Hmm. You know, Alex, I think I'll go with Door No. 2: The Fed knew it was buying weak assets and tried to hide it! Now, what do I win?

Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They didn’t share everything the Fed knew about the money.

The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified. The government also became the owner of $16 billion of credit-default swaps, and taxpayers wound up guaranteeing high-yield, high-risk junk bonds.

By using its balance sheet to protect an investment bank against failure, the Fed took on the most credit risk in its 96-year history and increased the chance that Americans would be on the hook for billions of dollars as the central bank began insuring Wall Street firms against collapse. The Fed’s secrecy spurred legislation that will require government audits of the Fed bailouts and force the central bank to reveal recipients of emergency credit.

“Either the Fed did not understand the distressed state of some of the assets that it was purchasing from banks and is only now discovering their true value, or it understood that it was buying weak assets and attempted to obscure that fact,” Senator Sherrod Brown, an Ohio Democrat and member of the Senate Banking Committee, said in an e-mail when informed about the credit quality of holdings in the Maiden Lane LLC portfolio. The committee held the April 3 hearing.

It wasn't even close.

I'd suggest that anyone who hasn't done it yet should find a small bank and move their accounts. Clearly, the people we elected aren't going to do anything about these monster banks:

A move to break up major Wall Street banks failed Thursday night by a vote of 61 to 33.

Three Republicans, Richard Shelby of Alabama, Tom Coburn of Oklahoma and John Ensign of Nevada, voted with 30 Democrats, including Senate Majority Leader Harry Reid of Nevada, in support of the provision. The author of the pending overall financial reform bill in the Senate, Banking Committee Chairman Christopher Dodd, voted against it. (See the full roll call.)

The amendment, sponsored by Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.), would have required megabanks to be broken down in size and capped so that their individual failure would not bring down the entire system.

Under Brown-Kaufman, no bank could hold more than 10 percent of the total amount of insured deposits, and a limit would have been placed on liabilities of a single bank to two percent of GDP.

In practice, the amendment required the six biggest banks -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley -- to significantly scale down their size. It was touted as a way to end Too Big To Fail.

Though top Obama administration officials have not publicly opposed the amendment, its leading economists have opposed ending Too Big To Fail simply by breaking up the nation's financial behemoths. Austan Goolsbee and Larry Summers have both fought back against this idea, as has Treasury Secretary Timothy Geithner.

"This is certainly a defeat for those who are concerned about the dangers of financial concentration in this country," Kaufman said in a statement after the vote. "Some causes are worth fighting for, and for me, the concern about the risks 'too big to fail' banks pose to the American economy and people is deep and profound given the economic tragedy millions of American have endured. I believe the debate itself -- though failing to gain a majority of votes -- has helped to change attitudes about the degree of financial concentration and power these megabanks now represent."

This is great news. A new CBS/NY Times poll (click here for the document) shows Sherrod Brown way ahead. The GOP is pulling out their cash on DeWine which seems to be a very cool concession speech.

Download | play -WMP Download | play -QT

The poll shows that:

Ohio Democrats are particularly energized about voting in general this year. 58% of them say they are more enthusiastic than usual,
compared to just 32% of Republican voters. That trend is also evident nationally, although the gap between the two parties is much smaller; nationally, 50% of Democrats are enthusiastic, compared to 35% of Republicans.

UPDATE: Four Five Six Fourteen more senators have signed on. Did you call yours?

I already called Arlen Specter's and Bob Casey's offices to see if they're going to sign on. Call your senators now and let them know you want them to support this last-minute push for the public option. If you don't get them tonight, call again tomorrow morning:

Four senators have signed a letter urging Senate Majority Leader Harry Reid (D-Nev.) to pass a public option for insurance coverage through the use of reconciliation.

The list of signatories includes both usual and somewhat unusual suspects, from the progressive wing of the party -- Sens. Jeff Merkley (D-Ore.), and Sherrod Brown (D-Ohio) -- to less ideological lawmakers who find themselves in primary election contests -- Sens. Michael Bennet (D-Col.) and Kirsten Gillibrand (D-N.Y.).

"Dear Leader Reid," the letter says:

We respectfully ask that you bring for a vote before the full Senate a public health insurance option under budget reconciliation rules.

There are four fundamental reasons why we support this approach - its potential for billions of dollars in cost savings; the growing need to increase competition and lower costs for the consumer; the history of using reconciliation for significant pieces of health care legislation; and the continued public support for a public option.

The petition is part of a larger effort by a coalition of progressive groups to rally Democratic lawmakers around the idea of passing a government run health insurance option through a parliamentary maneuver that would allow an up-or-down vote.

The Progressive Change Campaign Committee, Democracy for America and Credo -- a socially-conscious business -- have already secured the signatures of 119 House Democratic lawmakers for the late-stage public option push. The progressive advocacy group MoveOn.org also has emailed constituents asking them to push their representatives to co-sign the petition.

Via Howie Klein at Down With Tyranny, some encouraging news - not every member of Congress is buying the Wall Street line:

There is a small group of progressive Democrats-- very small-- who are actually independent of Wall Street. You may have noticed that last week Barbara Boxer (D-CA) and Jim Webb (D-VA) introduced a bill targeting outrageous bonuses of banksters who are getting it out of TARP money.

Yesterday Sherrod Brown (D-OH) introduced an even more stringent bill that targets any bonus over $25,000-- where the Boxer-Webb bill goes after anything over $400,000. I'm with Sherrod on this one. He says he wants to use the proceeds to help small businesses expand and hire new employees. In a talk about how Wall Street benefited from the infusion of taxpayer dollars via TARP, he explained why he thinks Main Street needs to be helped along now and how this is a way to get that started. “It’s time," he said, "for Wall Street to return the favor to Main Street. While big banks have rebounded thanks to the help of American taxpayers, small businesses are still struggling. If a big firm that received taxpayer help is now paying out massive bonuses, they should be able to help American small businesses expand operations and hire new workers. Small business growth will create jobs and get our economy back on track."

This is a big step in the right direction, and it's something that would go a long way toward easing national insecurity (and not incidentally, expire after the midterms, leaving a possible Republican majority with a ticking time bomb):

With unemployment still hovering in double digits and no real relief in sight, a group of 30 Senate Democrats today is urging party leaders to extend emergency unemployment benefits through the end of 2010 — 10 months longer than current law dictates. In a letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.), the lawmakers argue that shorter extensions might be cheaper, but they leave state budgeters in a state of constant uncertainty.

Short term extensions, while still helpful to families, only add strain to state agencies that must constantly re-tool their computer systems, and at the same time, continue to assist the millions still searching for work. As our economy continues on a path to recovery, we need a robust extension of safety net programs that have provided a lifeline to families since the recession began.

Signing the letter were Democratic Sens. Tom Harkin (Iowa), Bob Casey (Pa.), Jack Reed (R.I.),
 Sherrod Brown (Ohio)
, Chris Dodd (Conn.),
 Jay Rockefeller (W.Va.),
 Jeanne Shaheen (N.H.),
 Al Franken (Minn.), Carl Levin (Mich.),
 Frank Lautenberg (N.J.), Debbie Stabenow (Mich.), 
Roland Burris (Ill.), Arlen Specter (Pa.),
 John Kerry (Mass.), Kirsten Gillibrand (N.Y.),
 Ron Wyden (Ore.), Edward Kaufman (Del.),
 Sheldon Whitehouse (R.I.), Barbara Boxer (Calif.),
 Patrick Leahy (Vt.),
 Robert Menendez (N.J.),
 Herb Kohl (Wis.),
 Tom Udall (N.M.), Ben Cardin (Md.),
 Robert Byrd (W.Va.),
 Daniel Akaka (Hawaii),
 Jeff Merkley (Ore.),
 Barbara Mikulski (Md.),
 Dianne Feinstein (Calif.) and Michael Bennet (Colo.), as well as Independent Sen. Bernie Sanders (Vt.).

Democratic leaders are working on legislation to tackle the continuing problems related to the economic downturn. The package is widely expected to include an extension of unemployment insurance, COBRA health benefits, food stamps and help for states faced with budget crises. They’d hoped to have health care reform out of the way first. Now, that’s looking unlikely.

So Harry Reid's holding firm - for now. And you just can't argue with Sherrod Brown: What concessions have the ConservaDems made?

The Senate majority leader, Harry Reid of Nevada, met on Monday night with a group of liberal Senate Democrats who urged Mr. Reid not to back down from his decision to put a government-run insurance plan, or public option, in the major health care legislation that he is working to finalize.

[...] “I don’t think in the end, anybody here in our caucus wants to be on the wrong side of history, wants to kill on a procedural motion, something as important as this,” Mr. Brown said. “It’s the most important thing they ever will have voted on except perhaps the Iraq war.”

Mr. Brown, who is a member of the Health, Education, Labor and Pensions Committee, which included a public plan in its version of the health care legislation, said that liberals had already given a lot of ground, starting with their willingness to give up a fully government-run single-payer system, which many favor.

“A large number of people in this country including many, many doctors wanted Medicare for all,” he said. “That didn’t happen. Then we wanted a strong public option tied to Medicare rates. Then we wanted a public option building the Medicare network. That didn’t happen. Now we are saying public option coming out of the HELP Committee. And now we’re saying public option with the state opt-out. Where was the compromise coming from their side?”

You barely see or read anything in the media about health care town halls that are constructive and where people actually ask pertinent questions. The media have also forgotten that the leader of the House Republicans isn't having a town hall either. What's up with that?

Why isn't John Boehner having a town hall?

I’ll take right here in southern Ohio. My own representative, and the House Minority Leader, John Boehner is not holding any townhalls. Add to that the district directly south of me, OH-02, which is represented by Jean Schmidt (R), and our Republican Senator George Voinovich.

The closest townhall the people of southwest Ohio have had is one held in Columbus last week by Senator Sherrod Brown, however Steve Driehaus (D-OH-01) is also planning an event.

I can fully get behind what the right is doing, but I can’t tolerate partisanship in such an endeavor. To me its amazing, yet not shocking that John Boehner isn’t holding one. Boehner is a pro at ignoring his constituency. A few years back during the Medicare debacle his office flat out refused to talk to seniors, even when there was a large gathering only a couple of miles from Boehner’s house.

Maybe they'll make him cry like he did at the Reagan Statue:

So last week the Thune Amendment was thankfully defeated. A group I work with, Mayors Against Illegal Guns, took on the task of defeating this insane legislation, which only had a chance of passing due to the extremism of the NRA/Birther crowd and the ever-present cowardice of the usual Blue Dog Democrats.

I guess they weren't busy enough trying to destroy health care reform or climate-change legislation, so overriding state laws trying to prevent criminals from enjoying the right to concealed carry seemed like a good idea.

Thankfully, the NRA lost a gun battle for the first time in five years, but no thanks to squeamish Blue-Dog Democrats. Take Colorado Democratic Senators Udall and Bennet, for example. They waited to the end to vote, as if calculating which way to go right up until the last possible moment, and then voted with the gun nuts. Interestingly, two Republicans from generally pro-gun states, Senators George Voinovich of Ohio and Dick Lugar of Indiana, didn't feel a need to cave to the Bonkers Wing of the GOP. Nor did some other Democrats from pro-gun states, like Senators Claire McCaskill of Missouri, Bill Nelson of Florida and Sherrod Brown of Ohio.

In response, a Columbine dad, who suffered what is the nightmare scenario for all of us with children in school, decided to remind these two men about what is and is not leadership in today's Denver Post. It says everything that needs to be said on this issue, as well as a host of others the Blue Dogs continue to practice duck & cover.

Sadly, the biggest threat to rational legislating right now is not from Republicans, who are and should be irrelevant, but from Blue Dogs. These people need to be taught not to fear their big contributors, but We The People.

(**As I stated in the piece, I am working with Mayors Against Illegal Guns.)

This is certainly great news. With Ted Kennedy finally behind the public plan option, he'll be able to bring a lot of people to our side of the table - and of course, he considers this his legacy:

Liberals pushing for the creation of a federally run health insurance plan won a major victory Thursday when Sen. Edward Kennedy (D-Mass.) strongly indicated his commitment to the policy, one of the most controversial elements of healthcare reform.

Kennedy has co-sponsored a resolution introduced by Sen. Sherrod Brown (Ohio) and 26 other Democratic senators that declares the healthcare reform legislation the Senate will consider this summer must include a public plan option people can choose instead of private insurance. Senate Majority Whip Dick Durbin (D-Ill.) also co-sponsored the resolution.

Though purely symbolic, this show of strength by 28 Democratic senators sends a clear signal to liberals that a public plan, one of the left’s top priorities and a component of President Obama’s healthcare platform, will be part of reform.

Kennedy’s unequivocal support for the public plan marks a return of sorts to the front lines of the battle for healthcare reform.