of credit. Treasury argues that there are several reasons why the TARP investments will be slow to produce increased lending: (1) The CPP began only in October 2008, and the money must work its way into the system before it can have the desired effect. (2) Because confidence is low, banks will remain cautious about extending credit, and consumers and businesses will
remain cautious about taking on new loans. (3) Credit quality at banks is deteriorating, which leads banks to build up their loan loss reserves. For example, Treasury notes that the level of loan loss provisioning by banks doubled in the third quarter from one year ago. Treasury seems to be suggesting these larger trends may be obscuring the effect of TARP funds. The Panel understands the reasons why measurement of banks' use of TARP funds may be difficult.

Nevertheless, the Panel believes such direct measurements at the level of individual TARP recipient firms are important for determining the extent to which the funds are having a direct benefit to businesses and consumers.

And the report highlights Treasury's amazing unwillingness to require banks that get government money to take actions that are in the public interest:

[T]he Panel asked whether Treasury's actions preserved access to consumer credit, including student loans and auto loans at reasonable rates, and
whether Treasury was taking action to ensure that public money could not be used to subsidize lending practices that are exploitive, predatory, or otherwise harmful to customers. Treasury answered that its TARP programs to preserve access to consumer credit do not involve encouraging or mandating banks to take consumer-friendly actions with respect to credit cards or other consumer loans. (our itals)

Perhaps the Warren report's starkest expression of frustration with Treasury's lack of information comes in the executive summary:

The Panel's initial concerns about the TARP have only grown, exacerbated by the shifting explanations of its purposes and the tools used by Treasury. It is not enough to say that the goal is the stabilization of the financial markets and the broader economy. That goal is widely accepted. The question is how the infusion of billions of dollars to an insurance conglomerate or a credit card company advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards. It would be constructive for Treasury to clearly identify the types of institutions it believes fall under the purview of EESA and which do not and the appropriate uses of TARP funds. The need for Treasury to address these fundamental issues of strategy has only intensified since our last report.

Later in the report, a similar theme is picked up:

While Treasury's letter provided responses to some of the Panel's questions and shed some light on Treasury's decision-making process, it did not provide complete answers to several of the questions and failed to address some of the questions at all.

The Warren report also hits Treasury for not doing enough to prevent mortgage foreclosures, as Congress directed -- while giving billions to Wall Street banks:

While the statute contemplates that foreclosure mitigation would be accomplished through the purchase of mortgage-related assets, many believe that Treasury has clear authority to use a portion of the $700 billion to address mortgage foreclosures in other ways. For Treasury to take no steps to use any of this money to alleviate the foreclosure crisis raises questions about whether Treasury has complied with Congress's intent that Treasury develop a "plan that seeks to maximize assistance for homeowners."

More from the report of the Congressional Oversight Panel, chaired by Harvard Law professor Elizabeth Warren, on Treasury's spending of TARP funds:

First a bit of backstory. In its first report issued last month, the panel asked a series of questions about what Treasury was doing with the money -- questions it was unable to answer because the department didn't appear to have adequately tracked its own spending.

Late last month, Treasury issued a response that provided almost no new information whatsoever. As we noted, one paragraph appeared twice, in virtually identical form, in response to two different questions posed by Warren.

Now this new report finds that the problem is a long way from being fixed:

The Panel still does not know what the banks are doing with taxpayer money.

It continues:

The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence ... For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore

The panel appointed by Congress to track Treasury's use of the bailout funds has released its second report -- and its conclusions are even more worrying than the first.

One excerpt:

It is not enough to say that the goal is the stabilization of the financial markets and the broader economy," the panel wrote in a monthly report published today. "The question is how the infusion of billions of dollars to an insurance conglomerate or a credit card company advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs and families unable to pay their credit cards.

We'll have many more soon...

Ever since New Mexico governor Bill Richardson withdrew his nomination for Commerce Secretary citing an investigation into the company that obtained a contract to advise the state on bond deals, news reports have been making reference to a broader nationwide probe of alleged price-fixing and corruption in the municipal bond industry, which the New Mexico investigation grew out of.

Here at Muckraker, we've started looking into that larger ongoing story, and today the New York Times delivers a helpful takeout on the subject -- though many of the details still remain murky.

As the paper explains, federal and state investigators have over the last few years gathered evidence of what looks like a collusion scheme by financial firms that work with state and local governments on municipal bond deals worth around $400 billion each year.

Explains the paper:

E-mail messages, taped phone conversations and other court documents suggest that companies did not engage in open competition for this lucrative business, but secretly divided it among themselves, imposing layers of excess cost on local governments, violating the federal rules for tax-exempt bonds and making questionable payments and campaign contributions to local officials who could steer them business. In some cases, they created exotic financial structures that blew up.

And crucially, the paper makes clear that this isn't just an isolated case, but rather goes to the very heart of the municipal bond system.

People with knowledge of the evidence say investigators are not just looking at a few bad apples, but also at the way an entire market has operated for years.

A former IRS investigator estimated to the Times that as much as $4 billion has vanished into the system as a result of the schemes.

A source tells the paper about evidence that sheds light on one way in which the scam works. People from firms that have contracted with local governments to help them pick their bankers were taped telling the bankers: "We want you to bid on this deal, but you're not going to get it -- you're going to get the next one. We want you to submit a sloppy bid." Then, in some cases, banks would be paid in cities where they did not work, to reward them for throwing the other contract to a competitor.

Part of the problem appears to be the lack of regulation, especially of companies that have emerged in recent years to advise governments on complex derivatives deals like swaps and options.

The Times explains:

The packages are presented as money-savers to the municipalities, which may want to protect themselves against interest rate changes. But over the last year, as turmoil spread through the credit markets, some of the derivatives have blown up, leaving local governments stuck with unexpected costs.

CDR, the firm that's being investigated in New Mexico, leading to Richardson's withdrawal, is one such company that handles derivatives.

That firm and two that do similar work -- Investment Management Advisory Group, (known as "Image"), and Sound Capital Management -- had their offices raided by the FBI in 2006 as part of the investigation.

The former Treasurer of the city of Phladelphia is currently in jail for accepting illegal payments in exchange for giving city bond business and other contracts to selected companies. CDR and Image appeared frequently in the indictments, and CDR was found to have paid for the Treasurer's trip to the Super Bowl, but neither firm was formally charged.

Financial services companies including JP Morgan Chase, AIG, and Merrill Lynch have been subpoenaed as part of the investigation.

The exact mechanism or mechanisms by which these scams works remains a bit obscure, and may vary from case to case. But the broad picture is clear: financial firms, including some Wall Street powerhouses (at least until recently) are suspected of colluding to rip off state and local governments -- that is, taxpayers -- for billions.

We'll be staying on top of this...

Scientists at the Food and Drug Administration have taken the unusual step of writing a letter to the Obama transition team to complain about misconduct at the agency. The group of nine scientists claim that agency managers have used intimidation to hasten approval for medical devices that are not necessarily safe or effective. (Associated Press)

Senate Democrats are set to push for greater regulation over coal dumps after a Tennessee facility ruptured in December. It has recently come to light that thousands of facilities across the nation are under no regulation whatsoever. Accidents have serious environmental consequences and cleanups are very expensive. (Associated Press)

The new Congress has acted quickly to preserve certain Bush administration records, asking a federal judge to force documents pertaining to U.S. attorney firings to stay at the White House. Should the White House turn the documents over to the National Archives, they could take longer to retrieve for the ongoing investigation into the firings. Subpoenas have been issued for the documents. (Associated Press)

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As regular Muck readers know, we've been tracking the transparency -- or lack thereof -- of the Federal Reserve's program to buy up $500 billion worth of mortgage-backed securities in an effort to boost the housing market.

And today it's worth focusing on the issue of conflicts of interest.

The four outside investment firms hired by the Fed to manage the program -- Blackrock Inc., Goldman Sachs, Wellington Management, and PIMCO -- began buying up assets this week. So one assumes that the conflict of interest provisions that the Fed has said it has in its contracts with the four companies must be firmly in place by now.

But the Fed still is telling us almost nothing about what those crucial provisions entail. A department spokesman did not respond to a call from TPMmuckraker requesting information on what the Fed is doing to guard against conflicts of interest among the investment firms managing our money.

So far, all we know on the subject is what the Fed told us in a fact sheet posted last month on its website:

What measures will the Federal Reserve take to ensure that an investment manager implementing the MBS program will not have an unfair advantage relative to other market participants due to the information it receives about the MBS program?

Each investment manager will be required to implement ethical walls that appropriately segregate the investment management team that implements the Federal Reserve's agency MBS program from other advisory and proprietary trading activities of the firm. The New York Fed will monitor each investment manager's compliance with this requirement.

What sort of "ethical walls"? How will they work? How will the Fed monitor each investment manager's compliance? (After all, the Treasury doesn't appear to be taking its duty to monitor similar conflicts with TARP money all that seriously).

We're still in the dark.

It bears repeating: this isn't an abstract issue. The potential for these firms to improperly use, in their other investment work, the information they've been granted access to is enormous. Relatedly, the Fed's broader stonewalling on the structure of the contracts (or anything to do with the contracts whatsoever!) means we have no guarantee that the firms are being incentivized to get taxpayers the best possible deal.

In that same conversation with Senate Judiciary chair Pat Leahy, we also asked about the bizarre jab recently thrown by Leahy's Republican counterpart on the committee, Arlen Specter, who likened Attorney General nominee Eric Holder to Alberto Gonzales.

Leahy shook his head, almost amusedly, and said "a number of Republicans" have told him privately that "there's no way we could vote against Eric Holder -- there's no way we could explain it."

In other words, Specter's apparent crusade against Holder may turn out to be a lonelier effort than it might appear.

We just talked to Senate Judiciary chair Patrick Leahy (D-VT) as he left the official electoral vote count that designated the president-elect, and asked him something that's been on our mind here at TPMmuckraker: How much resources/time will Congress have to address the ongoing lawsuits against Harriet Miers and Josh Bolten for their failure to provide testimony and documents in the U.S. Attorney firings scandal?

The House officially voted to continue its legal efforts yesterday, but Leahy admitted that he was unsure about a timeframe for action in the Senate.

"I don't know," he said. "I actually raised the same question to my staff today."

Leahy explained that several senior members of his staff have taken a leave to help with Barack Obama's transition, a factor that could delay significant action for a time.

In October, Leahy's committee released a report on the firings saga which found that senior White House officials, including Karl Rove, helped compile the list of US Attorneys to be removed, and that former Attorney General Alberto Gonzales participated in a "cover up" to conceal the fact that the firings were politically motivated.

That report accompanied contempt resolutions, against Rove and White House chief of staff Josh Bolten, passed by the committee last year. Rove and Bolten have refused to testify or turn over documents to the committee.

The Bush DOJ may not usually be inclined to hold its own members accountable for criminal wrongdoing. But when the alleged wrong-doing consists of embarrassing the administration by revealing the existence of a program that was illegally spying on the American people, the wheels of justice seem to start turning.

Last month, as we noted at the time, Newsweek unmasked the man, Thomas Tamm, who leaked to the New York Times the news that the NSA had been conducting a secret wiretapping program that was being concealed from the FISA court.

And as the magazine reported, Tamm, who spoke on the record to Newsweek for its story, has been in federal law enforcement's sights thanks to his fateful decision.

Now, DOJ has written a letter to his lawyer -- obtained by Salon's Glenn Greenwald -- asking whether, in light of his decision to speak to Newsweek, Tamm "is willing to reconsider his prior refusal to speak with agents of the FBI and/or to testify before the Grand Jury regarding his knowledge of and/or participation in the disclosure of TSP-related information to [James] Risen, Mr. Lichtblau and others."

(Risen and Lichtblau, of course, are the New York Times reporters who first reported on the program, based on Tamm's leak.)

The letter, signed by Steven Tyrrell, the chief of DOJ's fraud section, continues with what appears to be a veiled threat to subpoeana Tamm:

if I do not hear from you by [January 7], I will assume that Mr. Tamm is not interested in submitting to a voluntary interview or testifying before the Grand Jury.

In its report last month, Newsweek wrote that federal agents have "pursued [Tamm] relentlessly for the past two and a half years ... raided his house, hauled away personal possessions and grilled his wife, a teenage daughter and a grown son. More recently, they've been questioning Tamm's friends and associates about nearly every aspect of his life."

That pursuit appears to be continuing -- even as the department declines to bring charges against anyone in connection with the illegal program itself that Tamm revealed.

The Wall Street Journal is reporting on its homepage that, according to prosecutors, Bernard Madoff had $173 million in signed checks made out to his friends and employees in his office desk at the time of his arrest.

News reports immediately after Madoff's arrest revealed that, after confessing the alleged fraud to his sons, he asked them for time to distribute bonuses to his firm's employees.

From the Journal at the time:

Mr. Madoff told them he planned to surrender to authorities, but first, he wanted to pay certain employees portions of the $200 million to $300 million dollars that was left.

And earlier this week, the Associated Press reported:

Prosecutors on Monday said disgraced financier Bernard Madoff violated bail conditions by mailing about $1 million worth of jewelry and other assets to relatives and should be jailed without bail.

Investigators have been working to figure out what Madoff did with the billions he's alleged to have stolen.

Yesterday, the Journal reported that shortly before his arrest, Madoff received $250 million from Carl Shapiro, an early friend and backer, in what was believed to be an effort to stave off his firm's collapse.

Attorney General Michael Mukasey gave his sendoff speech yesterday, and, after the usual boilerplate -- "pleasure to work alongside a group of the most talented legal professionals anyone could ever hope to work with..." -- he made reference to the department's politicization under the Bush administration.

From Mukasey's prepared remarks:

As I suggested a few moments ago, not all of the news over the last 14 months was good news. We heard allegations, and saw revelations, of politically influenced functioning within the Department, principally in hiring, and of other deviations from established procedures and acceptable professional standards. Thankfully, we can draw a measure of satisfaction even from these painful episodes. After all, many of the revelations and solutions came from within the Department itself. And, in those cases where investigations have been warranted, the Department has shown that it is capable of conducting the necessary review of the conduct and practices of its own people and of others.

We have also responded to these troubling allegations by changing policies and procedures. We instituted rules that limit contact between the Department and the White House on ongoing cases; we restored the role of career lawyers in making hiring decisions in the Honors and Summer Law Intern Programs; and we took steps to ensure that hiring and recruitment decisions throughout the Department take place on the merits, and without regard for any improper consideration, be it politics, age, race or sexual orientation.

It's true that Mukasey's tenure hasn't seen the kind of blatant politicization in hiring that we saw under Alberto Gonzales -- and Mukasey's decision to appoint a special prosecutor to determine whether criminal wrongdoing occurred in regard to the US Attorneys firings may help us finally get to the bottom of that issue. But on crucial issues of the day like torture and warrantless wiretapping, he's been far from the model of independence that the Attorney General is supposed to represent.

One sidenote: The press release containing Mukasey's comments was dated: "TUESDAY, JANUARY 8, 2008" Two mistakes by DOJ in one attempt to render today's date! Really gives you confidence in our federal law enforcement system.

We've heard talk from various quarters in recent weeks about the pressing need to re-regulate the financial markets, in response to the SEC's failure in the Bernard Madoff case, and to the broader financial crisis.

And in his interview yesterday with CNBC, Barack Obama added a bit more detail to the picture of what we can expect, and when.

Perhaps most importantly, he suggested that the overlapping "alphabet soup" of financial regulatory agencies -- the SEC, the FDIC, the OTS, and so on -- might be combined into one super-regulator. He signaled he'd be more interested than his predecessor in working with overseas allies on a global financial regulatory system. And he said he'll have a proposal by early spring.

Here's his answer in full:

CNBC: How extensive an overhaul of the financial regulatory apparatus will you propose and support? When will you do that? And do you think there is a global regulatory apparatus that needs to be created? You've got the G-20 coming up in April in London.

Obama: Well, by the time that G-20 meeting takes place, we, I believe, will have presented our approach to financial regulation. I think some international coordination has to be done. But right now, we just have to take care ... (unintelligible) ... and Wall Street has not worked, our regulatory system has not worked the way it's supposed to. So it's going to be a substantial overhaul. We're going to have better enforcement, better oversight, better disclosure, increased transparency. We're going to have to look at this alphabet soup of agencies and figure out how do we get them to work together more effectively. We've got to stop splintering functions in such a way that capital in one form is treated one way and capital in another form is treated another way, because these days in global financial markets, they're all fungible. And there's systemic risks that are possible, whether it's in the form of derivatives or insurance or traditional bank deposits. So we've got to update the whole system to meet the needs of the 21st century. This is an assignment that my team is already beginning to work on and I think that we will have, fairly shortly, a package that we've worked alongside Barney Frank and Chris Dodd, to present to the American people.

In a sign pointing in a similar direction, Obama yesterday announced that he intended to keep Sheila Bair on as chair of the FDIC (pending any massive reorganization of the regulatory system that would abolish the agency, presumably). Though she's a Republican, Bair, who has pushed for stronger efforts to prevent foreclosures, was described by the New Republic as "the high-ranking government official most likely to attack Obama's economic policies from the left."

Six veterans are suing the Central Intelligence Agency and the Defense Department over experiments they were subject to without their consent. The veterans say that although, during the Cold War, they volunteered for tests, they were not told the tests would include chemical and biological weapons and mind-control techniques. (Associated Press)

A Pentagon-focused advisory group will release a report today that's expected to be highly critical of the Defense Department's oversight of its nuclear weapons programs. The report comes on the heels of a separate report issued in September that slammed the Air Force for several embarrassing episodes, including a bomber flying cross country while mistakenly carrying nuclear-tipped cruise missiles. The report will recommend creation of a top-level oversight position. (Associated Press)

The new Congress kicked off its session Wednesday with two votes, one that will require public disclosure of presidential library donations and another making it harder to conceal presidential records from the public record. The library bill will not work retroactively; the document bill will overturn Bush's executive order of November 2001 allowing sitting and former presidents to delay document release for years. (Associated Press)

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In case you were worried, the coming of a new Congress won't stop House leaders from continuing their long-running effort to obtain documents and testimony about the US Attorney firings from White House chief of staff Josh Bolten and former White House counsel Harriet Miers.

As part of the rules package voted on by members yesterday, the House voted to continue its lawsuit against the White House, which seeks to compel Miers and Bolten to testify and hand over the documents, reports the Las Vegas Sun. Citing executive privilege, the two have been defying subpoenas issued by the House Judiciary committee, creating a protracted legal struggle.

Those subpoenas expired with the start of the new Congress, so as part of the rules package, the House passed rules ensuring the subpoenas could be promptly reissued.

Let the legal maneuvering continue!

A federal judge in Texas is facing new charges related to a second alleged incident of sexual abuse.

District Judge Samuel Kent pleaded not guilty in Houston today to federal charges that he sexually abused a female employee and lied to investigators about it, the Houston Chronicle reports.

Kent is accused of forcing an unnamed female employee, in the words of the Chronicle, sourcing the indictment, "to repeatedly 'engage in a sexual act,' including oral sex and using his hands to 'penetrate or attempt to penetrate' her", during 2004.

There's also an alleged coverup. The paper reports that, according to the indictment, Kent falsely told a special investigative committee that "the extent of his unwanted sexual contact with Person B was one kiss and that when told by Person B his advances were unwelcome no further contact occurred."

Kent is already the first ever federal judge to be charged with a federal sex crime. He faces a trial this month on charges that he allegedly abused his former case manager -- a relationship that the married justice's lawyer, Dick DeGuerin, has described as "enthusiastically consensual."

According to the Chronicle, that woman...

...alleged that the judge physically touched her under her clothing twice and often made obscene suggestions during the six years she worked for him. He is charged with abusing McBroom in 2003 and 2007 by fondling her breast and other body parts and by trying to force her head toward his groin.

Kent was the only federal judge in Galveston, Texas, when all the incidents are alleged to have occurred. He has since been transferred to Houston, where he remains on the federal bench.

Another interesting note: DeGuerin, Kemp's lawyer, is a heavy hitter in Texas legal circles who has also represented Tom DeLay -- the former Majority Leader who was indicted in 2005 on charges that he conspired to break Texas election laws -- and Branch Davidian cult leader David Koresh.

The bad blood between Senate Judiciary chair Pat Leahy, and ranking Republican Arlen Specter, over Attorney General nominee Eric Holder, shows no signs of abating.

Yesterday, Specter pointedly questioned Holder's record of independence, even comparing Holder to Alberto Gonzales -- a low blow by any measure.

Leahy, who supports Holder's confirmation, seems to have taken exception. His office today released the following statement in his name -- which tries to turn the Gonzo precedent back on Specter:

We need the new Attorney General to be a person of experience and independence. Eric Holder's long record of public service has earned him strong support from law enforcement organizations, civil rights groups, victims' rights advocates, former Reagan and Bush administration officials, and others. Any effort to question his character is unfounded. Every Republican voted for Alberto Gonzales, and felt his character merited confirmation. Certainly Eric Holder greatly exceeds that test.

Oh snap.

For weeks, Leahy and Specter have been bickering over the nomination. Specter prevailed on his opposite number to delay the confirmation hearings, citing a need to look more closely at Holder's record, in particular his role in the pardon of Marc Rich

Former senator Ted Stevens (yes, now actually former) is keeping up the fight against his guilty verdict -- and now Sen. Majority Leader Harry Reid has lent him a hand.

Reid told Politico that he believes Stevens shouldn't serve jail time.

My personal feeling, you guys, I don't know what good that [would do]... He was a real war hero too, you know. He's been punished enough.

Reid said he thinks Stevens was simply behind the curve of modern ethics standards in not disclosing the $250,000 in gifts he received from VECO CEO Bill Allen, saying of the famously internet-unsavvy Uncle Ted that "it's a different world we live in, and Stevens did not understand that."

Sentencing for Stevens had tentatively been scheduled for next month, but it's unlikely that he'll be sentenced any time soon. Last month, lawyers for Stevens asked for a new trial, claiming that the prosecution had presented false evidence and withheld information that could have helped the defense.

Last week, we looked at the process by which the New York Federal Reserve selected four investment firms to manage its program to purchase $500 billion of mortgage-backed securities, in order to bolster the housing market.

Or at least, we tried to.

A fact sheet on the website of the New York Fed, announcing the details of the program stated that "a competitive request for proposal (RFP) process was employed" to select the four firms -- Blackrock Inc., Goldman Sachs, Wellington Management, and PIMCO. A Fed spokesman declined last week to give TPMmuckraker any information about the value of the contracts or the nature of the firms' successful bids. But he did tell us that he expected to be able to provide us with a copy of the RFP, after it had been inspected by Fed lawyers.

But now things seem to have changed. The spokesman hasn't responded to our followup calls, placed this week, about the RFP. In other words, not only will the Fed not tell us how much its paying the firms to manage our money, it won't even release the document it used to solicit bids for the contract.

As for the firms themselves, they've been just as tight-lipped. As we noted at the time, the first three referred us to the Fed, and PIMCO didn't return our calls at all.

To be clear, there's no evidence that these firms were improperly selected -- though the fact that PIMCO's founder was, as we've reported, loudly calling back in September for the government to launch just such an MBS purchase program does create some interesting optics, at the least.

But don't taxpayers have a right to know some basic details about the process by which these private investment firms -- at least one already the recipient of massive government largesse -- were hired to manage our money? We think so...

Defense lawyers for former Detroit mayor Kwame Kilpatrick asked the Wayne County Prosecutor to destroy thousands of text messages between himself and an aide, with whom he was having an affair, from the case that had not yet been released to the public, according to prosecutor Kym Worthy. This revelation comes a day after the former aide to Kilpatrick was sentenced to 120 days in jail for obstruction of justice. Christine Beatty and Kilpatrick lied under oath about their relationship during a 2007 civil suit. Beatty will also pay a $100,000 fine and will not be able to attend law school during her five year probation. (Detroit Free Press, Associated Press)

A report by the New York Times finds that a coal ash dump which ruptured in Tennessee in December is only one of 1,300 such dumps in the nation that are not subject to any regulation. Meanwhile, an engineer working with a federal regulator claims that the Tennessee Valley Authority ignored two leaks at the site of last month's spill, warning signs that could have provided years of notice. Coal ash dumps are well known to contain high levels of heavy metals such as arsenic, lead and mercury. (New York Times, Associated Press)

The Bush administration has passed new midnight regulations to weaken environmental protections. The most recent rules allow industries not listed under the Clean Air Act to ignore "fugitive emissions," usually counted towards emissions totals; greater use of an off-label antibiotic in animals that could diminish the drug's efficacy in humans; and remove the Northern Rocky Mountain gray wolf from the list of Endangered and Threatened Wildlife. (ProPublica)

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Bloomberg advances the ball a bit on the progress of the federal investigation in New Mexico into CDR Financial Products, which derailed Bill Richardson's bid to be Commerce Secretary.

It sounds like the probe is focusing on Richardson's former top aide. Reports Bloomberg:

A witness who testified before a federal grand jury in Albuquerque last month said he was asked if David Contarino, the former chief of staff, ordered New Mexico Finance Authority officials to hire Beverly Hills, California-based CDR Financial Products Inc. Another person familiar with the investigation said Contarino, 47, is a subject of the inquiry and that prosecutors are looking at whether he solicited contributions from firms that worked on finance authority bond deals.

Contarino, who managed Richardson's presidential run last year, released the following statement:

As chief of staff and co-chairman of the Governor's Finance Council, it was my job to be involved in GRIP and many of the administration's economic and financial initiatives," Contarino said in an e-mail statement. "In all of my actions, I acted appropriately and I am confident that the investigation will bear out that fact.

Bloomberg also raises preliminary questions about another Richardson aide:

Michael Stratton, a senior political adviser to Richardson, lobbied the authority on CDR's behalf, [Finance Authority CEO Bill] Sisneros said.

Stratton was also paid $269,000 by JPMorgan Chase & Co. in 2003 and 2004 to help win public finance business in New Mexico, according to Municipal Securities Rulemaking Board records. JPMorgan served as lead underwriter on about $1 billion of transportation bond deals for Richardson's transportation program.

And Bloomberg adds additional detail about how CDR got one of the contracts under issue in the first place. In a nutshell, after CDR's 2003 bid received the second top score, the then-chief financial officer of the finance agency recommended splitting the job between the top two candidates.

Six companies answered the request, which contained two questions out of 39 items related to experience with interest- rate swaps and guaranteed investment contracts. A joint venture of the New York companies Salomon Smith Barney Inc., a unit of Citigroup Inc., and Ryan Labs Inc. received the top score of 99 percent. CDR had the second-highest score of 97 percent, authority records show.

Rather than select the Smith Barney/Ryan Labs team as both investment and swap adviser, the authority's then-Chief Financial Officer, Keith Mellor, recommended splitting the job. The agency gave the swap adviser assignment to CDR, which received the same score as the Smith Barney/Ryan Labs team on the swap section of the proposals, authority records show.

Brent Wilkes, the former defense contractor who's serving a jail sentence for bribing former GOP congressman Randy "Duke" Cunningham, is expected to leave prison today, reports the San Diego-area North County Times .

Says the paper:

On Monday, a federal judge signed the order allowing Wilkes to leave prison on bail while he appeals his conviction for the bribery of the ex-North County Republican lawmaker. As of this morning, however, the 54-year-old remained behind bars at Terminal Island Federal Correctional Institution in Los Angeles County.

This has been in the works for a while. Back in March, an appeals court ruled, in the words of the North County Times, "that his appeal raises such a substantial question of law or fact that it could lead the appeals court to overturn his conviction, force a new trial or order a punishment that would include no jail time."

As a result, the court ruled that Wilkes could leave jail while conducting his appeal -- as long as he could make bail.

For a while, he couldn't. Wilkes' properties depreciated in value thanks to the housing slump, which hit southern California hard. But on Monday, a judge ruled that properties' value was enough to ensure that he would show up for future hearings, and that he doesn't pose a flight risk.

His lawyer said in an email to the paper that she hopes Wilkes will be home with his family by tonight.

Wilkes is currently serving 12 years in federal prison for bribery, conspiracy, fraud, and wiretapping. Prosecutors argued he bribed Cunningham with prostitutes and lavish vacations, among other items of value.

It doesn't get harsher than that.

In a floor speech today, Arlen Specter, the ranking Republican on the Senate Judiciary committee, suggested that Eric Holder, Barack Obama's nominee for Attorney General, might follow in the footsteps of ... Alberto Gonzales!

The Washington Independent reports that Specter cited several of the attacks that we've heard from GOPers since Holder's nomination was announced -- including the Al Gore "campaign finance violations" of 1996, the Elian Gonzalez case, and the last-minute pardon of Marc Rich.

Then Specter really hit below the belt, declaring:

After our recent experience with Attorney General Gonzales, it is imperative that the Attorney General undertake and effectuate that responsibility of independence. Mr. Gonzales left office accused of politicizing the Justice Department, failing to restrain Executive overreaching, and being less than forthcoming with Congress ... I am convinced that many of Attorney General Gonzales' missteps were caused by his eagerness to please the White House. Similarly, when Mr. Holder was serving as DAG to President Clinton, some of his actions raised concerns about his ability to maintain his independence from the president.

Specter concluded:

I am prepared to give Mr. Holder a full opportunity to explain his past actions and convince the Committee and the Senate that his record warrants confirmation.

As we noted last month, Specter has already tried to throw a hitch into the Holder nomination, ultimately prevailing on Judiciary chair Pat Leahy to postpone Holder's confirmation hearings, citing the need to scrutinize Holder's record -- particularly on the Rich pardon -- more closely.

But comparing Holder to Gonzales surely goes too far.

Brian Hudson, the executive director of the Pennsylvania Housing Finance Agency was not contacted by anyone in the office of governor Ed Rendell in regard to the 2003 no-bid contract awarded by the agency to CDR Financial Products, Hudson told TPMmuckraker moments ago.

Hudson said that at that time, only two firms had the technical expertise to do the bond-swap advisory work the agency sought, and that CDR Financial was selected over a rival, Swap Advisors, simply because its appeared to "bring more to the table."

Hudson added he had been pleased with the company's work, saying that CDR had saved the PHFA $2-3 million, and that the agency had renewed its contract with the firm each year, and continues to employ it.

But he allowed that he was troubled by the allegations against CDR, and would reconsider the agency's ongoing relationship with the firm when its contract came up for renewal in March.

Hudson added that he had never heard of Alan Kessler, the Rendell fundraiser who records show, has lobbied for CDR.

As we noted earlier, Pennsylvania governor Ed Rendell has received at least $35,000 in contributions from CDR founder David Rubin. New Mexico governor Bill Richardson, who also received money from Rubin, this weekend withdrew his nomination to be Commerce Secretary citing a federal probe into the company's contracts with his state.

Earlier today we noted Pennsylvania governor Ed Rendell's ties to CDR Financial Products, the firm that derailed Bill Richardson's bid to be Commerce Secretary. Now we've found another Rendell-CDR link.

State lobbying disclosure records from 2006 show that CDR was represented by Alan Kessler of the Philadelphia law firm Wolf, Block, Schorr and Solis-Cohen. Kessler is also the chair of the USPS board of governors.

Philadelphia magazine describes Kessler as a "big fundraiser" for Rendell. And his Wolf Block bio shows he's held a string of prime patronage posts in government and Democratic politics.

From the bio:

Kessler was appointed by Governor Rendell as Finance Chair of the Pennsylvania Democratic Party.

Kessler also served, according to the site, as co-chair of Rendell's two transitions, the first after Rendell was elected mayor of Philadelphia in 1992, and the second after he was elected Pennsylvania governor in 2002.

And Kessler is said to have served as finance vice chair of the Democratic National Committee (DNC), which Rendell chaired from 1999 to 2001.

Kessler did not immediately respond to a phone call and email from TPMmuckraker requesting comment.

As we noted earlier, CDR obtained a no-bid financial contract from a state agency, the Pennsylvania Housing Finance Agency (PHFA), in 2003. And its founder David Rubin has contributed $35,000 to Rendell.

Chuck Ardo, a spokesman for Rendell told TPMmuckraker: "The governor took no action on behalf of CDR."

Ardo added that the 2003 contract was given by PHFA, and that the governor had no role in selecting CDR -- the same thing he told the Pittsburgh Tribune-Review which first reported the existence of the contract this morning.

Brian Hudson, the PHFA's executive director, told the Tribune-Review that he made the decision to select CDR, and that he wasn't contacted by anyone from the governor's office.

Hudson did not immediately respond to a phone call from TPMmuckraker.

Since Bill Richardson withdrew as Commerce Secretary nominee, citing the investigation into CDR Financial Products, there's been speculation (I know, I know, it's the Spectator) that he might not be the only prominent elected official who received political contributions from the company, and also contracted with it for government business.

And it looks like he isn't.

Recent reports have noted that Pennsylvania governor Ed Rendell received significant contributions from CDR founder David Rubin -- whose company's various run-ins with the law are beginning to attract scrutiny.

Today the Pittsburgh Tribune Review puts those contributions at $35,000. But it also reveals that CDR does indeed have a contract - a no-bid contract, to be precise -- with a state agency, which appears to be similar to the one it has with a New Mexico government agency.

The paper reports:

Gov. Ed Rendell was not aware that the Pennsylvania Housing Finance Agency awarded a $160,000 no-bid contract in 2003 to a California company headed by a member of his transition team for the state Department of Revenue, his spokesman said today.

Since then, CDR Financial Products has collected an estimated $770,000 as financial advisor to the housing agency, said Brian Hudson, the agency's executive director. Its contract is for $45,000, Hudson said.

A story (via nexis) that appeared in The Bond Buyer, a trade publication, in May of 2006 sheds a bit more light on that contract. The story reports that:

The Pennsylvania Housing Finance Agency [will issue] $150 million in single-family mortgage debt starting Wednesday to help fund home loans for residents with low to moderate incomes.

...

CDR Financial Products is the agency's swap adviser.

An earlier statement given to the paper by Rendell's office also described the governor's relationship with Rubin as "tangential". But it did not mention that, as the Tribune-Review noted, Rubin served on Rendell's 2003 transition team when Rendell was preparing to become governor. Rubin is still touting the appointment on his company's website.

As we noted yesteday, CDR was also found to have paid for the then-Treasurer of the city of Philadelphia, Corey Kemp, to attend the 2003 Super Bowl. Kemp is currently serving a jail sentence on a corruption conviction, though CDR was not charged with wrong-doing.

CDR won its contract with the city without a competitive bidding process.

Rendell was mayor of Philadelphia until 2000, though no evidence has yet emerged that the city's contract with CDR dates to his tenure as mayor.

Late update: Hudson tells TPMmuckraker he wasn't contacted by the governor's office in regard to CDR.

Yesterday we noted that, based on his testimony before Congress, SEC Inspector General David Kotz appears to be conducting an aggressive investigation of the agency's failures in connection with the Bernard Madoff case.

But on one crucial point, Kotz's tetimony was much less heartening.

Questioned by lawmakers about his authority to gain access to documents and witness testimony, Kotz admitted that he didn't have the power to subpoena former SEC employees for their testimony. (We'll post the video or the relevant portion of the transcript when it becomes available.)

Here's why that matters. Three SEC enforcement staffers -- Assistant Regional Director Doria Bachenheimer, Branch Chief Meaghan Cheung, and Staff Attorney Simona Suh -- were listed on the "closing document" for the 2006-07 inquiry into Madoff, which has emerged as exhibit A in the case against the agency. According to an SEC enforcement source, only Suh, the most junior of the three, remains at the agency. (A receptionist at the agency's New York office, where all three had been based, confirmed to TPMmuckraker that Bachenheimer and Cheung no longer worked at the SEC.)

So Kotz wont have the power to compel testimony from the two SEC staffers who were perhaps the most central on-the-ground players in the agency's failure to catch Madoff. That may well limit his ability to draw broad conclusions about the SEC's slip-up, and how to avoid similar mishaps in the future.

Buried in a Washington Post story on the incipient infighting between the Obama and Richardson camps about who's to blame for the aborted Commerce Secretary nomination, there's an interesting advance on the deeper story itself.

The Post reports:

The seriousness of the matter became apparent after the FBI began its own background check on Dec. 2.

And a little further down:

FBI agents assigned to comb his background learned independently that an inquiry was underway in New Mexico, the [Justice Department] source said.

In other words, it looks like FBI agents conducting a background check on Richardson for the Commerce job started bumping into their colleagues, who were looking into how CDR, a financial products company with a sketchy past that's donated over $100,000 to Richardson, obtained lucrative contracts advising the state finance authority on bond issues.

That suggests -- though of course, doesn't prove -- that the federal probe of CDR could be looking more directly at the governor himself.

And in that same vein, it was reported yesterday that Richardson had hired a top Albuquerque white-collar lawyer, Peter Schoenburg, in connection with the investigation.

More to come...

Interior Secretary Dirk Kempthorne spent up to $235,000 of taxpayer money on renovations to his office bathroom, the Washington Post reports. The General Services Administration approved the project because the office is in a government building and renovations to aging plumbing would have to have been made eventually. Additions included a shower, refrigerator and freezer, and monogrammed towels. (Washington Post)

The corruption trial of state Sen. Vincent Fumo of Pennsylvania continued Monday with new testimony regarding solicitations made to a phone company. The retired head of Verizon Pennsylvania alleged that Fumo had delivered a list of $50 million worth of demands during deregulation negotiations. Fumo has been indicted on 139 counts of corruption. (Associated Press)

A federal judge has renewed the case of an Islamic charity suing the government over illegal wiretaps. Al-Haramain Islamic Foundation had originally been barred from filing the case due to national security interests but says it now has enough access to evidence to prove it was potentially the target of surveillance under the Terrorist Surveillance Program. The Saudi Arabian charity is currently listed as a terrorist organization. (Associated Press)

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We noted earlier today that Madoff whistleblower Harry Markopolos over the weekend cancelled his scheduled testimony before a House committee, citing illness. Markopolos had been one of the key witnesses scheduled to appear, so his eleventh-hour withdrawal raised a few eyebrows.

We've now spoken to Markopolos' lawyer, Phil Michael, who assured TPMmuckraker that his client was incapacitated and unable to leave his home, and that Markopolos still intends to find a time to testify in the near future.

We look forward to hearing from him.

Did Madoff violate bail?

The Associated Press reports:

Prosecutors on Monday said disgraced financier Bernard Madoff violated bail conditions by mailing about $1 million worth of jewelry and other assets to relatives and should be jailed without bail.

"The defendant's recent actions amount to obstruction of justice," Assistant U.S. Attorney Marc Litt told a judge at a hearing in federal court in Manhattan.

Madoff's lawyer, Ira Sorkin, described the items as heirlooms that included cufflinks and antique watches. He said they were not significant assets. The items were sent to Madoff's children and to unidentified friends vacationing in Florida.

The prosecutor said the case against Madoff "is strong and getting stronger."

SEC Inspector General David Kotz, who is conducting an investigation into the agency's failure to detect Bernard Madoff's alleged "$50 billion ponzi scheme" despite conducting several probes of Madoff's business over the last decade, testified before Congress today.

And from the sound of his opening statement, his inquiry could be worth paying attention to.

Here, paraphrased, are a few highlights from the statement:

- Kotz has asked SEC employees to preserve relevant documents.

- He has sought information from the office of SEC chair Chris Cox, and with senior officials from the agency's compliance section, whose performance is at the heart of concerns that the SEC fell down on the job.

- He has obtained emails sent by former and current employees, both those at the Washington DC headquarters and in the New York and Boston regional offices.

- He hopes to add four new investigators to his team, and is seeking additional office space and administrative help.

- He has scheduled an on-the-record interview with Harry Markopoulos for later this month. Markopolos, who first rasied concern about Madoff's business in a lengthy complaint to the SEC, was scheduled to testify before Congress today but cancelled, citing illness.

- He'll probe conflicts of interest at SEC stemming from Madoff's and his family's relationships with SEC officials.

- He'll also look at the overall operations of the enforcement division.

- And his probe will be "independent and as hard-hitting as necessary."

More news from today's hearing to follow...

It's too soon to say where the federal investigation into CDR Financial Products -- which led to Bill Richardson's withdrawal this weekend as Barack Obama's nominee for Commerce Secretary -- might be heading.

The probe is focused on how the company -- whose founder gave at least $100,000 in political contributions to the New Mexico governor's political action committees -- won two 2004 financial consulting contracts with the state, worth about $1.4 million. No real evidence has yet emerged that Richardson himself is currently a target of the investigation, but his abrupt decision to take himself out of the running for the Commerce post -- and his refusal to say, at a press conference this afternoon, whether he had hired a lawyer in connection with the investigation -- suggest the story won't soon go away.

So it's worth noting that CDR and its founder David Rubin don't exactly have a squeaky clean record.

Even the firm's name isn't what it seems. A 2006 Bloomberg report notes:

David Rubin, whose firm, CDR Financial Products, is entangled in investigations by the Internal Revenue Service, used to call his company Chambers, Dunhill, Rubin & Co. He says he picked those names because he liked the sound of them together. Chambers and Dunhill didn't exist.

More seriously, that same story reported:

CDR, which has advised local governments on more than $17 billion of derivatives since 2003, is being investigated by the IRS for possibly profiting from deals at the expense of U.S. taxpayers. According to IRS letters obtained from the cities of Atlanta and Fargo, North Dakota, and an internal memo from the state of Wisconsin, CDR may have colluded with Bank of America Corp., Bear Stearns Cos. and other companies to make improper fees by selling municipalities unneeded contracts or mispricing investment deals.

The company's offices were searched as part of that investigation, which is ongoing, Bloomberg reports today. The probe is looking at whether banks and advisers conspired to overcharge local governments on financing deals.

The firm was also a player in a federal corruption probe focused on the administration of then-Philadelphia mayor John Street.

Bloomberg provides the details:

In April 2001, CDR hired Ron White, a bond lawyer and chief fundraiser for Philadelphia Mayor John Street, as a consultant, paying him a $5,000 retainer to help the company win business with the city. Rubin donated $15,000 to Street between December 2000 and June 2003, according to Pennsylvania state filings.

In addition, CDR gave White three tickets to the 2003 Super Bowl in San Diego and provided a limo ride to the game. White brought along Philadelphia treasurer Corey Kemp, according to a federal criminal indictment brought against White and Kemp in 2004.

On Feb. 11, 16 days after the game, Kemp told White that city Finance Director Janice Davis agreed to "move fast forward" on a $150,000 swap advisory contract for CDR, according to transcripts of FBI wiretaps.

Banks paid CDR, which wasn't accused of wrongdoing, at least $515,000 from profits they earned on transactions with the city, documents show.

CDR won its contract with the city without a competitive bidding process.

None of this, of course, means that either CDR or Richardson are guilty of any wrong-doing here. But at a minimum, we don't figure to have heard the last of this...

When the House committee that will hold hearings today on Bernard Madoff and the role of the SEC announced its witness list, one of the most interesting names was that of Harry Markopolos. The former rival investor to Bernard Madoff, who had first argued in a complaint to the SEC that Madoff's business was not on the level, was the closest thing this scandal has had to a heroic whistleblower.

But now Markopolos has pulled out, citing illness. Given the low public profile he has maintained since his role in the scandal became public, that move raised our interest.

A spokesperson for Rep. Paul Kanjorski, who chairs the sub-committee holding the hearings, told TPMmuckraker in an email, referring to Markopolos: "He has said that he looks forward to testifying at a subsequent hearing."

So perhaps we'll get to hear from him in the end. But until we do, this will bear watching.

The Wall Street Journal has a deeper look at the various government investigations into Bernard Madoff's business, stretching back over the last 16 years -- all of which failed to detect the alleged "$50 billion ponzi scheme" that Madoff is said to have been running.

Among other nuggets, the Journal reports:

The failure to stop Mr. Madoff also is an embarrassment for Mary Schapiro, the Finra chief who has been nominated by President-elect Barack Obama as the next SEC chairman. Finra [the Financial Industry Regulatory Authority, an industry-run watchdog for brokerage firms] was involved in several investigations of Mr. Madoff's firm, concluding in 2007 that it violated technical rules and failed to report certain transactions in a timely way.

Ms. Schapiro declined to comment. Mr. Cox has previously acknowledged mistakes by the SEC. The agency declined to comment.

Close SEC watchers generally have said they expect that under Schapiro, the agency will be a more vigilant watchdog than it has been under President Bush's various chairs, culminating with Chris Cox.

Still, Finra's failure, under Schapiro, to catch Madoff is another reminder that, even though the SEC's problems were in part a result of the pure free-market ideology to which the Bush administration largely subscribed, those problems likely won't immediately be solved by the change of administrations.

The process of rebuilding the Department of Justice after eight years of unprecedented politicization under President Bush continues apace.

President-elect Barack Obama today announced, in a press release, his nominees to fill four key posts under Eric Holder, his pick for Attorney General.

They are:

David Ogden for Deputy Attorney General;
Elena Kagan, Solicitor General;
Tom Perrelli, Associate Attorney General;
Dawn Johnsen, Assistant Attorney General for the Office of Legal Counsel.

Ogden was an assistant Attorney General, and served as chief of staff to Attorney General Janet Reno during the Clinton administration.

Kagan is the Dean of Harvard Law School, and served as Deputy Assistant to the President for Domestic Policy in the Clinton White House.

Perelli was, among other things, managing editor of the Harvard Law Review under Obama's editorship.

In the release, Obama made reference once again to the department's troubles under Bush, declaring:

I have the fullest confidence that they will ensure that the Department of Justice once again fulfills its highest purpose: to uphold the Constitution and protect the American people.

Full bios for all four after the jump...

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Sen. Hillary Clinton (D-NY) helped a New York developer with legislation not long before he donated to her husband's foundation, the New York Times reports. Robert Congel's donation of $100,000 to Bill Clinton's foundation came after Mrs. Clinton secured earmarks for $5 million worth of road construction serving one of Congel's projects and an allowance to use tax-free bonds for the financing of this project. (New York Times)

Sen. Majority Leader Harry Reid (D-NV) attempted to influence embattled Gov. Rod Blagojevich (D-IL) choice of Senate appointee soon before charges against Blagojevich became public. Reid tried to convince Blagojevich to not appoint Reps. Jesse Jackson Jr. and Danny Davis, as well as Emil Jones, president of the state senate - all of whom are black. Chicago Sun-Times sources say Sen. Reid found them to be insufficiently electable. (LA Times)

Senate Democrats plan to use Senate procedural rules to relegate Roland Burris, Illinois governor Rod Blagojevich's Senate choice, to the status of Senator-elect. By asking for a review of his credentials, Senate Democrats will show that Burris does not have the signature of Illinois Secretary of State Jesse White, thus barring him from being granted voting and speaking privileges. (Associated Press)

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