I just don't know what the best options are here, but I'm not feeling reassured that the people advising Geithner were making so much money from the people they're supposed to be regulating:

Oct. 14 (Bloomberg) -- Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.

The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.

As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.

“These people are incredibly smart, they’re incredibly talented and they bring knowledge,” said Bill Brown, a visiting professor at Duke University School of Law and former managing director at Morgan Stanley. “The risk is they will further exacerbate the problem of our regulators identifying with Wall Street.”

Gee, ya think?

[...] Treasury spokesman Andrew Williams said the department needs people with a deep understanding of markets and the financial system, especially as it works to fend off the worst recession in half a century.

“The secretary thought that the best way to utilize their talents was to allow these individuals to provide advice to the secretary on policy issues through appointments as counselor,” Williams said.

All of Geithner’s counselors are subject to federal ethics rules, including a pledge to avoid contact with their former firms for at least a year, Williams added.

Most officials at the Treasury who have been approved by Congress come from academic, legal or non-Wall Street backgrounds.

I wish I could say I was surprised, but pharmaceutical companies and medical device manufacturing is very big business in New Jersey and when those companies say jump, elected officials say "How high?" Wouldn't it be nice if they put as much thought into the health and safety of their constituents?

The Food and Drug Administration said Thursday that four New Jersey congressmen and its own former commissioner unduly influenced the process that led to its decision last year to approve a patch for injured knees, an approval it is now revisiting.

The agency’s scientific reviewers repeatedly and unanimously over many years decided that the device, known as Menaflex and manufactured by ReGen Biologics Inc., was unsafe because the device often failed, forcing patients to get another operation.

But after receiving what an F.D.A. report described as “extreme,” “unusual” and persistent pressure from four Democrats from New Jersey — Senators Robert Menendez and Frank R. Lautenberg and Representatives Frank Pallone Jr. and Steven R. Rothman — agency managers overruled the scientists and approved the device for sale in December.

All four legislators made their inquiries within a few months of receiving significant campaign contributions from ReGen, which is based in New Jersey, but all said they had acted appropriately and were not influenced by the money. Dr. Andrew C. von Eschenbach, the former drug agency’s commissioner, said he had acted properly.

The agency has never before publicly questioned the process behind one of its approvals, never admitted that a regulatory decision was influenced by politics, and never accused a former commissioner of questionable conduct.

“The message here is that there were problems with the integrity of F.D.A.’s decision-making process that have solutions,” Dr. Joshua Sharfstein, the agency’s principal deputy commissioner, said in a conference call with reporters.

As he awaits trial on money laundering charges, disgraced former House Majority Leader Tom Delay on Monday launched the latest phase of his extremist makeover on ABC's "Dancing with the Stars." Two years after publishing his book and 18 months after starting the Coalition for a Conservative Majority, Delay turned to the Cha Cha to complete his resurrection. Which is altogether fitting for the man who repeatedly compared himself to Jesus Christ.

Delay's Christ complex first manifested itself in 2001 as he explained to the Washington Post the opposition to his none-too-subtle campaign to bring his fundamentalism to the United States Congress. "People hate the messenger," Delay announced, adding, "That's why they killed Christ." On the day of his booking five years later, Delay told Time he prayed:

"Let people see Christ through me."

As it turns out, the similarities between Jesus and Tom Delay are striking:

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You remember Betsy McCaughey, don't you? She's the right wing hack who propagated a purposely misleading article in The New Republic that was used to torpedo the Clinton health plan, and more recently the author of the "death panels" lie.

Well, Rolling Stone's Tim Dickinson has a hell of a scoop in their Oct. 1 issue in an article called "The Lie Machine: The Plot to Kill Health Care Reform":

McCaughey's lies were later debunked in a 1995 post-mortem in The Atlantic, and The New Republic recanted the piece in 2006. But what has not been reported until now is that McCaughey's writing was influenced by Phillip Morris, the world's largest tobacco company, as part of a secret campaign to scuttle Clinton's health care reform. (The measure would have been funded by a huge increase in tobacco taxes.) In an internal company memo from March 1994, the tobacco giant detailed its strategy to derail Hillarycare through an alliance with conservative think tanks, front groups and media outlets. Integral to the company's strategy, the memo observed, was an effort to "work on the development of favorable pieces" with "friendly contacts in the media." The memo, prepared by a Phillip Morris executive, mentions only one author by name:

"Worked off-the-record with Manhattan [Editor's note: At the time, McCaughey was a fellow at the Manhattan Institute] and writer Betsy McCaughey as part of the input to the three-part expose in The New Republic on what the Clinton plan means to you. The first part detailed specifics of the plan."

McCaughey did not respond to Rolling Stone's request for an interview.

This USAToday piece leaves out an important piece of the puzzle here. The company who sold the pumps was closely tied to the Bush family, at one time even employing Jeb Bush:

WASHINGTON — Huge flood-control pumps installed in New Orleans after Hurricane Katrina don't protect the city adequately and the Army Corps of Engineers could have saved $430 million in replacement costs by buying proven equipment, a federal investigation finds.

The investigation by the federal Office of Special Counsel finds there was "little logical justification" for the corps' decision to spend hundreds of millions of dollars on the "untested" hydraulic pumps, which are meant to empty millions of gallons of water from the below-sea-level city during storm-related floods.

Nope, no "logical" justification. Just political! From March 2007:

Meanwhile, Sen. Mary Landrieu, D-La., asked the Government Accountability Office on Thursday to investigate the Corps and the contract it entered into with Moving Water Industries Corp.

MWI is owned by J. David Eller and his sons. Eller was once a business partner of former Florida Gov. Jeb Bush in a venture called Bush-El that marketed MWI pumps.

But wait, it gets even worse:

In 2002, the U.S. Justice Department amended its suit against Eller, alleging that he twice flew suitcases of cash to offshore tax havens to hide his assets, the St. Petersburg Times reported. The DOJ also claimed that MWI improperly used more than a third of a $74.3-million U.S. loan to pay a Nigerian agent for the company. In turn, that agent and other company officials paid Nigerian government officials involved in buying MWI's pumps, the lawsuit alleges. MWI denies the charges.

According to the paper:

Between 1985 and 1993, the government says, Eller flew on his company plane to the Bahamas and to Grand Cayman, once with a "large suitcase filled with currency" and once with a "large duffel bag or suitcase filled with currency." At both places, a chauffeured limousine whisked him and the money away. Eller told his pilot he was "moving his assets out of the United States," the lawsuit contends, calling it an effort to shield the money from creditors.

Eller's lawyer, William Scherer, said the flights never occurred and neither Eller nor MWI has accounts in either country.

The lawsuit by the George W. Bush Justice Department suggests no wrongdoing by Jeb Bush, who from 1988 to 1994 worked with Eller marketing MWI pumps to foreign countries, including Nigeria.

Indeed, the amended complaint omits allegations of influence-peddling by MWI -- including Eller's bringing Jeb Bush into the pump business -- leveled in the whistle-blower's recently unsealed lawsuit. That lawsuit prompted the federal investigation.

This begs a couple of questions: Why was a company under DOJ investigation for such serious charges given a major federal contract for New Orleans reconstruction in the first place? And why is the DOJ suit against MWI still unresolved after so many years?

Take a look at the trailer for Michael Moore's new movie "Capitalism: A Love Story." Moore appears poised to knock it out of the park again.

"It's a crime story. But it's also a war story about class warfare. And a vampire movie, with the upper 1 percent feeding off the rest of us. And, of course, it's also a love story. Only it's about an abusive relationship.

"It's not about an individual, like Roger Smith, or a corporation, or even an issue, like health care. This is the big enchilada. This is about the thing that dominates all our lives — the economy. I made this movie as if it was going to be the last movie I was allowed to make.

"It's a comedy." — Michael Moore

(Hi, dday here from Hullabaloo and Calitics and my own site D-Day. Thanks to John for having me over for the week to fill in for Dave Neiwert.)

I don't think I'm being hyperbolic by saying that the average subprime mortgage broker should probably be in prison by now. They took loans that their customers had no possibility of paying back, often by forcing them into exotic arrangements where their payments would shoot up by double after a reset. They got bonuses for putting people into a higher interest rate than what the borrowers could qualify for. Now lots of those loans have gone sour, but the broker's company has already passed on that risk in the form of mortgage-backed securities. Indeed, these same lenders who preyed upon homeowners by getting them into residences they couldn't afford are now ripping them off again by setting up loan modification companies.

Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.” [...]

FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.

Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company. The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod’s practices, and compensation for customers.

“Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif. He recounted his experience, he said, because “I really feel bad.”

Before state regulators and the Feds figured out this was going on, hundreds of loan modification companies took probably billions from distressed homeowners and provided virtually nothing in return. They saw opportunity in crisis - and they also CREATED much of the crisis by selling the homes to people who couldn't afford them in the first place.

Special place in hell reserved for them...

It took two years, but it finally happened - thanks to an agreement with the White House that deposing Rove would not infringe on executive privilege. Now everyone wants to know: What did Karl say? And don't you wish you were the fly on the wall?

Former White House Deputy Chief of Staff Karl Rove was deposed Tuesday by attorneys for the House Judiciary Committee, according to Rep. John Conyers (D-Mich.), the panel’s chairman.

Rove’s deposition began at 10 a.m. and ended around 6:30 p.m, with several breaks, Conyers said.

Conyers would not comment on what Rove told congressional investigators, what the next step in the long-running Judiciary Committee investigation would be or whether Rove would face additional questioning.

“He was deposed today,” Conyers said in an interview. “That’s all I can tell you.”

Rove's attorney, Robert Luskin, declined to confirm or deny that his client had appeared before the committee. Luskin said there was an agreement that the depositions would remain confidential until they were completed. However, in a court filing Monday, the Justice Department indicated that the deposition set for this week would be the committee's last.

Conyers’ panel had first subpoenaed Rove in 2007 as part of its probe into the firing of nine U.S. attorneys. But the Bush White House, citing executive privilege, refused to make Rove or White House Counsel Harriet Miers available for any deposition.

You know, I've often wondered if Tony Blair became a Catholic so he could go to confession. There's a lot more to David Kelly's story than we're ever going to find out. But officially, he's a suicide and no one's talking.

Let's review: The day after he died, a reporter asked Tony Blair, ”Have you got blood on your hands, prime minister?” Whether it was David Kelly's or all those killed in the Iraqi war, the answer seems to be yes, no matter how many judges rule otherwise.

Ah yes, Lord Hutton! One MP questioned the findings:

The MP reveals that the Oxfordshire coroner held an 'unusual' meeting with Home Office officials before he determined the cause of Dr Kelly's death.

And he claims that a 'cosy cabal' of Mr Blair's friends, including Peter Mandelson and Lord Falconer, the Lord Chancellor, hand-picked Lord Hutton, a retired Law Lord from Northern Ireland, to lead the official investigation in 2003.

And then there's his relationship with Judith Miller. Remember?

There's so much more than we'll ever know - unless someone gets religion and decides to unburden their soul.

Weapons inspector David Kelly was writing a book exposing highly damaging government secrets before his ­mysterious death.

He was intending to reveal that he warned Prime Minister Tony Blair there were no weapons of mass destruction anywhere in Iraq weeks before the ­British and American invasion.

He had several discussions with a publisher in Oxford and was seeking advice on how far he could go without breaking the law on secrets.

Following his death, his computers were seized and it is still not known if any rough draft was discovered by investigators and, if so, what happened to the material.

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It is curious that this AP article left out one giant aspect of the UBS scandal -- the role former GOP Senator Phil Gramm may have played in their illegal activity.

MIAMI – Swiss bank UBS AG "systematically and deliberately" violated U.S. law by dispatching private bankers to recruit wealthy Americans interested in evading taxes and must be forced to reveal the identities of 52,000 of those clients, the Justice Department said in a court filing Tuesday.

The filing, which comes amid several published reports that the case may be near settlement, urges U.S. District Judge Alan S. Gold to hold UBS accountable for conducting years of illegal business on U.S. soil — business that earned the bank more than $100 million in fees but cost the U.S. hundreds of millions of dollars in unpaid taxes.

"It is time for UBS to face the consequences that it has brought upon itself," said Justice Department tax attorney Stuart Gibson in the 55-page filing. "The United States has proven its case for enforcement."

As Jon Perr wrote earlier this year, Gramm was instrumental in handcuffing the IRS while he was in the Senate, and may have paved the way for UBS to commit their crimes once he became their Vice Chairman in 2002.

It's getting to the point where I don't even want to read Simon Johnson anymore. Yes, he's right. If we reduce oversight safeguards to "trust us," we have a system far too ripe for corruption - in fact, almost asking for it:

Buried in the late wire news on Friday – and therefore barely registering in the newspapers over the weekend – Treasury announced the rules for pricing its option to buy shares in banks that participated in TARP.

The Treasury Department said the banks will make the first offer for the warrants. Treasury will then decide to sell at that price or make a counteroffer. If the government and a bank cannot agree on a fair price for the warrants, the two sides will have the right to use private appraisers.

This is a mistake.

The only sensible way to dispose of these options is for Treasury to set a floor price, and then hold an auction that permits anyone to buy any part – e.g., people could submit sealed bids and the highest price wins.

In Treasury’s scheme, there is significant risk of implicit gift exchange with banks - good jobs/political support/other favors down the road – or even explicit corruption. For sure, there will be accusations that someone at Treasury was too close to this or that bidder. Why would Treasury’s leadership want to be involved in price setting in this fashion?

Treasury apparently sees corruption as an issue about personalities (i.e., WE aren’t ever corrupt) rather than about institutional structure. For example, if you create an arrangement that easily permits corruption, such as through nontransparent decision making or negotiation around warrant pricing, you set up incentives to be corrupt. Either existing people change their behavior, or new people will seek appointment in order to participate in corruption.

This is also a point, by the way, that Treasury has been making for years through its representatives at the International Monetary Fund – including during the Clinton Administration, when the same people were running U.S. economic policy as now. It’s a good point and never easy for countries-with-potential-corruption to hear. It applies as much to the United States as to anywhere else.

Treasury will argue the disposal of warrants is a one-off event, but this is not a plausible line: it is part of a much longer series of nontransparent decisions over finance. The attitude that “we can be nontransparent because we will never be corrupt” creates reputational risk for both Treasury and participating banks. If extraordinary support for the financial sector lasts several years, we will likely have at least one time-consuming and damaging investigation into all the details of these settlements.

I'm getting so tired of these stories. I mean, what's the point? Americans are perfectly happy to stay home and watch TV while our elected officials rob us blind and we struggle along without needed health care:

June 26 (Bloomberg) -- In June 2008, U.S. Virgin Islands Governor John deJongh Jr. agreed to give London-based Diageo Plc billions of dollars in tax incentives to move its production of Captain Morgan rum from one U.S. island -- Puerto Rico -- to another, namely St. Croix.

DeJongh says he had no idea his deal would help make the world’s largest liquor distiller the most unlikely beneficiary of the emergency Troubled Asset Relief Program approved by Congress just four months later.

Today, as two 56-foot-high (17-meter-high) tanks for holding fermenting molasses will soon rise from the ground on the Caribbean island of St. Croix, the extent to which dozens of nonbank companies benefited from last October’s emergency financial rescue plan is just beginning to come to light.

The hurried legislation adopted by a Congress voting under the threat of sudden global economic collapse led to hidden tax breaks for firms in dozens of industries. They included builders of Nascar auto-racing tracks, restaurant chains such as Burger King Holdings Inc., movie and television producers -- and London’s Diageo.

“It’s kind of like the magician’s sleight of hand,” says former House Ways and Means Committee Chairman William Thomas, a California Republican who ran the committee from 2001 to 2007 and oversaw all tax legislation. “They snuck these things in a bill that was focused on other things.”

[...] The added tax breaks prevented the TARP legislation from being rejected a second time, says Michael Steel, a spokesman for House Minority Leader John Boehner. Twenty-six Republicans, including Tim Murphy of Pennsylvania, John Shadegg of Arizona and Zach Wamp of Tennessee, reversed their earlier no votes.

Each of the tax provisions has a story -- and plenty of defenders.

Clearly, some people are just looking out for themselves. And these are the ones we count on to look out for the rest of us? Oy. I wonder if this falls into the "moving ahead" category, or is anyone going to look into this?

WASHINGTON -- As financial markets tumbled and the government worked to stave off panic by pumping billions of dollars into banks last fall, several members of Congress who oversee the banking industry were grabbing up or dumping bank stocks.

Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup -- some of the very corporations their committee would later rap for greed, a Plain Dealer examination of congressional stock market transactions shows.

Financial disclosure records show that some of these Financial Services Committee members, including Ohio Rep. Charlie Wilson, made bank stock trades on the same day the banks were getting a government bailout from a program Congress approved. The transactions may not have been illegal or against congressional rules, but securities attorneys and congressional watchdog groups say they raise flags about the appearance of conflicts of interest.

"I don't think that any of these people should be owning these types of financial instruments," said Brian Biggins, a Cleveland securities lawyer and former stock brokerage manager. "I'm not saying they shouldn't be in the stock market. But if they're on the banking committee and trading in these kinds of stocks, I don't think that's right."

Last night, before select audiences in places like Los Angeles and Chicago out to see other films, Michael Moore played a special trailer for his new movie about the financial meltdown. But this wasn't just any trailer:

Hi, I’m Michael Moore. Instead of using this time to tell you about my new movie I’d like to take a moment and ask you to join me in helping our fellow Americans. The downturn in the economy has hurt many people, people who have had no choice but to go on government assistance. Yet our welfare agencies can only do so much. That’s why I’m asking you to reach into your pockets right now and lend a hand. Ushers will be coming down the aisles to collect your donations for Citibank, Bank of America, AIG, Goldman Sachs, JP Morgan and a host of other needy banks and corporations. Won’t you please give generously? Now, I know what you’re thinking - I already gave at the bailout. And I know you did, but even if you’ve given in the past, give some more. It will make you feel… good.

Sure enough, ushers came down the aisles:

And started passing out the collection cans:

More to the point, audiences laughed and gave:

A writer for FirstShowing was taken aback, and called it "pretty damn crazy." Slashfilm's writer wondered what would happen to the money.

We're told that it actually will be donated to local food banks in the donor cities.

[H/t Jonathan for the pics.]

Now if only we could get the appointed judges to recuse themselves on similar conflicts:

WASHINGTON (AP) — The Supreme Court ruled Monday that elected judges must step aside from cases when large campaign contributions from interested parties create the appearance of bias.

By a 5-4 vote in a case from West Virginia, the court said that a judge who remained involved in a lawsuit filed against the company of the most generous supporter of his election deprived the other side of the constitutional right to a fair trial.

With multimillion-dollar judicial election campaigns on the rise, the court's decision Monday could have widespread significance. Justice at Stake, which tracks campaign spending in judicial elections, says judges are elected in 39 states and that candidates for the highest state courts have raised more than $168 million since 2000.

The West Virginia case involved more than $3 million spent by the chief executive of Massey Energy Co. to help elect state Supreme Court Justice Brent Benjamin. At the same time, Massey was appealing a verdict, which now totals $82.7 million with interest, in a dispute with a local coal company. Benjamin refused to step aside from the case, despite repeated requests, and was part of a 3-2 decision to overturn the verdict.

The Massey Energy case was about as clear a case of a corporation trying to buy a verdict as I've ever seen - so egregious, it inspired John Grisham's "The Appeal." Nice to see this ruling.