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This Week in Scandal Watch

Every week, we take stock of how the week unfolded for the five stories we're tracking in Scandal Watch (see the right sidebar). Click here for more information on how we do this and to suggest additions.

1. Subprime Mortgages and Ratings Agencies(about)

Countrywide CEO Angelo Mozilo (Mark Wilson/Getty Images)The Wall Street Journal reported that the Federal Housing Administration still operates a program offering risky no-money-down mortgages, long after most mortgage companies discontinued such loans. Furthermore, the Washington Post revealed that key portions of the housing bill meant to provide homeowners with foreclosure aid had been suggested by banks such as Credit Suisse. Not surprisingly, the bill would benefit lenders and relieve such banks from much of the debt accrued from the subprime crisis.

The Countrywide scandal heated up as three states - California, Illinois and Washington - brought charges against the company and its CEO, Angelo Mozilo.  The charges were brought on the same day that Countrywide's shareholders approved its sale to Bank of America. And The Wall Street Journal reported that Countrywide's "Friends of Angelo" program included a variety of prominent figures - such as retired professional athletes - not just politicians.

2. Military Contractor Abuse(about)

After feds arrested Efraim Diveroli, the 22-year-old arms dealer with a $300 million military contract, for selling banned Chinese ammunition, Rep. Henry Waxman alleged that the State Department and the ambassador to Albania had conspired to hide the ammo's origins. An investigation by the House Oversight and Government Reform Committee, which Rep. Waxman chairs, further revealed that Diveroli's company, AEY, had been on the State Department's watch list in 2006 -- but had nonetheless won contracts from both the Pentagon and the State Department afterwards.

The military contractor Blackwater allegedly skirted a law that forbids private parties from carrying automatic weapons by ‘donating' AK-47s to the local police department and kindly offering to house them in their own facilities. ATF subsequently raided the premises.

Considering all the flak the military is getting over its contracting, one might think an overhaul of the process -- and its oversight -- would be on the way. But the White House rejected the Army's plan to do so.

3. Politicization at EPA(about)

The EPA came back into the spotlight this week when officials revealed that the White House had tried to silence a December report on greenhouse-gas emissions. When the EPA refused to recall its e-mail, the Bush administration countered by refusing to open it.

4. Detainee Treatment(about)

The New York Times published an in-depth article describing the interrogation of the 9/11 mastermind, and a federal appeals court delivered the first verdict on a Gitmo detainee following the Supreme Court's landmark decision. The court dealt a blow to the Bush administration by determining that Huzaifa Parhat was not an "enemy comabatant," but the government wouldn't let his lawyer tell him the good news. Meanwhile, the Bush administration has asked to rewrite its evidence against Gitmo detainees.

And two Bush administration lawyers – David Addington, Vice President Dick Cheney’s legal adviser and John Yoo, an ex-Justice Department lawyer – testified to Congress about their role in condoning harsh interrogation methods.

5. Warrantless Surveillance(about)

Finally, a federal court ruled that the NSA has no obligation to tell lawyers for Gitmo detainees whether their phones were wiretapped as part of Bush's domestic spying program. 

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