Those of you eager to see Blago getting his day in court may be waiting a long time.

At a hearing today, U.S. District Judge James B. Zagel said that the former Illinois governor's trial "will take six months, and likely will not begin for two years," reports CBS.

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The SEC has stepped into the corruption probe in New Mexico that saved Gov. Bill Richardson the hassle of amending years of tax returns. The new angle involves one of those enticing "toxic derivatives" deals we can't stop reading about, although there's a sexual harassment component, too.

Frank Foy used to manage the state teachers' pension fund, and in 2007 he says he got a call from a guy from a Chicago investment adviser -- and soon-to-be Richardson donor -- named Vanderbilt Capital Advisors. He told the Santa Fe Reporter he was too swamped to meet with him:

"This guy calls me up and says, 'I want to talk to you about a CDO.' I said, 'Call me back in a month. I don't have time to screw with it, dude,'" Foy recalls. "He didn't like that answer."

Soon after, Foy told the Reporter, he got a call from [Foy's Richardson-appointed boss Bruce] Malott. "He said, 'You were very rude to Pat Livney. I think he has a good investment and you ought to talk to him.'...I'd never been called by the chairman before. I thought, 'This stinks.'"

The investment was the lowest-rated slice of a collateralized debt obligation -- called the "equity tranche", presumably because like a stock its value can go all the way to zero. (Which it -- surprise! -- essentially did, after paying out about $4 million in interest payments to the fund, according to State Investment Officer Gary Bland.) Vanderbilt's CDO was the most toxic brand of the sort of "toxic" securities dragging down bank balance sheets right now; most banks, according to this handy primer on CDOs, didn't attempt to sell them to investors. But Livney, a former head trader of asset-backed securities at JP Morgan, nabbed a $90 million investment from the teachers' pension fund, despite what Foy claims were his strenuous objections. Malott, Foy says, told him the investment had been ordered by Bill Richardson's chief of staff. Shortly thereafter, a female employee accused Foy of sexually harassing her, and he was demoted.

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The Rod Blagojevich pay-to-play scandal may seem like an anachronistically simple big city machine politics scandal next to the ever-widening web of inscrutably interrelated financial scams comprising the on-going financial crisis. But in brokering deals with public coffers, at least, Blago liked "exotic" derivatives as much as the next hedge fund guy.

In January 2004, the Illinois pension obligation program was $36 billion in the hole, the most indebted state pension program in the country. So Blago decided to refinance, taking advantage of the era's superlow interest rates to float $10 billion in "exotic" new bonds in the country's biggest pension bond offering on record. Bond Buyer named it the Midwest Deal of the Year at the time -- not just for its "complex" pricing but its use of derivatives, which had just been legalized by the state legislature the year earlier. It was the start of a new trend, the trade publication noted:

Since Gov. Rod Blagojevich took office in January 2003 faced with a nearly $5 billion budget deficit, his finance team - which includes former financial advisory professional John Filan and quantitative analyst and investment banker David Abel - has turned to more sophisticated techniques to manage state finances. Supporters have called them creative, while critics have labeled them dangerous.

The deal alone netted investment banks $35 million in fees, including $8 million for the lead underwriter Bear Stearns, which in turn delivered a $809,000 consulting fee to a firm called Springfield Consultants run by lobbyist Robert Kjellander. The fee caused much furor in the Illinois statehouse when Bear Stearns disclosed it in an SEC filing, especially after initial probes launched by the state Inspector General revealed the firm could not produce any evidence that Kjellander, a prominent GOP lobbyist and friend of Karl Rove, had done anything to earn the fee.

The investigation swung into high gear when a hospital president named Pamela Davis got an unsettling phone call at her house from a Bear Stearns executive:

Back in 2003, Davis was trying to get approval for a new medical office building from the Illinois Health Facilities Planning Board. A night or two before a hearing was to be held, Davis recalled, something strange happened. A business acquaintance of hers, Nicholas Hurtgen, then a managing director of the Chicago office of Bear Stearns, called her at home and told her that unless she agreed to use a certain contractor she should pull her building request, because it wasn't going to be approved.

She ignored the warning and went off to the board hearing, where she was surprised to find that her request was denied. "I was humiliated," she said. "They were mean. So I walk off, and then a different guy comes up to me and he says, 'We told you to pull your project. Call me.' And right then I decided to call the F.B.I."

The FBI wouldn't confirm or deny Davis' story to the New Yorker, but she says she spent seven months secretly recording conversations with Hurtgen and his cronies, eventually filing a sealed federal whistleblower lawsuit alleging that Hurtgen, a former protege of former Wisconsin governor and Bush cabinet member Tommy Thompson, was part of a massive pay-to-play scheme that somehow linked the bond offering to the hospital.

The details are still unclear, but some of that $809,000 allegedly made its way back to Tony Rezko, who in turn split the bounty with three friends -- one of whom was Blago, according to last week's indictment, which refers to Kjellander as a "lobbyist" according to the Chicago Tribune:

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One of the more interesting new details in the Blagojevich indictment was the allegation that the former Illinois governor held up the state funds for a publicly supported school, in an effort to pressure an unnamed congressman who supported the school to have his brother hold a fundraiser for Blago.

Who, we wondered, was the congressman? And who was his brother?

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The indictment of Rod Blagojevich and his associates includes one RICO conspiracy count. From the DOJ's press release:

The RICO conspiracy count alleges that Blagojevich personally, the Office of the Governor of Illinois and Friends of Blagojevich were associated and, together, constituted the "Blagojevich Enterprise," whose primary purpose was to exercise and preserve power over Illinois government for the financial and political benefit of Blagojevich, both directly and through Friends of Blagojevich, and for the financial benefit of his family members and associates. Blagojevich and Kelly, the only RICO conspiracy defendants, allegedly conspired with Monk, Cellini, Harris, Robert Blagojevich, Rezko and previously convicted cooperating defendant Stuart Levine, to conduct the Blagojevich Enterprise through a pattern of multiple acts of mail and wire fraud, extortion, attempted extortion and extortion conspiracy, and state bribery.

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Here are the major new allegations contained in the indictment of Rod Blagojevich, his brother Robert Blagojevich, and four associates (from a very detailed DOJ press release (pdf)):

[B]eginning in 2002 and continuing after Blagojevich was first elected governor, Blagojevich and Monk, along with Kelly and previously convicted co-schemer Antoin "Tony" Rezko, agreed that they would use the offices of governor and chief of staff for financial gain, which would be divided among them with the understanding that the money would be distributed after Blagojevich left public office.

And:

[I]n 2003, Blagojevich, Monk, Kelly, Rezko and other co-schemers implemented this agreement by directing lucrative state business relating to the refinancing of billions of dollars in State of Illinois Pension Obligation Bonds to a company whose lobbyist agreed to provide hundreds of thousands of dollars to Rezko out of the fee the lobbyist would collect, and Rezko in turn agreed to split the money with Blagojevich, Monk and Kelly.

And:

After it became public that Kelly and Rezko were under investigation and ceased playing a significant role in raising campaign funds, Blagojevich personally continued to trade his actions as governor for personal benefits, including, for example, delaying a state grant to a publicly-supported school while trying to leverage a U.S. Congressman, who supported the school, or the Congressman's brother, to hold a campaign fundraiser for Blagojevich.

And:

[I]n an interview on March 16, 2005, Blagojevich lied to FBI agents when he said that he maintains a separation, or firewall, between politics and state business; and he does not track, or want to know, who contributes to him or how much they are contributing to him.

Chicago Breaking News Center reports:

Former Gov. Rod Blagojevich, his brother Rob and Christopher Kelly, a former top fundraiser for Blagojevich, were all indicted today on corruption charges, the U.S. attorney's office in Chicago announced.

Also charged in the indictment were Lon Monk, a lobbyist and former Blagojevich chief of staff; John Harris, also a former chief of staff to Blagojevich; and William Cellini, a Springfield insider for decades.

Will bring you more from the indictment itself...