Citigroup Spends Bailout Money Lobbying Student Lenders To Sabotage Obama Plan

Moe Tkacik | May 8, 2009, 6:17PM

If Citigroup -- recipient of $45 billion in bailout funds and constant visits with Treasury Secretary Tim Geithner, and longtime employer of former Treasury Secretary Bob Rubin -- is supposed to be the government's friend, it's quite the underminer. Today the bank emailed borrowers who took out student loans with Citigroup encouraging them to write to Congress opposing the administration's student loan proposal.

Obama has been talking about overhauling student loans since at least 2007, echoing GAO estimates that banks had been taking in $15 million a day peddling and securitizing private student loans without taking on any risk, since student loans are guaranteed by the government and cannot even be discharged in a bankruptcy. The "most controversial" aspect of his proposed legislation, according to the New York Times, would cut out the proverbial middleman so all students could borrow directly from the government. Any "controversy," of course, is likely to be fomented by the banks that make money off the arrangement -- as Citigroup's letter would seem to indicate.

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Nancy Pelosi

Record Suggests Pelosi Did Little In Response To Torture Briefing

Zachary Roth | May 8, 2009, 4:55PM

As we said before: Whatever the specifics of exactly what was and wasn't said during the September 2002 CIA briefing that Nancy Pelosi received about enhanced interrogation techniques, it seems clear that she was given enough information to conclude that we either had already conducted waterboarding and other harsh techniques, or that we very well might in the near future.

So the more important question, which seems to be getting less attention today, is what Pelosi did in response. And the short answer appears to be: very little.

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AIG

Are AIG FP Employees Using Bailout Cash To Get Jobs Elsewhere? Looks Like It, Says AIG Source

Moe Tkacik | May 8, 2009, 4:00PM

Remember the rumors that AIG Financial Products had "thrown in the towel," handing over massive portfolios of derivatives to the trading desks of major investment banks to unwind in a process that gave the beleaguered banking sector a profitable first quarter?

We first heard them back in March from the blog Zero Hedge. Then, sure enough, the banks began reporting first quarter earnings that for the most part beat expectations -- all thanks to record and near-record revenues for their trading operations.

Then the fixed income chief at the hedge fund BlackRock essentially confirmed the story to Bloomberg Radio in a wry interview we partially transcribed.

And now we've heard from an anonymous executive at AIG who is "familiar" with AIG FP...

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Nancy Pelosi

Hoekstra Spokesman: Docs Will Show Pelosi Was Briefed On Waterboarding

Zachary Roth | May 8, 2009, 3:58PM

So Nancy Pelosi has again denied that she was briefed on the fact that we had already committed waterbaording.

But now a spokesman for Pete Hoekstra, the chair of the House intelligence committee, seems to be telling Greg Sargent that as-yet-unreleased documents will prove once and for all that she was.

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Nancy Pelosi

Pelosi Points To Panetta Letter Warning Descriptions Of Briefings May Be Inaccurate

Zachary Roth | May 8, 2009, 2:31PM

Greg Sargent has noted that the cover letter sent by CIA director Leon Panetta to accompany the release of the documents on torture briefings, in which Panetta cautions that the descriptions of the briefings may be inaccurate.

And now Nancy Pelosi is pointing out the same thing.

In a blog post on the Speaker's site, she reiterates that the September 2002 briefing was the only one she received on enhanced interrogation techniques, then writes:

As reported in the press, a cover letter from CIA Director Panetta accompanying the briefings memo released this week concedes that the descriptions provided by the CIA may not be accurate.

Rod Blagojevich

The National Pay-To-Play Scams: What, No Chicago Connection?

Moe Tkacik | May 8, 2009, 1:37PM

Do the expanding pension scandals have a Chicago connection?

The pay-to-play probes currently scrutinizing controllers of public pursestrings from New York to New Mexico to Alabama have so many parallels to the sweeping Illinois investigation that turned Gov. Rod Blagojevich into a reality show candidate, we're kind of surprised they haven't overlapped more.

For one, they both revolve around questionable public pension fund investments and "swaps" contracts. In Illinois, the probe began with questions about millions of dollars in consulting and "finder's" fees collected by Republican lobbyist Bob Kjellander for directing a $500 million teacher pension fund investment to a Carlyle Group hedge fund and convincing another state pension fund to bet on an interest rate swap that generated big fees for Bear Stearns. Some of those fees, according to last month's indictment of Blagojevich, wound up in Blago's own bank account.

But back in 2004, when CDR Financial Products, one of the main consulting firms being under investigation in the scheme, tried to set up shop in Chicago, it got nowhere.

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Jay Rockefeller

Docs Show Rockefeller Was Briefed On "How The Water Board Was Used"

Zachary Roth | May 8, 2009, 12:31PM

The hot story of the morning is the release of CIA documents appearing to show that Nancy Pelosi was briefed on "enhanced interrogation techniques" in September 2002. Things have already descended into a he-said she-said debate -- literally -- over exactly what Pelosi was told, and whether the new information contradicts what she'd said in the past.

But let's set that aside for a second, because according to the documents, it was another Democratic lawmaker who received the first briefing whose summary in the newly released document specifically mentions waterboarding -- the technique that has been at the center of the controversy, especially for Pelosi lately.

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The Daily Muck

Moe Tkacik | May 8, 2009, 9:51AM

• Pelosi spokesman on her being briefed in 2002 on CIA interrogation tactics: "The briefers described these techniques, said they were legal, but said that waterboarding had not been used." But CIA documents "appear to conflict" with that line. [WSJ

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  PERMALINK | COMMENTS | RECOMMEND RECOMMEND (3)
  Topics:

Pension Players Go Back To The Lincoln Bedroom Days

Moe Tkacik | May 7, 2009, 5:06PM

Finally, a fresh face to connect some dots in the evermore mind-numbingly convoluted state pension fund scandals!

Meet Lori Schiaffino. She is a former secretary of Revlon CEO Ron Perelman who gets invited to exclusive Oscar parties and lives some of the time in the Hamptons. According to records released by state investment authorities in New Mexico, Schiaffino also works as what is called a "placement agent," who helped secure a hedge fund called Optima a $50 million investment from the New Mexico teachers' retirement fund.

Placement agents, who are paid finders fees by hedge funds and other private money managers for securing investments from public pension funds, are at the heart of the expanding pension fund scandal. In March Hank Morris, the top adviser to former New York state comptroller Alan Hevesi, was indicted for running an elaborate scheme to collect $35 million in phony placement agent fees while he acted as an effective gatekeeper of the state pension fund in conjunction with Dan Loglisci, the fund's chief investment officer. A parallel -- and intertwined -- scandal is brewing in New Mexico, where a longtime associate of Gov. Bill Richardson named Marc Correra appears to have collected $13.5 million in finders' fees over the past few years -- including a whopping $2 million we told you about yesterday for directing a $90 million in the teachers' pension money to a "toxic waste" tranche of a mortgage-backed collateralized debt obligation that lost nearly all of its value within the space of a year.

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Curt Weldon

CORRECTED: Weldon Probe Winding Down Without Charges?

Zachary Roth | May 7, 2009, 2:03PM

Could the long-running FBI corruption probe into former Pennsylvania GOP congressman Curt Weldon be winding down, without charges?

That's what the Philadephia Daily News suggests, noting the fact that the Justice Department recently sent letters to people whose conversations were intercepted as part of the investigation, including the paper's own reporter, William Bender.*

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Jay Bybee

With Impeachment Talk Swirling, Bybee Reaches Out to Nevada Lawmakers

Zachary Roth | May 7, 2009, 11:18AM

Via Think Progress:

Jay Bybee may not be responding to Pat Leahy's invitation that he testify before the Senate Judiciary committee. But that doesn't mean he isn't trying to get out his side of the story behind the scenes.

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Karl Rove

Rove Lawyer: Likely Early June For US Attorneys Testimony

Zachary Roth | May 7, 2009, 9:08AM

Karl Rove's long-awaited testimony before Congress about the US Attorney firings will likely occur around early June, according to Rove's lawyer.

Robert Luskin told TPMmuckraker that the Obama White House has been painstakingly sorting through the documents related to the firings, and is providing them to Rove and to the House Judiciary committee simultaneously. It's that process, said Luskin, that's driving the scheduling of Rove's testimony. Luskin stressed that the discussions have been cordial on all sides.

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Chris Cox

Scenes From The Ninth Circle Of Financial Bureaucracy

Moe Tkacik | May 6, 2009, 6:56PM

We've been poring over the report -- hit piece? -- on the SEC issued today by the Government Accountability Office, and we're starting to understand why Hank Paulson wanted to shut the place down and put all those "enforcers" out of their Kafkaesque misery. The agency got more tips from FINRA -- the financial industry's self-regulator -- than it had the resources to pursue, it lost 11.5% of its lawyers since 2004, and the staff lacked in-house expertise on pretty much all the fancy financial instruments without which we would not have this crisis (in addition to "government securities" which seems a bit sad, the SEC being a division of the government). The agency's revenues were in a downward spiral, with corporate penalties falling 39% in fiscal year 2006, only to fall another 48% in 2007, only to fall another 49% last year.

But as the Columbo-eseque foil for a cabal of deep-pocketed financiers with $87,000 rugs in an absurdist Office Space comedy about how the crisis happened, the SEC as depicted in the GAO report is ideal. We excerpted some of our favorite bits:

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Defense Department

Lawmaker On Withdrawn IG Report: "The American People Have Been Misled"

Zachary Roth | May 6, 2009, 5:03PM

Rep. Rosa DeLauro (D-CT) led the congressional charge against the Pentagon's use of retired military analysts to shill for the Iraq war on TV -- a program that was exposed in that Pulitzer-winning New York Times report.

Now the Pentagon Inspector General's office has withdrawn a report into the affair, which had largely exonerated the department, finding that it "did not meet accepted quality standards for an Inspector General work product." And DeLauro isn't mincing words about the news.

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Defense Department

UPDATED: Rumsfeld Ally Who Trashed Pulitzer-Winning Story Fires Back, Illogically, On Withdrawal Of IG Report

Zachary Roth | May 6, 2009, 3:33PM

The other day, two allies of Donald Rumsfeld spoke to US News, to trash the Pulitzer committee for awarding an investigative reporting prize to the New York Times' David Barstow, for his story on the Pentagon's use of retired military analysts to publicly cheerlead for the Iraq war.

"Does the Pulitzer give prizes for works of fiction? Perhaps they just got the wrong category," scoffed former Pentagon Assistant Secretary Dorrance Smith.

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Marc Correra

New Mexico: Richardson Pal Marc Correra Made $2 Million On "Toxic Waste" Teacher Pension Deal

Moe Tkacik | May 6, 2009, 2:35PM

Last week we introduced you to Marc Correra, a longtime ally of New Mexico Governor Bill Richardson, who appointed his wife Claudia Correra in 2004 to be the state's first "international protocol officer." Last month Correra's name surfaced as the most successful in a list of dozens of "placement agents" paid by hedge funds and other money managers to secure investments in the state teachers' retirement fund; he was listed as having netted at least $11.5 million in fees for channeling around a billion dollars in pension investments to various money mangers -- including a controversial $90 million investment in a near-worthless "toxic waste" tranche of a subprime mortgage-backed CDO. The CDO, Vanderbilt Financial Trust, was put together by a Chicago firm called Vanderbilt Capital Group.

At the time the state said it did not know Correra's fee for the transaction, and his attorney strenuously denied his involvement whatsoever with Vanderbilt in the Albuquerque Journal:

"That did not happen," Bregman said Friday. "Marc Correra never received a fee for that transaction. He was not involved in that transaction in any way, shape or form."

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Defense Department

Bush DOD Officials Mum On Using TV Military Analysts To Tout Admin Policies

Zachary Roth | May 6, 2009, 2:15PM

So, as the New York Times has reported, the Pentagon's Inspector General has taken the unusual step of withdrawing a report into the department's use of retired military analysts to tout Bush administration policies on network news shows.

The report, released just days before the Bushies left office in January, found that DOD didn't violate prohibitions on using public funds for propaganda, as part of a program that was exposed by David Barstow's Pulitzer-winning New York Times story.

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Chrysler bankruptcy

Chrysler Hedge Funds Denied Motion For Protection From -- Anonymous Internet Commenters?

Moe Tkacik | May 6, 2009, 12:50PM

On Monday we brought you news that the Chrysler bond-holding hedge funds courageously defending the U.S. Constitution by holding out for a bigger payout in bankruptcy court were appealing to have their names sealed after receiving death threats.

Blaming a "hostile climate" perpetuated by the Obama administration "publicity campaign," Tom Lauria, the attorney representing the group of twenty hedge fund calling themselves the "Chrysler Non-TARP Lenders," filed a motion to seal claiming the hedge funds "targeted by the president" -- presumably Oppenheimer Funds and Stairway Capital, since those were the only funds associated with the group -- had "received various threats, including dozens of death threats directed to their employees."

But today bankruptcy court Judge Arthur Gonzales denied the motion, seeing "no evidence that authorities found the threats bona fide" -- maybe because the only evidence of said threats cited in the motion was a printout from the comments section of the Washington Post website.

We've excerpted the relevant portion of the motion after the jump, so we'll leave it to you to determine the seriousness of these elusive zealots operating pseudonymously under enigmatic handles (e.g. "jerkhoff").

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Jane Harman

Report: Top Gossling Pushed To Declassify Info To "Embarrass The Democrats"

Zachary Roth | May 6, 2009, 12:20PM

The other day we took a look at the modus operandi of the team of aides around Porter Goss. The Gosslings, as they were known to their many detractors, developed a reputation, both on the House intelligence committee and at the CIA, for partisan knife-fighting and a willingness to do the bidding of the Bush White House.

In recent days, there's been speculation -- though only speculation -- that the Gosslings may have been involved in the leak to CQ about Rep. Jane Harman's wiretapped conversation with a suspected Israeli agent.

But there was one interesting story we missed in that roundup. In November 2004, Newsweek reported on the clash between top Gossling Patrick Murray, and Steve Kappes, a high-ranking CIA official, which led to Kappes's resignation. We've noted that incident before, of course, but the Newsweek story had a particularly interesting passage about the way that Murray -- who was Goss's chief of staff at CIA -- operated while he was a top Goss staffer on the committee.

Reported the magazine:

"He was just impossible," says one staffer who dealt with him. "He was sarcastic, snide and had this uncanny ability to push people's buttons." One former CIA official told NEWSWEEK that Murray leaned on him more than once to declassify information so he could use it to "embarrass the Democrats." Murray was irritated when the agency declined. He regarded much of the CIA as a nest of obstructionist bureaucrats, time-servers who had schemed to undermine the administration's policies--especially in Iraq.

Again, it's worth repeating that there's no solid evidence that Murray, or any of the other Gosslings, were behind the leak. But at the very least, the Newsweek story offers additional evidence of just what kind of political hardball the Gosslings were capable of playing.

Philip Zelikow

Zelikow: I Think Cheney Tried To Destroy My Torture Memo

Zachary Roth | May 6, 2009, 12:01PM

Mother Jones has advanced the story of an alleged bid by the Bushies to destroy a memo, written by a top state department lawyer, that offered an alternative view on the legality of torture.

Last month, as we noted, Philip Zelikow, a top lawyer for Secretary of State Condoleeza Rice, wrote that the Bush White House "attempted to collect and destroy all copies" of the memo. But he hadn't said who at the White House he suspected of being behind that effort.

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Torture

WaPo: Bushies Lobbying To Water Down Torture Report

Zachary Roth | May 5, 2009, 4:47PM

It looks like the Bushies are going all in to limit the damage from those torture memos.

The Washington Post reports that former Bush administration officials have launched a "behind-the-scenes lobbying campaign," designed to pressure DOJ to soften its forthcoming ethics report into the lawyers who approved torture.

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AIG

Ashcroft Made Millions As Corporate Monitor, Sees Dire Need For More Corporate Monitoring

Zachary Roth | May 5, 2009, 3:19PM

You can say one thing for John Ashcroft: he's not short on chutzpah.

In an op-ed in today's New York Times, the former attorney general points out a thorny problem that the Justice Department may face as a result of the financial crisis: if there's evidence that a company that has received significant amounts of bailout money committed fraud or other financial crimes, how do the Feds prosecute that company, while still protecting the health of the company on behalf of taxpayers?

The answer, according to Ashcroft: deferred prosecution agreements.

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AIPAC

Parsing Goss's Role In The Harman Story

Zachary Roth | May 5, 2009, 12:37PM

It's worth trying to clear up some of the confusion on a key point that came out of yesterday's post.

We wrote that, after reading the transcript of Jane Harman's wiretapped conversation with the suspected Israeli agent, then-CIA director Porter Goss signed off on the Justice Department's application for a FISA warrant to wiretap Harman herself.

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Allen Stanford

Viva Las Vegas: Stanford Spent A Quarter Million At The Bellagio -- After Asset Freeze, Say Feds

Zachary Roth | May 5, 2009, 11:09AM

It looks like Allen Stanford just couldn't quit his high-living ways -- even when the chips, so to speak, were down.

The Financial Times has a great find in the court filings made by the SEC in Stanford's case:

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AIG

AIG Subsidiary Explains "Timely" Decision To Pretend It Was Never Called "AIG"

Moe Tkacik | May 4, 2009, 6:38PM

"We are pleased to announce our decision to rebrand to a familiar name -- VALIC," begins a brochure titled, "Back to our roots" that was recently distributed to holders of policies with the Variable Life Insurance Company. Um, and guess what slightly more familiar name VALIC has decided to cast off? Yes, that would be everyone's favorite federally-funded money vortex the American International Group.

Possibly, and this is entirely idle speculation on our parts but, the fancy public relations firms the zombie insurer retained are known for running focus groups. Perhaps the feedback concluded that somehow the AIG name was a turnoff to people looking for a place to store their remaining life savings?

"We believe this decision is timely," the brochure goes on, adding that with its return to its more venerable brand it restores a name "that has represented more than a half a century of helping people plan for and enjoy a secure retirement"* and also sounds vaguely like the pickle brand, possibly to convey a sense of "preservation."

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AIPAC

Secrecy Expert: Harman Leakers Likely Committed Felony

Zachary Roth | May 4, 2009, 6:08PM

Did the people -- whoever they may be -- who leaked details about Rep. Jane Harman's wiretapped conversation with a suspected Israeli agent, break the law?

The law quite clearly prohibits the unauthorized disclosure of classified information "concerning the communication intelligence activities of the United States or any foreign government." And Steven Aftergood, the director of the Project on Government Secrecy, confirmed to TPMmuckraker: "It seems crystal clear that if this was a FISA wiretap," as appears to be the case, "then whoever disclosed it committed a felony."

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Thomas Luria

Chrysler Creditor Hedge Funds Take Courageous Stand Upholding Consititution, Beg Judge For Anonymity

Moe Tkacik | May 4, 2009, 4:52PM

Last week a group of hedge funds that had invested in Chrysler bonds "came out with guns blazing", in hedge fund terms anyway, against the administration's 33 cent on-the-dollar settlement offer, forcing the automaker into bankruptcy in spite of the president's stern verbal appeals for everyone involved to make a "sacrifice." But most observers agreed the holdouts were not likely to get much higher than 30 cents in any bankruptcy court, and some of them undoubtedly would have made a profit under the terms of the Obama deal, as this Bloomberg story points out: in March, after all, Chrysler bonds traded as low as 13 cents.

But the crusade was about so much more than money, the holdouts insisted. By Friday they had organized into a group they dubbed the "non-TARP lenders" -- to differentiate themselves from Chrysler's biggest creditors, four big banks which had, like all big banks, received TARP funding. One hedge fund manager, Geoffrey Gwin -- who officially joined the holdouts Friday -- even allowed a Wall Street Journal reporter to bear witness to the "turmoil" plaguing him as he wrestled with his own decision on the matter.* And a preliminary objection filed today in the bankruptcy court on behalf of the group calls the administration's bankruptcy proposals "patently illegal" and "not proposed in good faith" in a "tainted sales process" that is "unconstitutional."

So why are so few of the holdouts willing to go on the record upholding the Constitution on this weighty matter? Today in court the non-TARP lenders' chief counsel Tom Lauria, pleaded with the court to keep his clients' firm names sealed, according to the Detroit Free-Press.:

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Hillary Clinton

Congress Seeking Zelikow's "Alternative" Torture Memo

Zachary Roth | May 4, 2009, 2:01PM

Congress has asked Secretary of State Hillary Clinton for a 2005 memo written by a top State Department lawyer, which is said to have taken an alternative view on the legality of torture to that famously offered by DOJ lawyers.

In a letter to Clinton, Reps John Conyers and Howard Berman, who chair, respectively, the Judiciary and Foreign Affairs committees wrote that the memo "may shed important light on the process by which these interrogation practices were evaluated, approved, ad implemented by the former Administration." Reps Jerry Nadler and Bill Delahunt, who chair subcommittees of Judiciary and Foreign Affairs, respectively, also signed on.

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AIPAC

Harman To AIPAC: I'm A "Warrior On Behalf Of Our Constitution"

Zachary Roth | May 4, 2009, 9:20AM

Jane Harman isn't backing off her call to have information about her wiretapped conversation with a suspected Israeli agent released publicly.

In fact, in a speech to AIPAC's annual policy convention, Harman doubled down on that demand. "I want it all out there. I want it in public. I want everyone to understand, including me, what has happened," she said, according to the Washington Post.

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