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This Week’s Scandals: Blago's Bribes, Blackwater And More

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.

Gov. Blagojevich leaves his home on Dec. 11, 2008. (Brian Kersey/Getty Images) 1. Blago's Bribes

Illinois Gov. Rod Blagojevich shot to the top of Scandal Watch this week after his Tuesday morning arrest. Chicago outsiders were shocked by the portrait of Blagojevich that emerged from the colorful criminal complaint (PDF). Blagojevich's take on Obama's vacant Senate seat -- it's "a fucking valuable thing, you just don't give it away for nothing" -- seems to sum up his general philosophy towards public office, where he allegedly made a habit of trading political appointments for campaign donations and favors.

Obama has vigorously denied any participation in the governor's alleged "pay-to-play" game and called for his resignation. A union official allegedly acted as a liaison between the Obama and Blagojevich camps during discussions over the Senate seat, but the complaint quotes Blagojevich cursing Obama for not offering him "anything except appreciation." Obama vowed to air any contacts he or his staff had with Blagojevich's office.

U.S. Rep. Jesse Jackson Jr. was identified as "Senate Candidate 5," whose go-between allegedly offered to raise $1 million for Blagojevich in return for Obama's Senate seat. Today the Chicago Tribune reports that after a lunch on Oct. 31, Jackson's supporters began raising money for Blagojevich. Jackson has denied knowing of any deal to buy the seat.

2. Market Crisis

Goldman execs' decision to forgo bonuses this year has apparently spurred a Wall-Street-wide fervor of selflessness. Wachovia's CEO is forgoing a bonus, as are execs at Morgan Stanley and Merrill Lynch. Merrill's CEO might have been shamed into that decision after the Wall Street Journal fronted Monday's paper with news that he suggested to the board he deserved a $10 million bonus for his less than top-notch work this year. Morgan adopted a more unusual bonus strategy: In order to dull the incentive to take big risks for big bonuses, it plans to enact a "claw-back" provision that takes away some of an employee's bonus if his bets sour after a few years.

At a congressional hearing on Wednesday, Treasury Assistant Secretary Neel Kashkari took a battering from lawmakers angry that Treasury isn’t tracking the cash it doles out to financial institutions. Kashkari tried to assure them that the plan is working; it's just going to take some time.

A House panel on Tuesday blasted Fannie and Freddie execs for ignoring internal warnings of risky loans. Just two days before, the AP reported on the millions Freddie spent to halt a push for greater regulation. Citigroup is also keeping its lobbying machine well-oiled, even after a cushy deal from the government.

3. Military Contractor Abuse

The Justice Department has charged five Blackwater guards with the 2007 manslaughter of Iraqis. The guards have defended their actions by saying they were fired upon first, but testimony from a sixth guard who has cooperated with the FBI suggests otherwise. Attorneys for the five guards immediately lashed out at the government for "second-guess[ing] split-second decisions" made in a warzone.

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