Every week, we take stock of how the week unfolded for the stories we’re tracking in Scandal Watch (see the right sidebar). Here is how we do it.  And, as always, feel free to suggest new scandals.

1. Market Crisis

As the Treasury’s bailout plan progresses – we’re keeping a running tally of the banks participating – it continues to garner criticism. Critics say that the Treasury didn’t make enough demands ($) on the banks, and that the banks won’t actually use the cash influx to lend to one another and unfreeze the credit markets. Instead, taxpayer funds will be used to pad executive bonuses, line shareholder’s pockets and fund bank mergers.

Faith in the Treasury’s ability to effectively manage the market crisis ran into further questions this week when the Washington Post highlighted the failure of the Fannie, Freddie takeover to lower mortgage rates and the Wall Street Journal reported that understaffing and a battle over fees has delayed the hiring of asset managers ($) to oversee the bailout.

The credit crisis continues to batter pension funds, and titans like Lockheed and General Motors are pressing the government to help cover the $200 billion deficit in pension funds.

And the Justice Department is investigating Countrywide’s ‘Friends of Angelo’ VIP mortgage program, making us wistful for the days when that was our biggest mortgage-related scandal.

2. AIG

AIG rocketed to number two on our scandal list after being lambasted for burning through its $123 billion government loan, allegedly hiding its losses from investors and auditors, lobbying the government in favor of deregulation and spending its dwindling capital on retreats and executive payouts.

This week, the New York Times focused on AIG’s spending and wondered where all the cash has gone. “You don’t just suddenly lose $120 billion overnight,” said one analyst. Instead, AIG must have been hiding tens of billions of dollars of losses when it got the $85 billion loan from the government back in September, he said.

Besides the loan it’s gobbling up, AIG’s collapse may also cost transit agencies across the country millions of dollars because it had insured some of their bank loans.

3. Detainee Treatment

A second military tribunal got underway at Gitmo this week, but the suspect boycotted the trial and his lawyer stayed mum in a show of solidarity. In another trial, the judge ruled that the suspect’s confession was inadmissible because it had been obtained after Afghani police threatened to kill his family, which constitutes torture, the judge said. And a third Gitmo judge gave defense lawyers the opportunity to visit the mysterious Camp 7 that houses some of the highest-profile detainees.

And in U.S. courts, a federal judge finally defined “enemy combatant,” which has been a matter of legal ambiguity for some time, and another judge ruled that the CIA can conceal detainees’ statements that the agency tortured them in secret prisons. The ACLU had wanted the CIA to un-redact those statements.

Meanwhile, Gitmo guards continue to use pepper spray, shackles and brute force to feed a Gitmo detainee who has been on a hunger strike since 2005.

And finally, the Bush administration’s efforts to transfer detainees ($) back to their home countries have stalled because it cannot agree to terms with several Middle Eastern and African nations.

4. Alaska!

Sen. Ted Stevens (R-AK) was convicted on all seven counts of lying on Senate disclosure forms. Senate rules don’t require him to step down, but there has been clamoring in Congress for him to do so. Undeterred, Stevens vowed to continue his re-election campaign and called for an investigation into the federal prosecutors. Meanwhile, his case has spurred a push for the creation of an independent committee to investigate Senate ethics breaches.