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This Week in Scandals: TARP, Torture, and More

Rep. John Murtha (D-PA) (WDCPIX)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

TARP cash was supposed to ultimately wend its way to borrowers, but it seems to have gotten stuck in bank coffers along the way: Lending actually fell in February at the 21 largest banks receiving bailout bucks, the Treasury said this week. (Mortgage lending did see a significant boost, though.) Meanwhile, mortgage lenders are lifting foreclosure moratoriums, putting more people out on the street just as the Obama administration unrolls its “homeowner bailout.”

In other bailout news, TARP inspector general Neil Barofsky told the Financial Times that he was looking into whether banks “cooked their books” to secure bailout funds and that it was likely he’d find at least one that did. Goldman Sachs raised money to pay back its $10 billion from the bailout – and cut loose all the strings attached to it, like caps on executive pay. The announcement accompanied a report of strong profits, but as was quickly pointed out, the report skipped right over massive December losses

And finally, Fannie Mae and Freddie Mac might be facing a major revamp, and the SEC has credit ratings agencies in its crosshairs

2. Detainee Treatment

Yesterday the Obama administration released legal opinions from lawyers in the Bush Justice Department’s Office of Legal Counsel who signed off on harsh interrogation techniques like water-boarding and sleep deprivation. In releasing them, President Barack Obama said he would not prosecute the CIA interrogators who carried them out, but stayed mum on the lawyers who approved them. (Our continuing coverage of the battle to win release of some 30 still-secret memos can be found here, along with a chart of more than 50 related memos.)

One memo released yesterday appears to inadvertently reveal that Hassan Ghul, a so-called ghost detainee human rights groups had lost track of, had been held in a secret prison and beaten by the CIA.

3. House of Murtha

Rep. Pete Visclosky (D-IN) and Rep. John Murtha (D-PA) have been in the spotlight this week over their earmarks for (and campaign donations from) clients of defense lobbying shop PMA Group, which closed last month amid an FBI investigation. But where Visclosky errs on the side of caution, Murtha stays the course.

Visclosky amended old FEC filings to properly identify donors, dumped (some of) his old donations from PMA clients and stopped taking new ones. He also said his earmarking days for PMA clients are over until the investigation ends. Murtha, meanwhile, is still requesting earmarks for PMA clients and raking in their campaign cash.