This is the second wave of the mortgage crisis, one that was predicted by the liberal economists who inhabit the blogosphere. It's unlikely that we'll see a sustained economic recovery until after this shakes out:

By the end of 2010, about half of all commercial real estate mortgages will be underwater, said Elizabeth Warren, chairperson of the TARP Congressional Oversight Panel, in a wide-ranging interview on Monday.

“They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have these dangerous concentrations in commercial real estate lending."

As a result, the economy will face another “very serious problem” that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010.

It sounds like a really good idea. But really, this is bribery. And it wouldn't have been necessary to give them everything they want if Geithner and pals put reasonable conditions on the bank bailout in the first place:

The Obama administration is developing a major initiative to tackle the economic and political problem of unemployment by getting federal bailout funds into the hands of small businesses.

The proposal involves spinning off a new entity from the Troubled Assets Relief Program that could give banks access to the government money without restrictions, such as limits on executive pay, as long as they use it to make loans to small businesses. But officials are not yet certain whether carving the program out of TARP would be the best way to lure banks to participate in small-business lending, said sources familiar with the matter who spoke on the condition of anonymity because the plans were not final.

As an alternative, officials are prepared to ask Congress to modify TARP itself, easing the pay limits and other restrictions that would be imposed on small-business lenders taking the money, the sources said.

Since the summer, the administration has been facing an uncomfortable dynamic in the economy. The ranks of the jobless have been growing, while big financial firms that got taxpayer bailout money have been thriving. In response, officials have been trying to recast TARP as aid for Main Street rather than Wall Street.

Treasury Secretary Timothy F. Geithner told a congressional oversight panel Thursday that TARP would focus on aiding small-business lending, community banks and homeowners struggling to keep up with their mortgage payments, and he hinted at the new program.

Banks are "very reluctant to come and do business with the government and they're concerned that, if they come, they will be stigmatized and they will be subject to the risk of conditions in the future that might make it harder for them to run their businesses," Geithner told the TARP oversight panel. Solving that problem, he added, is "going to be something we cannot do on our own. It's going to require some help from Congress to help deal with those basic concerns."

Elizabeth Warren, who heads the oversight panel, chided Geithner for taking so long in setting up several other small-business lending initiatives, two of which were announced last spring.

"It's not news to anyone that small-business lending is important," she said. "Small businesses are closing every day. But Treasury has now announced three plans and clearly has not gotten the job done."

We don't really know. But the draft of a GAO risk assessment says the decision was based on "unrepresentative accident scenarios," "outdated modeling" and "inadequate" information about the sites. Gee, I'm not feeling real good about that:

The Department of Homeland Security relied on a rushed, flawed study to justify its decision to locate a $700 million research facility for highly infectious pathogens in a tornado-prone section of Kansas, according to a government report.

The department's analysis was not "scientifically defensible" in concluding that it could safely handle dangerous animal diseases in Kansas -- or any other location on the U.S. mainland, according to a Government Accountability Office draft report obtained by The Washington Post. The GAO said DHS greatly underestimated the chance of accidental release and major contamination from such research, which has been conducted only on a remote island off the United States.

DHS staff members tried quietly last week to fend off a public airing of the facility's risks, agency correspondence shows. Department officials met privately with staff members of a congressional oversight subcommittee to try to convince them that the GAO report was unfair, and to urge them to forgo or postpone a hearing. But the House Energy and Commerce Committee's oversight and investigations subcommittee, chaired by Rep. Bart Stupak (D-Mich.), decided otherwise. It plans to hold a hearing Thursday on the risk analysis, according to two sources briefed on the plans.

The criticism of DHS's site selection comes as the proposed research lab, the National Bio and Agro-Defense Facility (NBAF), was expected to win construction funding in the congressional appropriations process.

"Drawing conclusions about relocating research with highly infectious exotic animal pathogens from questionable methodology could result in regrettable consequences," the GAO warned in its draft report. DHS's review was too "limited" and "inadequate" to decide that any mainland labs were safe, the report found. GAO officials declined to comment on the findings.

The new developments started another round of accusations that politics steered DHS's decision in January to build the proposed lab in Manhattan, Kan. Critics of the choice argue that a Kansas contingent of Republican Sens. Sam Brownback and Pat Roberts and then-Gov. Kathleen Sebelius, a Democrat, aggressively lobbied DHS to pick their state. Records show that a DHS undersecretary and his site selection committee met frequently with the senators, one of whom is a member of an appropriations subcommittee that helps set DHS funding.

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CSPANjunkie's video highlights the outrage members of Congress felt after learning what Dick Cheney was up to with the CIA.

And there's a lot of speculation going on about what possible CIA program Dick Cheney was trying to hide from Congress. Trusting the WSJ when it comes to the Bush administration is like trusting the Yanks to win against the Angels in Anaheim. (I was due for a bad baseball analogy.)

TIME magazine has a few sources that make a case that's a bit more believable.

It is the biggest mystery in Washington at the moment. Here's what our colleague Bobby Ghosh says his sources are telling him:

Speculation abounds about the nature of the secret program Dick Cheney asked the CIA to keep from the Congressional oversight committees. The most sensational reports suggest it was plan to find and kill top Al Qaeda leaders – like the covert Israeli campaign to take out the perpetrators of the Munich killings.

But two former ranking CIA officials have told TIME that there's another equally plausible possibility: The program could have required the Agency to spy on Americans. Domestic surveillance is outside the CIA's purview -– it's usually the FBI's job – and it's easy to see why Cheney would have wanted to keep it from Congress.

Both officials say they were never told what was in the program, and that they're only making calculated guesses. But their theory gibes with other reports, quoting ex-CIA officials, that say the program had to do with intelligence collection, not assassinations.

“People may want this to be about hit squads bumping off shady Saudis in Geneva, but that's very unlikely,” says one official. “More likely, it was a plan to spy on some suspicious American citizens or organizations, without telling the FBI.”

A third CIA official who is familiar with details of the program says it was deemed unworkable and cancelled in 2004.

With Cheney's love of spying, this makes perfect sense since catching and killing terrorists just like Jack Bauer is something that any member of Congress would have signed off on in a heart beat. Spying and keeping secrets is Darth Cheney's MO and when he sends his daughter out to defend him only sends up more red flags.

Digby writes:

This is something so far off the charts that even the wingnuttiest wingnuts distanced themselves from it:

Representative Peter Hoekstra of Michigan, the top Republican on the House intelligence committee, said last week that he believed Congress would have approved of the program only in the angry and panicky days after 9/11, on 9/12, he said, but not later, after fears and tempers had begun to cool.

Does that sound like something about killing Al Qaeda or spying on Muslims in America? They did that anyway. This is something else.

In other words, the only way possible a program like this might have been contemplated was when Americans were utterly terrified. You can count on Cheney to be consistent when it comes to playing the fear card.

Kerry is a great person to be handling this, with his background in the BCCI investigation. Can't wait to see what he digs up!

May 29 (Bloomberg) -- John Kerry has never run for sheriff. As chairman of the Senate Foreign Relations Committee he is starting to act like one, and the world is his jurisdiction.

The Massachusetts Democrat is wielding his gavel with an investigative zeal, and plans to take on Iran’s nuclear program, gun-running on the Mexican border, terrorism, narcotics and human trafficking, all through the prism of money laundering. He has hired a former investigative reporter, an ex-CIA agent and a one-time managing director of Bear Stearns Cos. LLC to help him.

“There are lots of big pieces out there that depend on money moving,” he said in an interview in his office in the Senate, where he is serving his 24th year.

Kerry, who was a prosecutor and attorney in Massachusetts before starting his political career in 1982, said the lack of congressional oversight during the Bush administration left behind a target-rich environment for his panel. The Treasury Department “has its hands full” and is “inadequately resourced” to pursue these inquiries, he said.

“For the last eight years we’ve had an administration that has done its utmost to protect, hide, obfuscate, neglect, void, simply not even care about these issues,” said Kerry, 65.

I listened to this Planet Money interview yesterday and it wasn't even close. Elizabeth Warren, a class act in every sense, totally destroyed the host's argument that concerning herself with the economic health of the American family was somehow her liberal "pet cause" and outside her bailiwick as TARP oversight chair. Not that it made any difference in his evident scorn!

NPR may have some nice little essays, but the only time their hosts show anything resembling teeth is when they attack... people who attack corporate interests! From the Columbia Journalism Review's "So That's Why The Press Won't Cover Elizabeth Warren!" by Ryan Chittum:

A couple of times in the last few months I’ve taken the press to task for ignoring the Congressional Oversight Panel and its report on the TARP. I’ve talked to reporters in the biz since and got the impression that many of them don’t really take it seriously because its chairwoman Elizabeth Warren is a liberal who, they say, pushes her agenda.

So it’s worth listening to this entire Planet Money podcast from NPR, where Adam Davidson badgers Warren for more than an hour to justify her existence, so to speak.

If you want a peek inside business-press mentality, and why certain stories get reported and others don’t, you can do worse than start here. It sees Warren as an outlier whose views, based on decades of research, are suspicious. It would never, ever have badgered a former bank exec, say, like this if one had been chairman of the panel. Davidson, like the reporters I referenced above, has been talking to too many bankers and insiders who sneer at someone not inside their bubble. Perhaps he’s trying to prove his objective journalist bona fides at “liberal” NPR by taking it to a liberal.

Warren isn’t legitimate in the eyes of the press, so it just pretty much ignores her—even though she and her co-panelists were selected by Congress to oversee whether the Treasury is spending the $700 billion we gave it in a way that’s best for the economy.

This interview is really cringeworthy stuff from Davidson, who comes out looking pretty bad (which makes it all the more admirable that NPR runs the entire tape). Warren takes this fight going away.

Really, go read the whole thing - and if you have the time, listen to the podcast. The comments are also smart, and this one summed it up nicely:

Adam Davidson essentially admits his own insider-oriented, in-the-bubble reporting style. His comments reflect not so much on Elizabeth Warren but on the breadth and depth of his own Rolodex.

Uh, isn't this what Krugman and Stiglitz have been saying? It's why the two Nobel prize winners have been urging Obama to nationalize the banks:

WASHINGTON (Reuters) - Treasury secretary Timothy Geithner on Tuesday said difficulty in setting a value on banks' toxic assets was a continuing hindrance to their ability to lend and borrow.

In prepared testimony for delivery to the Congressional Oversight Panel that monitors Treasury's efforts to bail out troubled banks, Geithner said toxic assets were "congesting" the U.S. financial system and making it hard to get credit flowing normally again.

"Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital," he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.

It's official:

California Rep. Henry A. Waxman on Thursday officially dethroned longtime Energy and Commerce Chairman John Dingell, upending a seniority system that has governed Democratic politics in the House for decades.

In a secret ballot vote in the Cannon Caucus Room, House Democrats ratified an earlier decision by the Steering and Policy Committee to replace the 82-year-old Dingell with his 69-year-old rival. The vote was 137-122 in favor of Waxman.

The ascension of Waxman, a wily environmentalist, recasts a committee that Dingell has chaired since 1981 with an eye toward protecting the domestic auto industry in his native Michigan. The Energy and Commerce Committee has principal jurisdiction over many of President-elect Barack Obama's top legislative priorities, including energy, the environment and health care.

As John says, this is truly welcome news. We may finally get some oversight from this committee. Matt Stoller has more.

Politico: McLame casting Obama as a 'celebrity' is particularly audacious coming from a guy, who, since 2000, has gotten more screen time than the rest of congress combined.

Consortiumblog: Tax-Factless Wall Street Journal-omics

unbossed: Spurning congressional oversight -The Dept. of Labor and double-secret stealth killer regulation

The Impolitic: Why doesn't polling mirror event turnout numbers?

Sic Semper Tyrannis: The DNI's power keeps growing

The Opinion Mill's Sunday Bookchat: Jane Mayer sheds devastating light on The Dark Side and how the war on terror has soiled America's good name and planted seeds of further extremism. Plus: Chastity is even duller than you think! Ray Bradbury loves libraries! And here's your chance to meet the sleazebag who helped lie us into a war!