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This Week in Scandals

Every week, we take stock of how the week unfolded for the 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.

Market crisis

Last week’s passing of the bailout bill did not staunch the bleeding. The Dow fell below 10,000 for the first time since 2004, then below 9,000 for the first time since 2003, then, at least briefly, below 8,000. There was little time to pause for questions as the federal government pushed away the Invisible Hand and plunged its own fingers into the mess. Treasury Secretary Paulson’s deputy was fast-tracked into the position of bailout czar. The world’s central banks coordinated a rate cut. The Fed announced that it will sidestep banks and loan money directly to companies. And the White House said it will consider taking ownership stakes in banks.

Meanwhile, the days of judgment have begun. The meltdown is the fault of Lehman Brothers executive Richard Fuld, Congress said. It may have also been Fannie Mae and Freddie Mac (though many dispute that). Regulators sat on their hands, and Alan Greenspan was wrong. It was the shadow market, and Wall Street “greed.”

The crisis seeped into real people’s lives. Cities and states felt the squeeze. Retirement savings washed away. Lights went off. One in six homes was worth less than its mortgage.

The Presidential candidates could not compete. At a town hall debate, Sen. McCain proposed bailing out homeowners, but offered few details.

Palin ‘Troopergate’

In Alaska, the legislature awaited a Friday report on ‘Troopergate’ allegations.  Gov. Sarah Palin is accused of abusing her power by sacking the state’s public safety commissioner after he refused to fire her ex-brother-in-law, a state trooper.

Two obstacles to the report’s release were lifted. Alaska’s Attorney General, appointed by Palin, backed down from his previous position and allowed seven state employees to respond to subpoenas and testify. The state Supreme Court also rejected a bid to stop the investigation. The McCain-Palin campaign headed off the report by releasing its own exoneration of Palin.

New details emerged: Palin’s office once asked that Trooper Wooten, dressed as Safety Bear, not appear at the state fair, The New York Times reported. And in a 52-page affidavit written by Todd Palin, he said it was he, not Sarah, who urged anyone who would listen that the trooper should lose his badge.

Alaska!

Earlier this week, defense attorneys for Alaskan Sen. Ted Stevens renewed their call for mistrial. Stevens is accused of failing to disclose $250,000 in gifts. The trial went on, but the judge struck a blow to the prosecution by excluding evidence he said contained lies.

Also, pipeline contractor Bill Allen testified that the senator knew the value of Allen’s extensive and free renovations on Stevens’ home, and jurors heard secretly recorded conversations between the two men. The defense called Colin Powell as a character witness.

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