As outrage swells around massive bonuses paid to executives of bailed out financial institutions, Rep. Edolphus Towns (D-NY) wrote a letter Tuesday to Bank of America CEO Ken Lewis requesting more transparency on $3.62 billion in bonuses paid to Merrill Lynch executives. Reviewing the record on these bonuses, the House Committee on Oversight and Government Reform will investigate whether Merrill intentionally deceived regulators. Merrill, which has been owned by B of A since January, claimed in a letter on November 24 that it had not made decisions on bonuses. But subsequent testimony given to New York Attorney General Andrew Cuomo shows that Merrill approved bonuses on November 11. (Reuters)
Felipe E. Sixto, a former aide to President George W. Bush, will be sentenced today for embezzling $579,247 from Center for a Free Cuba, a government-funded nonprofit organization.
Sixto used the money to repay student loans, purchase expensive items like a car and a piano and “live a lifestyle that was beyond his means,” the government said. The scheme was carried out when Sixto served as chief of staff for CFC and continued when he started working for President Bush in 2007 as an aide on Cuba policy. (National Journal)
The CIA has hired former Republican senator Warren Rudman to advise the agency through the upcoming congressional investigation of its interrogation program. CIA Director Leon Panetta chose Rudman because he is a respected former lawmaker who can help the agency navigate Congress’ critique of interrogation tactics, which some CIA officials have claimed are necessary to prevent future attacks. Panetta, a former Democratic congressman and chief of staff to President Bill Clinton, has long been a critic of harsh interrogation techniques, but said when he was appointed CIA director that he would not support prosecution of CIA employees who were simply following orders. (LA Times)
Former New Mexico state senator Manny Aragon was sentenced Tuesday to five and a half years in prison for defrauding his state of $4 million. Aragon, who served 29 years in the New Mexico Senate as a Democrat, personally stole $650,000 by falsifying invoices connected to the construction of an Albuquerque courthouse. In addition to Aragon, seven others pleaded guilty in connection with the scheme. (Associated Press)
I.R.S. commissioner Douglas H. Shulman told the Senate Finance Committee Tuesday that victims of 2008 Ponzi schemes could seek tax deductions on the majority of their losses. Under the new tax rules, investors can claim a deduction of up to 95 percent of their investments minus any withdrawals or reinvested gains that occurred after the original investment. But the investors must specify that they lost their money in 2008 in connection to one of the year’s many Ponzi schemes, most notably Bernard Madoff’s multi-billion dollar fraud. (New York Times)
Banking regulators knew about weaknesses in financial institutions but failed to act until it was too late, according to a GAO report that will be presented to the Senate Banking Subcommittee on Securities today. In a conclusion that will shock no one, the report finds that the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the SEC all fell short in overseeing risk management at large financial institutions. (Wall Street Journal)