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The Chicago office of Winston & Strawn has found itself the most recent addition to the list of complaints against Rod Blagojevich. Because of the lengthy ongoing federal investigation into the governor, Blagojevich's political fund is unable to foot the full legal bill; Winston & Strawn is now refusing to continue representation of their client. (WSJ)

The Portuguese foreign minister has offered his country as a place of asylum for at least some Guantanamo detainees and called on other members of the European Union to do likewise. U.S. officials have been hindered in their attempts to shut down the controversial program because of the question over where freed prisoners will go. (FT)

An investigation into misappropriation of campaign funds by a campaign staffer for Rep. Chris Shays' (R-CT) campaign is focusing on Shays' campaign manager, sources say. Accounting for the $3.6 million campaign has been incomplete, although an exact amount for missing funds has still not been finalized. Rep. Shays lost his bid for reelection in Connecticut's 4th congressional district. (Hartford Courant)

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Remember back in September when Congress blocked the Bush administration's initial effort to ram through a bailout bill that would have given Treasury Secretary Hank Paulson virtually unlimited authority to spend $700 billion however he saw fit?

Among the measures that Congressional Democrats successfully held out for -- against the wishes of the White House -- were meaningful oversight mechanisms that would allow Congress and others to track what the Treasury Department is doing with all that money.

That seemed like a victory for taxpayers at the time. But now, over two months later, we've learned a bit about what those oversight mechanisms have been able to provide. And there's real reason to question whether in fact they were designed adequately for the task in the first place.

"It's a mess," Eric M. Thorson, the Treasury Department's inspector general, told the Washington Post last month. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

Perhaps the single biggest obstacle to adequate oversight of Treasury is how little oversight Treasury itself is exercising over the bailout funds, whether through indifference or an inability to hire qualified staff. In the first report issued by the Congressional Oversight Panel (COP) -- the main oversight mechanism that Congress fought to include in the bailout bill, over Paulson's objections -- the authors made clear that they were concerned about Treasury's lack of tracking mechanisms: "Treasury cannot simply trust that the financial institutions will act in the desired ways; it must verify." But COP also suggested that it was prevented from going further by the fact that Treasury wasn't keeping extensive enough records of its allocation of funds to be able to provide much more information.

A different overseer, the Government Accountability Office -- which functions as the investigative arm of Congress -- drew similar, albeit somewhat firmer, conclusions about Treasury's handling of the bailout money. Its preliminary report last week found a litany of problems, perhaps most fundamentally that there were no procedures to ensure that bailout funds are used as intended.

Just as important, the system of oversight doesn't appear to have been set up under conditions that would have allowed it to function effectively. With just three paid staff members (who started only this week -- two days before the panel's first report was to be released), COP was still struggling to get office space as it was preparing the report. Warren confirmed in an email to TPMmuckraker that "time constraints" had played a role in limiting the scope of the report's conclusions, saying that the panel met for the first time only two weeks ago.

Congress dragged its feet in naming the panel's members: although the bailout bill was passed in early October, they weren't named until mid-November. And it hasn't helped that Senate GOP leader Mitch McConnell still hasn't named a replacement for Sen. Judd Gregg, who stepped down last week as one the panel's two Republicans, saying he was too busy.

Still, at least GAO and the Congressional panel have been in place long enough to offer those reports. The single person who's most directly responsible for overseeing Treasury's bailout spending, Special Inspector General for the bailout, Neil Barofsky, was only confirmed this week. That's because one unnamed Republican senator -- it now seems all but certain that it was Kentucky's Jim Bunning -- placed a hold on Barofsky's nomination.

Congress may be talking belated steps to fix the problem. The Senate yesterday passed a bill that would let Barofsky investigate any use of bailout funds that he deems questionable, and hire auditors for the job. And the House has passed an amendment to the auto bailout bill that would require banks to say more about what they're doing with the TARP money.

Still, it appears that the rush to take action affected not just Treasury -- which was clearly scrambling to set up the bailout program without adequate record-keeping -- but also Congress, which failed to ensure that the oversight system it set up was designed as effectively as it needed it to be. And much of the damage may already have been done.

The Bush administration's record on the environment is so abysmal that even a former Bush EPA official had difficulty defending it today.

Environmentalists blasted the administration's policies at a hearing called by the Select Committee on Energy Independence and Global Warming, convened to highlight Bush's use of midnight regulations -- proposals made in the waning days of a presidency when political consequences are minimal -- to ram through rule changes on behalf of business interests.

Then, Jeff Holmstead, the lone witness called by the GOP minority, was given a chance to speak.

Holmstead, once the head of the Air office at the EPA and now a lawyer at Bracewell & Giuliani, gamely attempted to defend his own record, touting an improvement in air quality in his opening statement. But hostile questioning put him on the defensive. The timing of the last-minute proposals, he said, was simply due to human responsiveness to deadlines. And as for global warming, other countries "have not achieved anything either."

Finally, Holmstead gave up. "Maybe we should have a little more polite discussion," he said.

Of the 39 rules proposed in the final days of the president's term, 20 pare back environmental restrictions. (ProPublica has a tally going here.)

Rep. Edward Markey (D-MA), the select committee chair, closed the meeting promising to "shine a light" on the Bush administration's activities.

"We are going to be on their case," he said. "We are going to be there every single minute."

If any of Barack Obama's aides talked to Rod Blagojevich about the Senate seat the president-elect left open, we may be about to find out who it was, and what was said. And that's a lot better than we've been used to over the last few years.

At an appearance moments ago to announce his healthcare team, Obama led off by telling reporters that he has asked his team to gather the facts about contacts with the governor on the subject. "What I want to do is to gather all the facts about any staff contacts that may have taken place" between the governor's office and the transition team, he said. In response to a question, he added that he would present the findings publicly in the next few days.

But Obama said he is "absolutely certain" that if such contacts took place between his team and the governor's office, they would not have included discussion of any kind of "deal" for the seat.

Obama also repeated that he himself never spoke to the governor about the seat. "I did not speak to the governor about these issues," he added.

It's worth noting that Obama's pledge to canvass his staff and present what he's found stands in contrast to the approach taken by President Bush after news reports suggested that a member of his team had improperly leaked the name of a covert CIA operative. Bush at first pledged to get to the bottom of the matter, but soon appeared uninterested in quickly doing so, or in disciplining those members of his administration -- Karl Rove, Scooter Libby, and Richard Armitage -- who were ultimately found to have been the culprits.

We should wait to see if Obama fully delivers on his pledge to reveal what he's found, but so far, he seems to be approaching the issue with greater openness than his predecessor.

The 2008 Republican and Democratic conventions were underwritten by hefty contributions from the institutions and individuals at the center of the country's financial crisis, according to a report released Wednesday by the Center for Responsive Politics and the Campaign Finance Institute. Insurance giant AIG, which has since received more than $150 billion in federal money, gave $1.5 million; mortgage company Freddie Mac, now a government enterprise, donated $500,000. In all, the donations come to about $14 million. (Wall Street Journal/Politico)

The Supreme Court could hold former Attorney General John Ashcroft and FBI Director Robert Mueller responsible for abuse of Muslim and Arab detainees in the days after September 11, 2001, if Javaid Iqbal, a Pakistani Muslim held in solitary confinement in Brooklyn for 6 months, wins the case he has brought against the officials. Iqbal must prove that Ashcroft and Mueller are responsible for his treatment. On Wednesday, the justices "offered no clear indication" that it would stop Ashcroft and Mueller from being named in the suitaccording to the AP. (NYTimes/AP)

Part of the proposed auto bailout plan would reinstate a tax loophole, Silo, which allows companies to avoid paying billions of dollars in taxes. The I.R.S. outlawed the shelter in 2004. A version of the bill passed the House Wednesday, though its fate in the Senate remained uncertain. (New York Times)

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Trouble in paradise?

Pat Leahy and Arlen Specter, the ranking Democrat and Republican respectively on the Senate Judiciary committee, have had a relationship over the years that, on the whole, has been a model of bipartisan comity as they've passed the gavel back and forth.

But are they falling out over Eric Holder?

In a speech on the Senate floor today, reports The Hill, Specter expressed surprise that Leahy, the committee chair, had scheduled a January 8 kickoff for Holder's confirmation hearing for the Attorney General job. Barack Obama is scheduled to be sworn in January 20.

Specter cited concerns about Holder's role in the pardon of Marc Rich in the waning days of the Clinton administration.

"We need to be sure the attorney general does not bend his views in any way that is partisan or political," Specter said. "There are many other matters that warrant inquiry."

Given the amount of material to go through, Specter said, the hearings should not begin until January 26 at the earliest.

The speech followed a letter sent last night by Specter to Leahy.

In response, Leahy just now fired off a letter back to his longtime colleague -- "Dear Arlen", it begins -- expressing surprise at Specter's surprise.

Leahy writes:

As I have said repeatedly from the time reports of his likely designation began appearing in the press in mid-November, I thought we should move promptly. It hardly came as a surprise when the President-elect announced that Eric would be a key part of his national security team at the designation announcement on December 1. My recollection is that your initial reaction on November 18 was that you were at that time already reviewing his record. Of course, Eric is someone you and I both know well and have known and worked with for years.

Leahy also cites historical precedent to argue that the timing of the hearings is not unusual:
After the contentious 2000 presidential election, I also proceeded promptly to hold the hearing on the designation by President-elect Bush of John Ashcroft to be Attorney General. John's designation was not formally announced until December 22, but I held his hearing 25 days later. I do not think President-elect Obama should be penalized for proceeding promptly with transition and designating his Attorney General selection three weeks before President Bush had.

I am sure you recall during your first year in the Senate how promptly Chairman Thurmond proceeded on the designation of William French Smith to be Attorney General at the beginning of the Reagan administration. The Committee completed its consideration of President Reagan's lawyer to be the Attorney General of the United States with a vote on January 16, even though he was not designated until December 11. We have known about Eric's designation officially for 10 days, and unofficially for more than three weeks. The Committee would have to vote on January 6, the first day of the new Congress, to approximate that timeline.

President Carter's first Attorney General, Griffin Bell, was not designated until December 18, yet his hearing and Committee consideration were completed by January 19. Approximating that timeline would have the Committee voting before the new Congress even comes into session.

Leahy even brings up past favors he has done for Specter:
I have sought to accommodate your interests on many occasions. I scheduled field hearings for you in Pennsylvania on foreclosure and health care mergers issues, and worked hard to ensure fair treatment and confirmation for nominations in which you had a personal interest.

We'll keep you posted on how this plays out...

On CNN within the last hour, Wolf Biltzer slipped in some interesting and potentially important news about what federal prosecutors might and might not have on Jesse Jackson Jr., who today was all but confirmed by his lawyer to be Senate Candidate 5.

Talking to legal analyst Jeffrey Toobin, Blitzer said that according to law enforcement sources, Pat Fitzgerald's office does not have recordings of Jackson himself speaking to Rod Blagojevich as part of the US Attorney's investigation into the governor.

If true, that would be significant, because the indictment filed yesterday against the governor quotes him telling an aide that an "emissary" from Jackson approached the governor and proposed a "pay-to-play" deal in regard to the open US Seante seat that Blagojevich has the power to fill.

If Fitzgerald doesn't have evidence of Jackson himself talking about any such deal, it would appear to lessen the chances that Jackson will be charged.

Of course, there are some caveats here. We've been unable to get more details on Blitzer's report, and haven't seen it corroborated elsewhere.

And even if true, Blitzer's report doesn't exlcude the possibility that Fitzgerald has a recording of an aide to Jackson -- perhaps the "emissary" to whom Blagojevich referred -- talking about the alleged deal.

Still, this is worth trying to learn more about...

Elizabeth Warren, the Harvard Law professor who chairs the Congressional Oversight Panel, which is monitoring the Treasury's spending of the bailout money, appeared this afternoon before a House commmitee to testify about the report -- better characterized as a set of questions -- the panel released this morning.

And from what Warren said, it doesn't appear that oversight of the billions of dollars at stake is being treated by either Treasury or Congress as a top priority.

Warren told the committee that the panel's four members had met for the first time just two weeks ago, and were still "struggling" to find office space. She added that all the members of the panel are serving part-time.

"Well, that raises the question of whether this can really be taken seriously," said Rep. Melvin Watt (D-NC), echoing fears about the strength of the oversight mechanisms are in place.

Congress authorized the creation of a five-member panel in the Oct. 2 bailout bill, but progress has been slow-going. Appointments were not announced until Nov. 14, and the panel remains one member short. (Sen. Jud Gregg, a New Hampshire Republican who was originally named to the position, stepped down Dec. 1.) The panel has little authority to do more than request information and report back to Congress about it.

In addition to Warren the other three members of the panel are Rep. Jeb Hensarling (R-TX), Richard Nieman, the state superintendent of banks for New York, and Damon Silvers, an associate general counsel of the AFL-CIO .

Rep. Jesse Jackson Jr. just gave a press conference adamantly denying any wrongdoing in connection with the Blagojevich charges.

"I reject and denounce pay-to-play politics, and have no involvement whatsoever in any wrongdoing,"Jackson said.

He added: "I did not initiate or authorize anyone at any time to promise anything to Governor Blagojevich at any time."

Jackson continued: "I spoke to the US Attorney's office and they shared with me that ... I am not accused of any misconduct."

Jackson said he met with the governor Tuesday (he meant Monday, it appears) to discuss the Senate seat, as was reported at the time, but that he believed he was in consideration on the merits.

He closed with an effort to associate himself with civil-rights history, saying he wanted to be judged "on the content of my character."

Earlier today, Jackson's lawyer all but admitted that Jackson is Senate Candidate 5. In the indictment filed against Blagojevich, the governor claims that an "emissary" from Candidate 5 approached him about a "pay to play" deal for the open Senate seat that Blagojevich has the power to fill.

In a televised press conference this afternoon, Jesse Jackson Jr.'s lawyer all but confirmed that his client is Senate Candidate 5 -- as we suspected from the start.

Asked whether he believes that Jackson is Candidate 5, James Montgomery said: "I do." He added: "He did not specifically tell me that, but I can assume it from our conversation."

Montgomery said that Jackson is guilty of no wrongdoing, and that both Montgomery and Jackson have been told by law enforcement that Jackson is not a target of the investigation. And he said that he and Jackson are scheduled to meet with US Attorney Pat Fitzgerald on Friday or Monday.

Just to remind you, in the indictment filed against Rod Blagojevich, the governor claims that an "emissary" from Candidate 5 approached him about a "pay to play" deal for the open Senate seat that Blagojevich has the power to fill.