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.
It’s time for another weekly blame round-up. This week in the cross-hairs: Moody’s and other credit-rating agencies who often knowingly overrated mortgage-based securities; Bush’s first-term mortgage strategy ($); and President Clinton’s ex-HUD Secretary who radically loosened mortgage restrictions. Even ex-Federal Reserve Chairman Alan Greenspan conceded some blame for the financial crisis.
Freddie Mac took some flak too after the AP reported that it had spent $2 million to kill a key regulation bill in 2005. Taxpayer-owned AIG finally halted its lobbying efforts this week, spurred on by a lobbying backlash ($) in Congress.
The Justice Department and the New York attorney general teamed up to take on credit-default swaps while the SEC, CFTC and Federal Reserve Bank of New York all vie for future oversight of the swaps market.
Wall Street executive payouts fueled more fury when the Wall Street Journal reported that Merrill Lynch’s top strategist could take home $25 million this year. An SEC official warned that banks should expect close scrutiny of their records ($) this year, particularly on the issue of executive compensation.
Bloomberg reported that SEC Chairman Chris Cox has been missing in action for much of the crisis and an SEC audit revealed that an SEC official closed a long-running investigation into Bear Stearns amid an “ongoing personal relationship” with Bear’s lawyer, an ex-SEC colleague.
So who’s going to hold all these firms accountable? Presumably the FBI, but it’s struggling to keep up with the glut of financial fraud cases after reassigning a hefty portion of its white-collar crime staff to terrorism after 9/11.
The speedy trial ($) of Sen. Ted Stevens (R-AK) is wrapping up. Jurors heard final testimony from the senator on Monday (he got a little testy) and closing arguments on Tuesday. Stevens’ lawyers stuck to their storyline, that Stevens is an honorable man who was taken advantage of by VECO CEO Bill Allen, while prosecutors rejected Stevens’ explanation as “nonsense.”
The jury is having some trouble reaching a decision though. On Wednesday, it asked the judge for permission to leave early because things were getting “kind of stressful.” The next day, they asked him to remove a juror due to her “violent outbursts.” This time the judge did not comply and instead gave the jury a lecture on civility.
The fate of those 17 Gitmo detaineesordered to be released two weeks ago remains up in the air after an appeals court halted that release on Monday. But the Pentagon dropped charges against five other detainees after the former prosecutor in their cases accused the military of withholding evidence from the defense and resigned.
Despite wide criticism of Gitmo and the tribunals in particular, senior administration aides told the New York Times that President Bush has decided to keep Gitmo open without ever having considered alternative proposals drafted by the Departments of State and Defense.
Meanwhile, Mother Jones found that a recent court filing in the case of detainee Lakhdar Boumediene suggests that the Bush administration ordered Bosnia to arrest six terror suspects after they had been cleared by an exhaustive Bosnian investigation in order to bolster the president’s 2002 State of the Union address.
Alaska Gov. Sarah Palin and her husband are both set to testify to the state Personnel Board today as part of its Troopergate investigation. An earlier investigation commissioned by the state legislature found that the governor had abused her power by pressuring the state’s top cop to fire her ex-brother-in-law.