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This Week in Scandal Watch

1. Subprime Mortgages and Ratings Agencies

Customers line up in front of an IndyMac Bank branch after it suffered one of the biggest bank closures in U.S. history (Credit: Bariel Bouys/AFP/Getty Images) Fallout from the failure of subprime mortgages continued to rock the housing and financial sectors as news spread of the woes of the nation's largest mortgage backers and a major regional bank.

In the wake of the Treasury Department's pledge to bail out government-sponsored Fannie Mae and Freddie Mac, both facing major losses in the wake of the foreclosure crisis, revelations of the political connections of the profit-making companies came to light. Both Fannie and Freddie have invested heavily in political campaigns -- supporting mostly Democratic candidates, but also picking up the tab for GOP events. They have deep ties to both presidential contenders.

Meanwhile, the federal government responded to a massive run on deposits by shuttering and seizing California-based IndyMac Bank, raising questions of criminal wrongdoing.

2. Detainee Treatment

This week, The New Yorker's Jane Mayer published the "The Dark Side," which chronicles how the U.S. embraced abusive interrogations after 9/11. Mayer reports, among other things, that the Red Cross warned the administration that some treatment of the detainees constituted torture and could expose officials to war crimes charges. (ProPublica's Eric Umansky interviewed Mayer, and we have the first chapter of her book.)

 John Ashcroft testified yesterday to the House Judiciary Committee, and appeared to suggest that waterboarding began before the White House got the legal go-ahead.

Meanwhile, the coming trial of Salim Hamdan, a Gitmo detainee and Osama bin Laden's former driver, remained in the spotlight. A judge refused to grant his lawyers' plea to postpone the trial.  And on Wednesday, a military judge refused to dismiss the charges against Hamdan; his trial remains scheduled for next week.

At a pretrial hearing on Tuesday, Hamdan offered a haunting description of daily life as a Gitmo detainee. One document filed by his lawyers alleges that Hamdan was deprived of sleep for 50 days.

Another court awarded a victory to President Bush by asserting his power to indefinitely detain civilians captured in the U.S. as enemy combatants, but it also maintained that the detainee in question, Ali al-Marri, must be allowed to challenge his detention.

And finally, lawyers for Omar Khadr released a video of the then-16-year-old sobbing and begging for medical treatment as he is interrogated in 2003 by Canadian officials at Guantanamo Bay. (Khadr was captured in Afghanistan when he was 15.)

3. Military Contractor Abuse

Last Friday, the Senate Democratic Policy Committee heard testimony about KBR's faulty electrical wiring in Iraq, which has killed at least 13 Americans since the war began. Witnesses blamed KBR's shoddy work and "good-old-boy network." Sen. Robert Casey, Jr. (D-PA) wrote a letter to Gen. David Petraeus criticizing him for the Pentagon's belated investigation. And today, The New York Times detailed internal Army documents suggesting KBR's faulty wiring problems are more widespread and dangerous than previously suspected.

NPR interviewed Iraqi employees of KBR who claim that their efforts to apply for refugee status were thwarted by their employer. The employees allege that KBR refused to provide letters confirming their employment - a prerequisite for application to the refugee program - supposedly to avoid loss of labor.

The Wall Street Journal reported ($) on a wrongful termination lawsuit brought against MVM Inc., a contractor that provides bodyguards to U.S. intel agencies in Iraq. The plaintiff claims he was fired after raising concerns about misconduct and reckless behavior. Congress passed a bill this week that would increase oversight of such contractors but the White House has threatened to veto to it.

4. Politicization at EPA

The Bush administration finally released an EPA report that outlines a plan for the U.S. to reduce greenhouse gas emissions. It had just one caveat: An introduction prepared by the White House repudiated the report's legality and fiscal feasibility. The White House had previously attempted to alter or block this report, which came in response to a 2007 Supreme Court ruling and has the power to regulate greenhouse gases.

On Thursday, the U.S. Climate Change Science Program released an EPA report outlining the threat that global warming poses to human health. Some potential dangers include "more powerful hurricanes, shrinking supplies of fresh water in the West, and the increased spread of diseases contracted through food and water."

The EPA has stated that it won't regulate greenhouse gas emissions, the primary cause of global warming, while President Bush is in office.

5. Earmark Abuse

The Washington Post reports that earmarks are still "alive and kicking" in Congress. Despite attempts at earmark reform, the House spending bills for the 2009 fiscal year are laden with over a billion dollars in earmark costs.

And finally, Rep. Charles Rangel's (D-NY) foundation, which Republican critics dubbed his "Monument to Me" after it won a $1.9 million earmark last year, is back in the news. This time, Rangel is under fire for soliciting funds -- on House letterhead -- from corporations with business before his panel, the House Ways and Means Committee. Rangel has defended his actions, but yesterday he announced at a press conference that he would file an ethics complaint - against himself.

 

Matthew Schwarzfeld contributed to this report.

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