Justice delayed?

The House Judiciary committee has agreed to a request from Karl Rove's lawyer, Robert Luskin, to postpone the deadline by which Rove must respond to a subpoena issued by the committee.

Here's the letter sent by the committee, agreeing to Luskin's request and setting a new date of February 23 for Rove's testimony.

The hold-off serves the interests of the White House. The Obama administration is scheduled to file a brief on February 18 in the ongoing court case over the House's subpoena of two other senior Bush White House aides, Harriet Miers and Josh Bolten. At that time, it will likely indicate whether it intends to back President Bush's claim of retroactive executive privilege on behalf of his aides. So the committee's decision to agree to Luskin's request means the Obama administration has until then to formulate its position.

The ball, then, is still in Obama's court. And court is still exactly where the battle over Rove's testimony is most likely headed.

So does that letter Newsweek obtained, sent January 16 by the Bush White House to Karl Rove's lawyer, instructing Rove not to respond to any subpoenas that might be issued, change the state of play as to whether Rove will end up testifying on the US Attorneys firings? After all, President Bush is now on the record claiming the right to assert executive privilege even after leaving office.

Not according to Neil Eggleston, who specialized in executive privilege issues for President Clinton's White House. Eggleston told TPMmuckraker that, since President Obama has already issued an executive order that appears to take the view that a former president can't assert executive privilege, he's unlikely to back Bush's claim. And assuming things then wind up in court, Eggleston said he'd be very surprised if a court sided with Bush, ruling that executive privilege can be asserted retroactively.

"Remember what Obama kept saying during the transition: 'There's only one president at a time?'" asked Eggleston. "This is one where I think a court's going to decide there's only one president at a time."

Eggleston told TPMmuckraker last week that Obama's order seemed designed to help gain access to Bush White House documents and testimony that Congress has been seeking, including on the US Attorney firings matter.

Bloomberg has a few more details about the developing investigation, conducted by New York Attorney General Andrew Cuomo, into the bonuses awarded last month by Merrill Lynch.

It reports, sourced to "a person familiar with the matter," that Cuomo may demand the return of the bonuses -- estimated at as much as $4 billion, and apparently awarded on an accelerated schedule just before the firm came under the control of Bank of America at the start of 2009.

Bloomberg adds that Cuomo is also probing what Bank of America Chief Executive Officer Ken Lewis knew about the bonuses, and about Merrill's huge losses in the fourth quarter, which appear to have ben revealed B of A around the time the bonuses were awarded.

More broadly, Bloomberg reports, the investigation is focused on "whether the companies' shareholders had all necessary information about Merrill's finances and whether federal bail-out loans to Bank of America were used properly."

John Thain, Merrill's former CEO, was ousted as a Bank of America exec shortly after news of the bonuses, and the losses, became public. According to reports, Cuomo has already subponaed Thain.

President Obama yesterday called Wall Street's awarding of billions of dollars in bonuses "outrageous." Congress is considering adding "claw back" provisions to the next round of bailout money, which would allow the Treasury to get back money it invested in banks that was then spent in ways that departed from the purpose of the government's investment.

We've got our own contact in to Cuomo's office, and will let you know what else we find out...

Late Update: Looks like Bloomberg's report may have overstated the case a bit.

Newsweek's Michael Isikoff has obtained the letter sent by White House counsel Fred Fielding to Karl Rove's lawyer Robert Luskin, just a few days before Bush left office, instructing Luskin that Rove "should not appear before Congress" in response to any subpoenas issued. The letter makes clear that Bush is continuing to assert a retrospective executive privilege over his White House years.

The Wall Street Journal had reported the existence of the letter -- which makes clear the lengths to wish the former president is wiling to go to keep a lid on what happened inside his White House -- earlier this week.

Earlier this week, the House Judiciary Committee issued a subpoena to Rove, ordering him to testify February 2 about the US Attorney firings, and the prosecution of ex Alabama governor Don Siegelman. Luskin told us he had forwarded the subpoena to the Obama White House, which must decide whether to back Bush's claim of retroactive privilege. If it doesn't, but Bush continues to assert it -- which it would appear from the letter he will -- the matter looks headed for the courts. There is no settled legal precedent to guide how a court might rule.

The Obama White House told Newsweek it's still studying the issue.

Fielding also sent a near identical letter to former White House counsel Harriet Miers, instructing her not to appear for a scheduled deposition in front of the Judiciary committee. The issue of whether Miers and another Bush White House aide, Josh Bolten, can testify is currently the subject of a court fight between the committee and the Bush White House.

The Obama White House is scheduled to file a brief in that case by February 18, in which it may make clear whether or not it intends to back Bush's executive privilege claim.

Last week, in one of its first moves, the Obama administration told its military prosecutors to ask for delays in the proceedings of 21 Guantanamo detainees who have been charged, so that their cases, and the military commissions process as a whole, could be reviewed.

Most military judges have complied with that request. But one judge, Army Colonel James Pohl, has now declined to do so, saying he found the government's reasoning "unpersuasive," reports the Washington Post.

Pohl wrote:

The Commission is unaware of how conducting an arraignment would preclude any option by the administration. Congress passed the military commissions act, which remains in effect. The Commission is bound by the law as it currently exists, not as it may change in the future.

Pohl is presiding over the case of Abd al Rahim al-Nashiri, a Saudi citizen of Yemeni descent accused of planning the October 2000 Al Qaeda attack on the USS Cole warship, which killed 17 service members.

The Pentagon may now be forced to withdraw the charges against Nashiri if it wants to impose the broader delay. It could bring them up again, but that would bring the case back to square one, costing the government time.

But the wider impact of Pohl's opinion isn't yet clear. It may be limited to this specific case, but it could also potentially throw a wrench into the new administration's plan to put the process on hold pending a review, and even complicate Obama's plan to close Guantanamo.

We'll keep you posted as things become clearer.

Late Update: The ACLU has called on Defense Secretary Robert Gates to withdraw the charges against Nashiri so that the charges can be tried in a legitimate court. In a statement, the group's executive director, Anthony Romero, said:

Judge Pohl's decision to unabashedly move forward in the al-Nashiri military commission case shows how officials held over from the Bush administration are exploiting ambiguities in President Obama's executive order as a strategy to undercut the president's unequivocal promise to shut down Guantánamo and end the military commissions. Judge Pohl's decision to move forward despite a clear statement from the president also raises questions about Secretary of Defense Gates - is he the 'new Gates' or is he the same old Gates under a new president? Secretary Gates has the power to stop the military commissions and ought to follow his new boss' directives.

Later Update: But the commander of the USS Cole, Kirk Lippold, who is now affiliated with Military Families United, a group that bills itself as a "the nation's premier military family advocacy organization", takes the opposite view. Lippold said in a statement:

Today's decision is a victory for the 17 families of the sailors who lost their lives on the USS Cole over eight years ago. This trial is a long overdue step toward accountability and justice for the attacks on the USS Cole. The seventeen American sailors who lost their lives on October 12, 2000, when we came under suicide terrorist attack by al Qaeda, were not just sailors. They were sons and daughters, husbands and wives, and friends to so many. The sacrifice of these sailors and all of our brave military service members who have died to protect this country and apprehend terrorists is a key reason why we should not close the detention facility at Guantanamo Bay precipitously.

By President Obama signing the executive order to close Guantanamo Bay within a year, he is not considering or addressing the impact on the families who have paid so dearly to defend our freedom.

President Obama has weighed in on the controversy over Wall Street bonuses.

Obama this morning called the bonuses "outrageous", according to White House Robert Gibbs, speaking at a press briefing moments ago.

A report released by the New York State comptroller's office and written up today by the New York Times found that Wall Street firms awarded over $18 billion in bonuses, despite the financial crisis that many of them helped trigger.

Yestrday, it was reported that AIG paid $450 million in bonuses to the unit that sold those disastrous credit default swaps.

And of course, New York Attorney General Andrew Cuomo is investigating Merrill Lynch's awarding of billions in bonuses, on an accelerated schedule, before it went formally went under the control of Bank of America.

Late Update: Obama went further in comments to reporters today after meeting with Treasury Secretary Tim Geithner. The presIdent said that awarding billions in bonuses "at a time when most of these institutions are teetering on the brink of collapse and they are asking for taxpayers to sustain them" is "the height of irresponsibility" and "shameful."

He added: "Show some restraint, and show some discipline, and show some sense of responsibility."

Those directives issued by President Obama last week, reversing the Bush administration's policy of secrecy, have really shaken things up.

Earlier this week, the House Judiciary committee subponaed Karl Rove for testimony in the US Attorney firings matter. That move appears to have been in response to the Obama's moves, since Rove had long been claiming executive privilege backed by President Bush.

Now, McClatchy reports, the ACLU has asked the new administration to release Bush Justice Department memos justifying harsh interrogation methods, eavesdropping, and secret prisons.

The Bush administration had long refused to release them, citing national security concerns, among other things.

It's clear that Obama's moves -- specifically, his rescinding of a Bush DOJ memo that gave backing to agencies when they refused to disclose material, and his issuing of an executive order urging agencies to take a broader view of the Freedom of Information Act -- triggered the request.

"The president has made a very visible and clear commitment to transparency. We're eager to see that put into practice," an ACLU staffer told McClatchy.

Pro Publica has a rundown of the missing memos.

As McClatchy notes, Obama's nominee to head the Office of Legal Counsel, Dawn Johnsen, has written articles suggesting she thinks that in general, such memos should be released.

So this could be another set of crucial Bush records that will finally see the light of day.

White House Press Secretary Robert Gibbs was just asked at a briefing about Congress's subpoena, issued yesterday to Karl Rove, seeking his testimony on the US Attorneys firings.

Gibbs replied that the White House counsel's office "is studying those issues and will advise us when they have a recommendation."

As we reported earlier, the ball is now largely in President Obama's court as to whether Rove can continue to defy Congress's subpoena.

We'll keep you posted.

On the question of whether we'll get to the bottom of the Bush White House's role in the US Attorney firings, it's starting to look more and more like the ball is squarely in President Obama's court.

Yesterday, as we noted, House Judiciary chair John Conyers issued a subpoena to Karl Rove, ordering him to testify about the affair February 2nd and declaring ominously: "It's time for him to talk."

(Rove, making a claim to executive privilege backed by President Bush, had defied a subpoena issued by the last Congress. That Congress ended before the full House could vote on contempt charges against Rove.)

And just now, Rove's lawyer, Robert Luskin, told TPMmuckraker that he had already forwarded Conyers' subpoena to the Obama White House, asking them to give an opinion as to whether President Bush retains his ability to assert executive privilege.

In other words, the Obama White House will decide, essentially, whether to back Rove's claim of privilege, or to deny it. (And given that Rove is supposed to appear February 2, that decision from the White House should come soon.) In the latter case, said Luskin, a negotiation would ensue between the Obama White House, President Bush, and Rove. That would likely result in the matter going to court.

That's not the only strand of the effort to uncover information about the firings on which Obama will likely have a major say. Conyers is also seeking testimony on the matter from former White House officials Harriet Miers and Josh Bolten, who, like Rove, are relying on Bush to claim executive privilege. That case is in court, and the Obama White House is scheduled to file an appeal brief February 18th. That brief may make clear whether it backs the privilege claim for Miers and Bolten, and could help determine the case.

Obama's executive order on presidential records, issued last week, suggests that his White House believes that former presidents do not retain their right to assert executive privilege. But that doesn't mean it's a sure thing that Obama won't uphold Rove's claim, and/or Miers and Bolten's. Either way, we should soon find out.

Already, a consensus of experts has formed to tell TPMmuckraker and others that President Obama's executive order on presidential records, issued Wednesday, could impact efforts to pry loose key documents from the Bush White House.

And the man who served as President Clinton's lead attorney for executive privilege issues yesterday went further, suggesting that that was exactly Obama's goal.

Neil Eggleston, a White House counsel under Clinton, told TPMmuckraker that in his view, the Obama White House issued the order with specific ongoing cases in mind -- that is, with the goal of bolstering those efforts to obtain Bush's records.

Congress and good-government groups are currently fighting to get access to key Bush White House documents that might shed light on a range of subjects, from the level of White House involvement in the US Attorney firings, to the Valerie Plame leak probe, to the decision to invade Iraq. "This is absolutely about all those issues," said Eggleston.

At its heart, said Eggleston, Obama's order is about "who gets to assert executive privilege." It says that former presidents can claim such privilege, but they have no automatic ability to prevent the release of their records if the current administration deems it to be in the national interest. That echoes the view of other experts who have examined the order, including the conservative legal scholar Doug Kmiec, who spoke to TPMmuckraker yesterday.

In a sense, said Eggleston, it's a directive to the National Archivist. "It says: 'Archivist -- if Bush calls up and says don't release certain papers, don't listen to what he says, listen to what I say.'"

Eggleston, now a partner at Debevoise and Plimpton's Washington office, cautioned that if a decision were made to release certain Bush records, and the former president chose to go to court to stop it, it's not absolutely certain that he would lose -- since no executive order can alter the constitution's executive privilege guarantee. But he said that the order would at the very least be likely to sway a court towards openness.

So if we do eventually learn the full story of the Bushies' involvement in the US Attorney firings, and get access to information about their record on a range of other issues, it looks like we may have the new president to thank.

President Obama moments ago signed an executive order closing the Guantanamo detention facility within a year.

The move makes good on a key Obama campaign promise.

Obama also signed two other orders, reviewing military trials of terror suspects, and banning the harshest interrogation methods.

After signing, Obama said:

The message we are sending around the world is that the US intends to prosecute the ongoing struggle against violence and terrorism and we are going to do so vigilantly, we are going to do so effectively, and we are going to do so in a manner that is consistent with our values and our ideals ... We intend to win this fight, and we intend to win it on our terms.

Here's the video:

The order to close Guantanamo can be found here.

The order to review detention policies can be found here.

The order revising interrogation policies can be found here.

And the order for a review of al Marri's detention can be found here.

Over at TPM, Josh and David have been mulling the significance of the executive order, issued today by President Obama, concerning the Presidential Records Act. Could it apply retroactively to previous administrations, making it easier to pry loose records that the Bush White House has fought to keep secret?

According to Anne Weismann, a lawyer for Citizens for Responsibility and Ethics in Washington, the tentative answer is yes.

As David notes, the order says:

Going forward, anytime the American people want to know something that I or a former President wants to withhold, we will have to consult with the Attorney General and the White House Counsel, whose business it is to ensure compliance with the rule of law.

As a result, Weismann told TPMmuckraker, the order could affect any case in which the White House has claimed executive privilege over presidential (or, to be clear, vice presidential) records. Most important, it would subject those claims to review by the Justice Department. "It does have the potential to impact ongoing litigation," she said.

Weismann specifically cited the ongoing legal fight between the House Judiciary committee and the Bush White House, over documents relating to the US Attorney firings. Among other documents, Congress has been seeking a key memo written by a White House counsel, which might shed light on White House involvement in the firings.

Weismann told TPMmuckraker that that the order likely would not affect a lawsuit she had been working on, on behalf of CREW, which sought to compel Dick Cheney's office to hand over all his records to the National Archives. On Monday a judge declined to order Cheney to do so. Weismann said that case turned on an interpretation of the Presidential Records Act itself, rather than on a claim of executive privilege.

Still, it certainly seems possible that on his first full day in office, the new president has dealt significant a blow to the Bush administration's efforts to permanently keep information from the public. But a lot more questions than answers remain, and we've got calls out to some experts in executive privilege who might be able to shed further light on what Obama's order does and doesn't do.

Looks like Barack Obama's word is worth quite a lot just now. About $350 billion, in fact.

To explain:

Congress has been talking tough lately, for good reason, about the need to impose strict conditions on the second $350 billion for the bailout -- lest it meet the same fate as the first $350 billion, which, at least for now, appears not to have eased lending or stabilized the housing market.

But yesterday, the Senate went ahead and voted not to block the incoming administration from getting the money -- despite the fact that there are no strings attached. Congress could still add restrictions, of course, but, as we've reported in depth over at Election Central, leaders in both the House and Senate have suggested that they won't. Instead, they're apparently willing to accept the Obama team's voluntary assurances that they'll do things differently from the Bush crew.

As for those voluntary assurances, they're not nothing. As laid out in a letter to Congressional leaders by Larry Summers, who'll run Obama's White House Economic Council, they read as a pointed indictment of the current administration, which failed to do any of them.

For instance, Summers pledged:

The Treasury will require detailed and timely information from recipients of government investments on their lending patterns broken down by category.

and:

Executive compensation above a specified threshold amount [will] be paid in restricted stock or similar form that cannot be liquidated or sold until the government has been repaid.

and:

Prevent shareholders from being unduly rewarded at taxpayer expense. Payment of dividends by firms receiving support must be approved by their primary federal regulator. For firms receiving exceptional assistance, quarterly dividend payments will be restricted to $0.01 until the government has been repaid.

and:

Preclude use of government funds to purchase healthy firms rather than to boost lending.

Limit assistance under the EESA to financial institutions eligible under that Act. Firms in the auto industry, which were provided assistance under the EESA, will only receive additional assistance in the context of a comprehensive restructuring designed to achieve long-term viability.

And perhaps most important:

Implement a sweeping foreclosure mitigation plan for responsible families including helping to reduce mortgage payment for economically stressed but responsible homeowners, reforming our bankruptcy laws, and strengthening existing housing initiatives like Hope for Homeowners.

Those all sound like crucial ideas. But it'd be nice if we didn't have to take anyone's -- even Obama's -- word for it.

Ok, so that headline wasn't really on point. But now that you're reading...

In his questioning of Eric Holder this morning, Sen. Chuck Schumer really doubled down on the theme of politicization at DOJ under Alberto Gonzales -- a theme that, as we noted, has served as the constant backdrop to the hearings so far.

Schumer declared that "the likes of Alberto Gonzales and Bradley Schlozman sullied and demoralized a great legal institution, probably the finest civil service institution in the country, that they really dragged through the mud.

As for GOP efforts to suggest Holder could act similarly, Schumer called the comparisons "ludicrous," then initiated the following clever and enlightening exchange to demonstrate Holder's comparative independence:

Schumer: As I look at your background and your record, it's clear that you are less connected and less beholden to the new president than most attorneys general in the last fifty years. Let's review for the moment. I have a few quick questions for you.

Have you ever been President-Elect Obama's personal lawyer, like William French Smith had been for years for Ronald Reagan?

Holder: No, I have not.

Schumer: Have you ever been a staffer for Barack Obama, like Ed Meese had been for Reagan?

Holder: No, I have not, senator.

Schumer: Have you ever served as official counsel to Barack Obama, like Alberto Gonzales had for George Bush?

Holder: No, I have not, senator.

Schumer: And has Barack Obama ever dispatched you to the hospital room of a sick government official, to get him to authorize an illegal wiretap program?

Holder: No, he has not.

Schumer: Yeah I didn't think so. Alright, and I take it you're not a close relation to the new president, like Bobby Kennedy was to Jack Kennedy?

Holder: No, we're not related by blood though people to say we look alike.

Schumer: I don't think so. Although you're both very handsome.

Holder: I'd heard he's handsome and was going to try to draft on that.

Schumer: OK, let me ask you this, have you ever been a professional politician like John Ashcroft or Dick Thornburgh?

Holder: No, I've never run for office.

Here's the video of the exchange:

When Mary Schapiro was announced as Obama's pick for SEC chair, she was warmly received, in general, as someone likely to restore the agency's regulatory teeth after the free-market ideologues who ran the place under Bush.

But it looks Schapiro's confirmation hearings, set to begin this week, may not go perfectly smoothly all the same.

Schapiro heads the Financial Industry Regulatory Authority, the non-governmental body that supervises oversees U.S. brokerages. And as we noted last week, Finra, under Schapiro, failed to catch Bernard Madoff's alleged "$50 billion ponzi scheme". Indeed, it conducted an inquiry into Madoff's operation that concluded, in 2007, that he had violated certain technical rules and had failed to promptly report some transactions, but identified no more serious wrong-doing -- a very similar story to the SEC's.

Still, it's also worth pointing out that Finra's investigation into Madoff was focused on his brokerage operation, which, according to a Finra spokeswoman, is all that it is legal empowered to look into. Madoff's business was split into brokerage and investment-advisory arms -- but the alleged fraud, investigators believe, was centered on the investment-advisory arm. So Finra would appear to bear less responsibility than SEC for missing Madoff.

But that's not the only potential confirmation headache for Schapiro. She was accused in two recent lawsuits of making misleading statements in an effort to build support for the creation of Finra, which was created two years ago by merging the regulatory units of the NYSE and the Nasdaq. Schapiro headed the Nasdaq regulator at the time, and became the head of Finra, seeing her yearly salary rise from $2 million to $3.1 million.

The New York Times explains the details:

Among the misstatements that she is accused of making is that the Internal Revenue Service had prohibited the NASD from paying each member more than $35,000 as part of the merger deal. Although an NASD proxy statement issued while the deal was pending said that the I.R.S. would not permit the organization to give more compensation to members, the I.R.S. did not actually issue a ruling on the matter until March 2007, long after the deal closed and three months after the members voted to approve it.

The first lawsuit was rejected by a Federal judge but is on appeal. The second suit, which is similar and was brought by a former SEC lawyer, appears to have been filed soon after Schapiro was nominated to head the SEC, though lawyers for the plaintiffs say it was in the works before then.

Looks like those hearings could be more lively than we thought. We'll be watching closely later this week...

It looks like an ambitious new effort to set up an investigation of President Bush and his top aides for potential crimes committed on their watch may have a had time getting traction.

As we reported last week over at Election Central, House Judiciary chair John Conyers recently introduced a measure to create a "National Commission on Presidential War Powers and Civil Liberties." The commission, whose members would be appointed by the resident and congress, would be designed to probe the legality of Bush administration policies on issues like torture, treatment of detainees, and extraordinary rendition.

But the president-elect appears lukewarm to the idea. Asked yesterday on "This Week With George Stephanopoulos" about the idea of a broad inquiry into those Bush administration programs, Obama said: "We need to look forward as opposed to looking backwards."

He added:

Part of my job is to make sure that, for example, at the C.I.A., you've got extraordinarily talented people who are working very hard to keep Americans safe. I don't want them to suddenly feel like they've got spend their all their time looking over their shoulders.

Here's the video:

So it doesn't exatly sound like Obama would be eager to sign Conyers' bill.

And the top two House Democrats, Nancy Pelosi and Steny Hoyer, weren't jumping to express their support for the bill when Election Central called their offices about it last week.

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."

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...

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...

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...

Read more »