Treasury's 'Point Man' on AIG Bailout That Benefited Goldman, Owned Goldman Stock

by Karen Weise, ProPublica

Deep in an article today on the government's bailout of AIG, The New York Times cites sources saying that the Treasury Department's "point man" on AIG, Don Jester, was a former Goldman Sachs employee who owned stock in the bank even as he was making decisions on the bailout that ultimately channeled billions of taxpayer dollars to Goldman.

Owning stock in a company an official oversees typically is verboten, but because Jester was working as an outside contractor rather than an official employee, he was exempt from conflict-of interest rules.

Goldman Sachs stood to benefit from the AIG bailout because Goldman had roughly $20 billion in insurance-like credit-default swaps with AIG -- essentially bets by the investment bank that the housing market would go south. But if AIG collapsed, Goldman wouldn't be able to collect on the bets. When the government instead bailed out AIG, taxpayers paid out the swaps at full face value, and Goldman Sachs got $12.9 billion -- more than any other of AIG's customers.

Jester was Goldman's deputy CFO when he left the firm in 2005. And here's what the Times says about his investments in Goldman:

Mr. Jester, according to several people with knowledge of his financial holdings, still owned Goldman stock while overseeing Treasury's response to the A.I.G. crisis.

We contacted Jester this morning to comment on the story and confirm the stock ownership; we'll post an update when we get a response. His spokesperson, Michelle Davis, told the Times that Jester followed what the paper paraphrases as an "ethics plan to avoid conflict with all of his stock holdings." (According to a federal database search, Jester received $30,000 for six months consulting at the Treasury Department.)

Earlier this year, a Times op-ed online dubbed Jester one of the "mystery men" of the financial crisis and noted that Jester was at the center of the Treasury Department's response to AIG's impending collapse. During the chaotic two months in the fall of 2008, Timothy Geithner, then the head of the Federal Reserve Bank of New York, spoke on the phone with Jester 103 times -- more than other person aside from then-Treasury Secretary Henry Pauslon. Jester relocated to AIG's offices for a period of time, the paper reported.

The government's decision to have AIG pay out Goldman and others bets at full value has been controversial. The Times said while several of the Federal Reserve Bank of New York's outside advisors recommended it force banks to take losses on their bets with AIG, Jester advocated for full repayment:

According to the documents, Mr. Jester opposed bailout structures that required the banks to return cash to A.I.G. Nothing in the documents indicates that Mr. Jester advocated forcing Goldman and the other banks to accept a discount on the deals.

As an example of the advice against paying full value for the deals, the Times cited a presentation from an advisor to the New York Fed, which outlined five reasons banks should agree to concessions. The Federal Reserve Bank of New York defended its decisions to the Times:

"This was not about the banks," said Sarah J. Dahlgren, a senior vice president for the New York Fed who oversees A.I.G. "This was about stabilizing the system by preventing the disorderly collapse of A.I.G. and the potentially devastating consequences of that event for the U.S. and global economies."

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Senate Democrats Try New Approach To Extend Unemployment Benefits

Stymied so far in their attempts to extend unemployment benefits as part of a larger piece of legislation, Senate Democrats have decided to carve out that extension, and one other potentially popular provision, in apparent hope that the scaled-down bill might be more palatable to Republicans.

Senate Republicans repeatedly have filibustered the overall American Jobs and Closing Tax Loopholes Act, which includes a measure to extend benefits to out-of-work Americans. GOP obstruction has run out the clock for more than 1 million jobless Americans, who are starting to see an end to their supplemental income. Almost half of those unemployed have been out of work for six months or longer, a level of long-term joblessness not seen since World War II.

Although she has helped sustain the GOP filibuster thus far, last week Sen. Olympia Snowe (R-Maine) wrote a letter to Senate Majority Leader Harry Reid (D-Nev.) seeking a vote on a stand-alone bill to extend unemployment benefits.

Reid and Sen. Max Baucus (D-Mont.) appear to be obliging, hoping that by coaxing support from Snowe, they finally may overcome a filibuster.

Reid and Baucus introduced legislation Wednesday to reinstate federal unemployment insurance benefits and extend the purchase closing date for new homebuyers to qualify for tax credits, two measures that were a part of the doomed American Jobs and Closing Tax Loopholes Act. They filed their bill as a substitute amendment to the American Jobs and Closing Tax Loopholes Act, according to a statement from Senate Democrats.

The Reid/Baucus substitute would retroactively reinstate federal unemployment insurance, so that Americans who lost their benefits when the program expired at the end of May can receive the support they need while they look for work, the statement says. A million or more Americans could be affected by the expiration of benefits thus far. The bill will extend federal unemployment insurance benefits, so Americans who lose their jobs through no fault of their own can continue to receive the benefits they depend on through November, according to the Democrats' statement.

Although the nation's unemployment rate has eased slightly in recent months, it continues to stand at decades-high of 9.7 million. In all some 15 million Americans are out of work as a result of the economic downturn that began more than two years ago.

Additionally, the substitute bill would extend the date new homebuyers who are already under contract must close by to qualify for the Homebuyer Tax Credit from July 1 to October 30, so that more American homebuyers can benefit from the program.

“Folks in Montana and across the nation are struggling to find jobs in this tough economy, and every day these benefits are lapsed is another day Americans worry how they will feed their families while they look for work. This bill restores the support American workers so desperately need and extends tax cuts for homeownership, which is the backbone of the American dream,” says Baucus, chairman of the Senate Finance Committee. “I urge my colleagues to stand with us to support American families and restore the unemployment insurance benefits that are often the only lifeline many workers have in this tough economy.”

The substitute measure also includes several provisions to help pay for the unemployment and homebuyer-credit extensions, including rescinding $94 million from Defense Department unobligated funds which will expire on Sept. 30, and are excess to current requirements.

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DNC To Spend $50 Million Or More On 'One Of Most Ambitious Midterm Campaign Programs' In History

Facing a troubling a potentially troubling political environment heading into the 2010 elections, the Democratic National Committee intends to spend at least $50 million to bolster the chances of Democrats running nationwide, according to a top DNC official.

To keep those plans on track, the DNC is hoping to raise $465,000 by the end of Wednesday, Ann Marie Habershaw, DNC chief operating officer, says in an email. Wednesday is the deadline for second-quarter fundraising totals.

Democrats are "putting together one of the most ambitious midterm campaign programs in American political history" this year, Habershaw says in an email to supporters.

Her email doesn't address the larger political atmosphere, but after two big elections in 2006 and 2008, Democrats this year are facing a more-uncertain terrain after more than a year of Republican attacks and middling poll numbers for President Obama.

Democrats won back control of Congress in 2006, and extended their majorities in 2008 while sending Obama to the White House, too.

But this year, for the first time, Democrats will face the political potential of the so-called "tea party" movement, which has energized conservative candidates nationwide, including Senate hopefuls Rand Paul in Kentucky and Sharron Angle in Nevada.

Control of both houses of Congress will be at stake this year, which will determine whether Democrats continue to hold the House and Senate as they have since 2007, or whether Republicans take over, as they hope to do in a repeat of the 1994 midterm sweep.

"We've never had this much staff on the ground in a non-presidential election, and we're doing everything we can to reach out to the 15 million folks who voted for the first time in 2008 to get them back to the polls this fall," Habershaw says. "Such an ambitious program isn't cheap -- we know our Vote 2010 plan will cost at least $50 million. From office space to salaries for field organizers to ads and mail pieces, the expenses all add up. And, right now, as I'm looking at our budgets and projections, we don't yet have enough."

Although the DNC says it plans to spend heavily this year, Democrats easily could be outmatched financially due to the January Citizens United Supreme Court ruling. That decision swept away decades of limits on corporate spending to influence elections so that corporations and other special interests can spend virtually unlimited amounts to influence the 2010 election, and subsequent elections.

Habershaw touts major Democratic accomplishments: enactment of the 2009 $787 billion economic stimulus program, known as the American Recovery and Reinvestment Act, as well as the landmark healthcare law passed this year.

Democrats have achieved their legislative gains in the face of near-unified GOP obstruction and regular, historically high use of the filibuster in the Senate to attempt to block anything more than minor legislation.

"And now we need to fight for the President's allies up and down the ballot, to protect those gains and keep moving America forward," Habershaw says.

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Republicans Again Block Unemployment Extension -- This Time In The House

Republicans on Capitol Hill once again stood in the way of Democrats attempting to pass an extension of unemployment benefits for jobless Americans. The only difference on Tuesday is that this time it was the House GOP blocking the legislation.

Senate Republicans repeatedly have filibustered an overall tax and jobs bill, the American Jobs and Closing Tax Loopholes Act, that contains a provision to extend supplemental income assistance to unemployed Americans.

Because of Republican obstruction, 1.7 million out-of-work Americans are set to lose their unemployment benefits as of July 3, so House Democrats decided to attempt to approve the unemployment insurance extension as a stand-alone bill in hopes that, at least, could get past a Senate filibuster.

Republican Sen. Olympia Snowe of Maine has written Senate Majority Leader Harry Reid (D-Nev.) to seek such a stand-alone bill to extend unemployment benefits.

But House Democrats were blocked when they tried to pass H.R. 5818, the Restoration of Emergency Unemployment Compensation Act, on a voice vote. That means Democrats will have seek a roll-call vote, which could happen Wednesday, according to a blog post by a progressive advocacy organization.

House Democrats released a state-by-state breakdown (PDF) of the numbers of jobless Americans who have either already lost their benefits, or are set to.

"Republicans in Congress are clearly more focused on their short-term political standing than the immediate economic security of millions of Americans who have lost their jobs through no fault of their own and are unable to find work,” says Rep. Sander Levin (D-Mich), chairman of the House Ways and Means Committee. “While today’s vote is deeply disappointing, it is not altogether surprising given how Republicans have increasingly voted in lock-step against all measures to create jobs, strengthen our economic recovery and help the unemployed.

“We will persevere,” Levin adds. “We will bring this bill up again under regular order and it will pass. Today’s vote should make it abundantly clear to the American people that the Democratic majority in Congress remains committed to providing the benefits and assistance families need while we continue efforts to recover from this recession.”

The national unemployment rate stands at a decades-high 9.7 percent, with five or six Americans standing in line for every one available job opening.

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Republicans Slam Marshall For Activism, But Al Franken Says It Is Conservatives Who Are 'Legislating From The Bench'

Republicans opened the confirmation hearing for Elena Kagan's nomination to the Supreme Court Monday with a sustained attack on her and her mentors -- particularly the late Thurgood Marshall -- for their perceived judicial activism.

A Democrat on the Senate Judiciary Committee acknowledged such activism exists, but that it is not liberals or Democrats who engage in it. Rather, it is conservatives who have a record of "legislating from the bench," according to Sen. Al Franken of Minnesota.

The first day of Kagan's hearing was given almost exclusively to stage-setting, as the nominee and members of the committee all took up the day by making opening statements.

President Obama nominated Kagan this spring to succeed retiring Justice John Paul Stevens. Conservatives largely have opposed the nomination of the woman who is the current solicitor general.

Sen. Jeff Sessions of Alabama, ranking Republican on Judiciary, was just one in a line of GOP senators who took turns assaulting the record of Kagan's proclaimed mentors and heroes, especially the late Justice Thurgood Marshall.

Sessions called Marshall and former federal judge Abner Mikva each "a well-known liberal activist judge." The 50-year-old Kagan clerked for both Marshall and Mikva.

The first African-American to serve on the nation's highest court, Thurgood Marshall was appointed in 1967 by President Lyndon Johnson. He retired in 1991, and was replaced by Clarence Thomas. Marshall died in 1993.

Sen. Jon Kyl (R-Ariz.) went even further in criticizing Marshall's memory.

“Ms. Kagan identified Thurgood Marshall as another of her legal ‘heroes.’ Justice Marshall is a historic figure in many respects, and it is not surprising that, as one of his clerks, she held him in the highest regard. Justice Marshall’s judicial philosophy, however, was not what I would consider mainstream,” he says.

Marshall's son was in the audience during the hearing to listen on as senators disparaged his father's decades of work.

"I was a little surprised," the Washington Post quotes Goody Marshall as saying in response. "He would've probably had the same reaction I did: It's time to talk about Elena."


Activism In The Roberts Court



Franken, the Democrat now sitting through his second Supreme Court confirmation hearing, says that his earlier such hearing -- last year, for Justice Sonia Sotomayor -- laid bare the truth of judicial activism.

"There is such a thing as legislating from the bench. And it is practiced repeatedly by the Roberts Court, where it has cut in only one direction: in favor of powerful corporate interests, and against the rights of individual Americans," Franken says, referring to Chief Justice John Roberts, the conservative named to the high court in 2005 by George W. Bush. "In the next few days, I want to continue this conversation. Because I think things have only gotten worse. And so I want to say one thing to the Minnesotans watching at home: With few exceptions, whether you're a worker, a pensioner, a small business owner, a woman, a voter, or a person who drinks water, your rights are harder to defend today than they were five years ago."

As proof, Franken read a laundry list of cases in which he says that decisions by the Roberts Court hurt residents in his state.

"Our state has been victim to the third-largest Ponzi scheme in history. And yet in 2008, in a case called Stoneridge, the Roberts Court made it harder for investors to get their money back from the people that defrauded them," he says. "The Twin Cities have more older workers per capita than almost any other city in the nation. And yet in 2009, in a case called Gross, the Roberts Court made it easier for corporations to fire older Americans and get away with it. Minnesota has more wetlands than all but three states. And yet in a case called Rapanos, the Court cut countless streams and wetlands out of the Clean Water Act-even though they'd been covered for up to 30 years."

Franken notes that in each of those cases, Stevens, the justice whom Kagan would replace, led the dissent.

"Now Justice Stevens is no firebrand liberal. He was appointed to the Seventh Circuit by Richard Nixon. And he was elevated to the Supreme Court by Gerald Ford," Franken says. "By all accounts, he was considered a moderate.And yet he didn't hesitate to tell corporations that they aren't a part of '‘We the People,' by whom and for whom our Constitution was established.' And he didn't flinch when he told a President that 'the Executive is bound to comply with the rule of law.' General Kagan, you've got big shoes to fill."

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Capitol Idea: Sen. Byrd: A Difficult, But Indispensible, American Hero

By Scott Nance

The death of Ted Kennedy last summer brought a flow of tears from liberals and progressives and prompted what amounted to national days of mourning as the old liberal lion was eulogized and laid to rest.

Reaction to the passing of Sen. Robert C. Byrd, by contrast, is likely to be more subdued — perhaps amounting to a collective, if respectful, shrug of the shoulders.

Alhough Byrd has often been described as a conservative, he spent recent decades promoting solid Democratic values and earned a place as a friend to liberals and progressives. Moreover, Americans across the political spectrum owe a debt to the man who grew up poor in a small coal-mining town.

“Senator Byrd came from humble beginnings in the southern coalfields, was raised by hard-working West Virginians, and triumphantly rose to the heights of power in America. But he never forgot where he came from nor who he represented, and he never abused that power for his own gain,” said Byrd's home-state colleague, Sen. Jay Rockefeller.

The Left probably holds the nine-term veteran in highest regard for taking on the Bush administration. Byrd vigorously opposed not only the Iraq war, but the entire concept of preemptive war.

But his devotion to Democratic Party ideals went beyond merely serving as a nemesis to the 43rd president. Even as it went out of fashion nationally, Byrd never wavered in his belief that federal spending could help improve the conditions and economy for working-class Americans, particularly back home in the Mountain State.

And his deep scholarship and lofty oratory made Byrd a formidable defender of Democratic ideals, even in the face of growing conservative partisanship.

I recall watching the Senate one day shortly after the 1994 Republican takeover of Congress. One of the new GOP senators elected that year had come to the floor and began ranting on about the provisions in the Republican "Contract With America."

The freshman's mistake was yielding time to Senator Byrd, who began holding forth on Plutarch and the Roman Senate. The Republican was caught as a deer in the headlights and beat a hasty retreat as he had no defense against Byrd's use of history to take apart his sloganeering.

More than fealty to any partisan position, however, Robert Byrd held tight to the Constitution — literally. He would carry our nation's charter in his breast pocket, and would not hesitate to pull it out on the Senate floor whenever necessary in order to defend the liberty so many fought and died to preserve.

That Byrd could transcend partisan pigeonholes is reflected in the accolades heaped upon him in death. Liberals and conservatives, alike, paid tribute to this extraordinary American who served longer in Congress than anyone else and amassed a record of more than 18,500 votes.

None of the those who have been lauding Byrd and his career since his death at a hospital near Washington early Monday would be so tactless as to mention an overriding reason why a broader national outpouring might be more tempered. But the Washington Post's obituary covers it in fairly graphic detail.

Following a youthful association with the Ku Klux Klan, Byrd spent his early years in the Senate advancing an often segregationist and racist agenda that today we would find repugnant.

Time changed Byrd's ways. He apologized for his racism, and the once-vocal opponent of equality turned around and became such a civil-rights supporter as to back the Equal Rights Amendment.

Unlike other Democrats who may turn a blind eye to Byrd's unsavory past, or make excuses for it, I instead see it as one more reason to admire him.

The incredible arc of Robert Byrd's historic career is nothing more than a 60-year lesson that leaders can change their ways, and can learn to embrace good policies and positions they once may have rejected out of hand. In a word, Senator Byrd stands for the chance for redemption for all.

Perhaps the most powerful thing that can be said for Byrd's life and career are the high words of praise offered by our nation's most prominent African American.

"Senator Byrd’s story was uniquely American," says Barack Obama. "He was born into wrenching poverty, but educated himself to become an authoritative scholar, respected leader, and unparalleled champion of our Constitution. He scaled the summit of power, but his mind never strayed from the people of his beloved West Virginia. He had the courage to stand firm in his principles, but also the courage to change over time."

The publisher of On The Hill, Scott Nance has covered government and Washington for more than a decade. Capitol Idea is his regular column from Washington. The article was first published as "Sen. Byrd: A Difficult, But Indispensible, American Hero," on Blogcritics.org.

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Q & A: Former SEC Chairman Sees Financial Reform as Changes on the Margins

by Karen Weise, ProPublica

After a 20-hour, all-night session, Senate and House negotiators agreed last Friday on a compromise financial reform bill meant to prevent future economic meltdowns. Just before the bill was being finalized, former SEC Chairman Arthur Levitt wrote a scathing op-ed in The Wall Street Journal, saying the bill was “bled dry of nearly every meaningful protection of investors.” Levitt headed the SEC from 1993 to 2001, leaving just before the accounting scandals of Enron and WorldCom erupted, and is now an adviser to Goldman Sachs and the Carlyle Group, a private equity firm.

As the dust settled last Friday, we checked in with Levitt to understand just why he believes the bill, as he says, “totally left investors in the dust.” Here are his thoughts on the topic:

On reports that this is the biggest financial reform since the Great Depression ...

“I think that’s ridiculous. Whatever changes were made were made at the margins.”

On the most important omission from the bill ...

“The issue that was most important to investors for 25 years was shareholder access to the proxy, [which would make it easier for shareholders to nominate candidates for a company’s board of directors]. As the system has been structured, shareholders have no say in the management of the company except in very, very unusual circumstances. By having shareholder access, you are developing a measure of oversight that does not exist in any other form.”

On the best parts of the bill ...

“I suppose consumer protection was a useful step, but it’s unfortunate that it wasn’t an independent agency and is housed in the Federal Reserve, which is conflicted because their mission is to protect the safety and the soundness of the system, and that creates a tension with protecting investors and protecting consumers. The safety and soundness of the banks is often at odds with what’s best for consumers. I think that by housing it in the Federal Reserve, they really put chains on that agency.

“I think another constructive change was the power given to the CFTC [the Commodities Futures Trading Commission, which will now regulate derivatives], whose chairman presently is a very pro-investor chairman. They will be given rule-making power to deal with abuses that no bill could possibly contemplate. I think both opponents and proponents of the various measures dealing with derivatives didn’t totally understand their implications and how they will fit into the system in the future. I don’t think the Congress has the skills to deal with the intricacy of derivative regulation; it was a good move giving that power to the chairman of the CFTC.”

On regrets from his time in the SEC ...

“We didn’t have the kinds of derivatives that have developed since that time, but clearly I would regret not having called for regulation and oversight of the derivatives market that we had at that period. [Check out our story on the politics behind squashing derivative oversight.] But the need for it today is vastly greater than it was then. We probably wouldn’t have been where we are today had I taken a different position. And it’s unlikely that I would have won the battle against the Treasury and the Federal Reserve, but nevertheless, I certainly could have done more than I did.”

On the proposal to make the SEC self-funded, which supporters say would increase its independence and resources ...

“I think that the reason for cutting out the SEC funding proposal [to make it self-funded] was because the appropriators right now are able to raise money from both sides of every issue that comes before them. If they gave the SEC self-funding, they would lose the leverage that they currently have as a major tool to raise campaign funding, and they basically don’t want to do that. Five different SEC chairs tried to persuade Congress to do this, and the issue goes back almost 25 years. I just think it’s a cash cow that Congress characteristically resents giving up.”

On who will pay for the reforms ...

“The business community in America is very good at adjusting to regulatory changes. I think that investors and consumers and businesses will absorb some [costs], and the firms that aren’t skillful at adapting to change will absorb more.”

Write to Karen Weise at Karen.Weise@propublica.org.

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Its Scandal May Be Lost Within Gulf Oil, But Toyota's Car Safety Still At Issue

BP, of course, has become the poster child for bad corporate behavior for its monster oil spill that the energy giant can't seem to stop.

But before oil executives like Tony Hayward and Lamar McKay began coming to Capitol Hill for their regular tongue-lashings over the Deepwater Horizon disaster, it was Toyota bigwigs like James Lentz who came to town for congressional reaming due to problems with the carmaker's vehicles that would accelerate uncontrollably, causing a number of fatalities.

It may seem as the Toyota safety scandal was from another age, as preoccupied as the nation has become with oil continuing to spew into the Gulf of Mexico. But, in reality, it was just a few months ago that Congress was probing the Toyota issue, hot-and-heavy. And just because Toyota's ham-handed answers for "unintended acceleration" have given way in the headlines to BP's ineffectual mutterings about "top kill" and paying damage claims, the issue itself isn't over.

A 13-member panel organized by the independent National Research Council (NRC) will meet this week in Washington to identify possible causes of unintended acceleration in vehicles in the aftermath of Toyota's large recalls.

The group, which will hold its first meeting Wednesday and Thursday, includes notable engineers, scientists and auto safety experts. They will review electronic systems across the auto industry.

The study is part of the federal government's work to learn what led to the recall of more than 8 million Toyotas because of sudden unintended acceleration. The review is expected to last 15 months.

The NRC is part of the National Academies, an independent science, engineering and research organization that operates under a congressional charter and regularly provides advice and information to Washington policymakers.

Meanwhile, earlier this month, the Senate Commerce Committee approved the Motor Vehicle Safety Act of 2010, which includes legislation by Sen. Barbara Boxer (D-Calif.) that would crack down on the cozy relationship between the National Highway Traffic Safety Administration (NHTSA) and automobile companies.

Boxer’s legislation, known as the Motor Vehicle Safety Integrity Employment Act, would bar former NHTSA employees from working for auto manufacturers in any capacity that required written or oral communication with the agency for three years. The legislation would apply to high-ranking NHTSA officials, as well as individuals whose responsibilities during their last year at the agency included any motor vehicle safety-related program.

It's been reported that two former NHTSA regulators took a spin through that revolving door and landed at Toyota, where they helped kill at least four federal investigations into unintended acceleration.

The Motor Vehicle Safety Act of 2010, which provides NHTSA with greater oversight authority, improves the safety standards for motor vehicles and increases transparency and accountability for the auto industry and NHTSA, now moves to the Senate floor for consideration.

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Those Electronic Health Records Obama Has So Invested In Could Open New Liability Risks

President Obama has long trumpeted the benefits of more quickly adopting electronic health records, and he and his administration like to talk about such benefits of health information technology and claim they will reduce health care costs and improve medical outcomes.

While it's true that the advantages of digital records can be substantial, these electronic health record (EHR) systems also give rise to increased liability risks for health care providers due to possible software or hardware problems or user errors, according to a new research study.

At Obama's urging, Congress included $19 billion to hasten the adoption of EHR technology as part of last year's economic stimulus plan, known as the American Recovery and Reinvestment Act.

"With electronic health records, we are making health care safer; we’re making it more efficient; we’re making you healthier; and we’re saving money along the way," Vice President Biden says. "These are four necessities we need for healthcare in the 21st-century."

Obama began making the case for an increased investment in EHR systems even before being sworn in as president, talking up the need to make increased use of the technology in a speech outside Washington following his election.

"To improve the quality of our health care while lowering its cost, we will make the immediate investments necessary to ensure that, within five years, all of America's medical records are computerized," Obama said in a speech at George Mason University in Fairfax, Va., in January 2009. "This will cut waste, eliminate red tape and reduce the need to repeat expensive medical tests."

"But it just won't save billions of dollars and thousands of jobs; it will save lives by reducing the deadly but preventable medical errors that pervade our health-care system," Obama adds.

But two Case Western Reserve University professors, in a scholarly article published in the Berkeley Technology Law Journal, shed light on liability concerns and electronic health records systems. Until now, such a linkage has received little attention in the legal literature.

Sharona Hoffman, professor of law and bioethics and co-director of Case Western Reserve's Law-Medicine Center, and her husband, Andy Podgurski, professor of computer science at the university's School of Engineering, have written "E-Health Hazards: Provider Liability and Electronic Health Record Systems," which offers a comprehensive analysis of the liability risks associated with use of this complex and important technology.


Greater Risk For Malpractice, Privacy Breaches


Hoffman and Podgurski are well known for their research and findings documenting a national need for effective EHR regulation. They analyzed the need for federal regulation of electronic health record systems in the scholarly article "Finding a Cure: The Case for Regulation and Oversight of Electronic Health Record Systems" (Harvard Journal of Law and Technology, 2009). That paper came after two previous publications by the two on security and privacy issues of electronic health records.

"This new piece focuses on health care providers' liability. Are they at greater risk for malpractice claims? Are they at greater risk for privacy breach claims? And I think the answer to all of that is yes," Hoffman says in describing the thrust of the article.

"It's very personal to health care providers," she says. "It's what everybody who sits at that computer and uses it to manage patient care needs to know."

At first glance, a quick transition to digital heath records seems a normal, even overdue part of the wider flow of high-tech change. It may seem surprising that many health care professionals continue to jot down notes and prescriptions on paper.

Even so, many doctors might not be fully aware of the fresh liability risk, Podgurski says. Problems providing are can arise, for example, if an EHR system contains software bugs, if it is too complicated, or if training for users is insufficient.

"Whether or not there is a software bug, in the sense of a clear error that causes a wrong output, the usability of the system may be lacking, and that may lead a user to make mistakes that have safety implications," he says.

The authors make a strong case that without thoughtful intervention and sound guidance from government and medical organizations, EHR technology may encumber rather than support clinicians and may hinder rather than promote health outcome improvements. Aiming to prevent potential problems, Hoffman and Podgurski propose a uniform process for developing authoritative clinical practice guidelines, and they explore how EHR technology can assist in determining best practices. They offer recommendations to address liability concerns.

The Department of Health and Human Services seeks to achieve nationwide usage of electronic health records by 2014.

So now is the best time to consider pitfalls, the researchers say. While the new Hoffman-Podgurski article draws attention to concerns over how EHR technology can lead to problems with patient care, the authors also point out that EHR system purchasers may never know about product flaws, because no regulation requires such disclosure, and some vendor contracts even prohibit it.

"If a computer problem causes an error in somebody's drug prescription, medication dosage or surgical procedure, that can be catastrophic," Hoffman says.

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Scientists: Monster BP Spill Proves Senate Must Boost Energy Efficiency Technology Spending

The Senate must increase federal research investments for future energy technologies that will strengthen energy security and reduce the likelihood of disastrous effects associated with fossil fuel exploration as evidenced by the massive BP oil spill, according to a leading organization of physicists.

It's up to the Senate to include such a boost in spending in its energy and climate legislation because the cap-and-trade energy bill approved last year by the House shortchanged that kind of research, says a statement by the American Physical Society (APS).

Specifically, legislators should start by including in its bill the president’s Clean Energy Technology Fund, an investment of $15 billion per year over 10 years to develop affordable, low-emission energy technologies, the APS statement says.

APS cites the disastrous results of the ongoing Deepwater Horizon oil spill in the Gulf of Mexico as proof that the nation must do more to end its reliance on fossil fuels.

The Gulf oil spill — the worst in the history of the nation — has caused extraordinary environmental and economic damage to the communities along the Gulf Coast. Out-of-work fishermen are wondering how they will provide for their families; oil-drenched birds are struggling to live; and globs of oil are washing ashore on area beaches causing tourists to look elsewhere for vacation.

Senate Majority Leader Harry Reid (D-Nev.) has pledged to craft legislation in response to the BP spill. Senate Democrats held a meeting Thursday about the status of clean-energy legislation.

“There are a lot of strong passions and arguments but there is clear agreement on the need to move forward this summer on comprehensive clean energy legislation,” Reid says in a statement released after that session.

Senate Democrats agree that an energy bill must deal with the catastrophe in the Gulf; create millions of jobs; cut pollution; and strengthen U.S. economic security, national security and energy independence, Reid says.

“I’m looking forward to meeting at the White House with the relevant chairmen and leaders in the Senate, and with our Republican colleagues to forge a path forward,” the majority leader adds. “We’re going to write a bill that sets reasonable goals over a reasonable timeframe that will benefit both our environment and our economy. We’re going to write a bill that can pass the Senate.”

Reid also acknowledges an energy bill will require some Republican support in order to pass the Senate.

Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) have already introduced their American Power Act to deal with clean-energy and climate change issues, but it is unclear it has enough support to pass. It has come under fire recently, even by those who support clean energy and climate regulation.

Current technologies exist to begin the job of achieving energy security, the APS statement says. But to dramatically reduce the nation’s reliance on foreign oil and domestic drilling and to meet the nation’s 2030 target to substantially reduce greenhouse gases, advanced technologies are needed, the physicists add. And that means a greater investment in long-term research, they add.

Energy efficiency, an APS study panel concluded, is the easiest and least inexpensive way to significantly reduce the nation’s demand for imported and domestic oil and its greenhouse gas emissions without causing any loss of comfort or convenience.

“Energy efficiency reduces demand, and energy we do not use costs nothing, emits nothing and does not pollute the Gulf,” says Nobel Laureate Burton Richter, who chaired the APS energy efficiency study and authored the newly released book, Beyond Smoke and Mirrors: Climate Change and Energy in the 21st Century.

Numerous technologies already exist to increase the efficiency of U.S. vehicles and buildings that will save consumers money. But, as the panel’s report, Energy Future: Think Efficiency notes, realizing future gains, as with other energy technologies, will require a larger and better focused federal research and development program on energy efficiency than exists today.

The APS report also says that consumers often are not provided with information that allows them to make informed decisions on energy consumption. Energy and climate legislation should include a provision to help consumers save money by requiring energy audits at the point of sale for new homes. The audits would give home buyers valuable information regarding energy efficiency upgrades to lower their utility costs, the physicists add.

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Despite 'Modest' Reforms, Some See Big Help For Consumers In Final Financial Bill

Although many supporters of tighter financial regulation believe the final reform bill unveiled Friday doesn't go far enough, some see within it important new protections for consumers.

Members of the congressional financial reform conference committee announced a deal on what a final financial reform package will look like, reconciling differences between separate House and Senate versions of the legislation. The conference report is now expected to be taken up by the full House and Senate next week, and sent to President Obama to sign into law.

Obama has long sought enactment of new financial reforms to protect consumers, and prevent a repeat of the 2008 financial meltdown that resulted in trillion-dollar taxpayer-funded bank bailouts.

For some backers of strong financial reform, such as Sen. Bernie Sanders (I-Vt.), the legislative product doesn't do enough.

“It is modest. It doesn’t go far enough,” Sanders says.

Particularly, the legislation wouldn't break up huge banks, or cap credit card interest rates, he says. Sanders did note, however, the bill includes a Senate provision that he authored to authorize an audit of the shadowy and powerful Federal Reserve.

Other reformers view the conference report as a strong overhaul package to curb the worst abuses by banks. They, particularly, point to the protection consumers will be afforded by the creation of a new, independent federal Consumer Financial Protection Bureau.

“Without a doubt, the centerpiece of reform is the establishment of the new, independent Consumer Financial Protection Bureau with only one job: protecting consumers who buy financial products at banks and non-bank lenders, from mortgage companies to payday lenders," says Ed Mierzwinski, consumer program director at U.S. PIRG, a Washington-based advocacy group that has pushed strong financial reform. "While the bureau will not regulate predatory car dealer practices, a last minute compromise gives the Federal Trade Commission new authority over car dealers who initiate loans.

“Final passage next week of the Wall Street Reform and Consumer Protection Act will help consumers and the economy recover from the financial meltdown that cost millions of jobs and trillions of dollars in home and retirement fund value,” Mierzwinski adds.

Michael Calhoun, president of the Center for Responsible Lending, says he is especially pleased the new consumer bureau will be an independent body.

"Today, House and Senate conferees reached a historic agreement to create a consumer protection agency that is truly independent from the lenders it will oversee: It will have a single director nominated by the president and confirmed by the Senate; funding that is largely insulated from meddling by industry lobbyists; and the tools and scope needed to ensure most lenders operate under one set of common-sense rules. That's a win for families, small businesses, taxpayers and the economy," he says in a statement released Friday.

"Lawmakers began this process more than a year ago, and while there is more work to do, this new agency will be the keystone for reforms to make us all safer from lending abuses, including those that sparked the current financial crisis," Calhoun adds.

A new independent consumer financial protection agency would consolidate and give teeth to existing consumer-protection authority now scattered among, but largely ignored by, existing financial regulators, says Calhoun, who heads a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices.

"We think this new entity will usher in a new era of oversight, where unfair practices are stopped before they become pervasive and possibly trigger the need for another taxpayer-funded bailout," he says.

The conference report also contains stronger foreclosure prevention by including an emergency loan fund to help families at risk of losing their home because of unemployment or illness, Calhoun says.

The president of the venerable Teamsters labor union, too, urged final passage of the financial reform bill.

"This is a landmark bill that will help redirect bank capital toward creating jobs instead of destroying them," says Jim Hoffa, the union's general president. "It makes progress toward bringing back Glass-Steagall, which forbids traditional commercial banks from taking risks with other people's money.

"While not perfect, this conference report protects consumers, imposes some restrictions on executive compensation and regulates derivatives and private equity. I urge lawmakers to pass this important legislation," Hoffa adds.

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House Passes DISCLOSE Act With NRA Exception, Sparking Outrage On Both Sides

The House narrowly approved a bill Thursday designed to lend transparency to a flood of corporate spending to influence elections expected as a result of a January Supreme Court decision, and in so doing inflamed anger on both the political Left and Right.

Members passed the Democracy is Strengthened by Casting Light on Spending in Elections Act, or DISCLOSE Act, by a vote of 219-206. Rep. Chris Van Hollen (D-Md.) and Sen. Charles Schumer (D-N.Y.) introduced the DISCLOSE Act in April in response to the high court's Citizens United decision.

That ruling by the court's conservative bloc struck down decades of regulations that limited corporate, including foreign-owned corporate, influence in American elections to allow virtually unchecked campaign spending. President Obama took the unusual step of directly criticizing a Supreme Court ruling during a State of the Union address by decrying Citizens United. Obama at that time pledged to work to find remedies to address the problems the decision could cause.

The DISCLOSE Act is intended to at least provide Americans with a window to that new corporate spending, so that it is done more openly.

Conservatives have railed against the legislation, including after Thursday's passage. An official with one prominent social-conservative organization lambasted what he called the "onerous burdens" it places on organizations, and claims it violates First Amendment rights.

"This is a blatant attempt by the liberal-led House to mute organizations that oppose them in the upcoming election. House liberals are very aware that the DISCLOSE Act is unconstitutional and are unconcerned with that fact," says Tom McClusky, senior vice president of FRC Action, the legislative advocacy arm of the Family Research Council.

In the process of securing the votes of enough conservative Democrats to pass the bill, however, House leaders introduced an exception to the provisions of the DISCLOSE Act essentially intended to shield the National Rifle Association (NRA) from the public disclosure.

That exemption split supporters of the DISCLOSE Act, with some blasting the exception as a "shameful" bow to the gun lobby, while others continued to urge approval for the bill saying the loophole it would create is "very narrow."

That split was represented in the final vote on the House floor, with such formerly strong DISCLOSE Act supporters as Rep. Donna Edwards (D-Md.) coming out against the bill.

"As an early co-sponsor of DISCLOSE, I'm dismayed that, in order to gain passage, we've fallen prey to bullying and threats from one of the most powerful special-interest lobbying organizations in the country," she says. "Carving out an exception on behalf of one big group like this is just not the way to do reform. Shame on us."

The bill now moves to the Senate, where Majority Leader Harry Reid (D-Nev.) has committed to bring up the legislation "in short order," although Senate Democrats presumably will need to overcome a GOP filibuster.

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Millions of Unemployed Americans Set To Lose Big As Senate Fumbles This 'Political Football'

Senate Democrats could do little more than kick up a fuss Thursday as Republicans once again joined to block a vote on a jobs and tax bill that also would extend needed unemployment benefits to jobless Americans.

Democratic failure to overcome a GOP filibuster of the American Jobs and Closing Tax Loopholes Act means hundreds of thousands of out-of-work Americans will begin losing the supplemental income benefits they rely on as they continue to seek work in the current dismal economy.

“This is the eighth week since March we have tried to find a resolution. We have gone back and forth countless times, considering ideas, compromising where necessary and courting support,” Majority Leader Harry Reid (D-Nev.) says. “We tried to bring it to the floor, but the minority said no. Once we finally succeeded in bringing it here to the floor, we tried to bring it to a vote. Again, the minority said no. Somewhere along the line, throughout these charades, this job-creating, tax-cutting, loophole-closing bill has become a political football. The debate has focused more on winning and losing than on doing what’s right.”

Since the January election of Sen. Scott Brown (R-Mass.), Senate Democrats have held 59 seats, one shy of the supermajority required to break GOP obstruction.

Unless Democrats somehow can change the mind of at least one Republican in a matter of just days, more than 1 million jobless Americans will have lost their unemployment benefits, a number that only will grow each month unless Congress approves an extension. And the bill is not listed on the Senate calendar to be brought up again by the start of July.

"It's a pretty grim picture for these people," Ross Eisenbrey of the Economic Policy Institute (EPI) told the International Business Times. "The states have done away with emergency assistance programs. They can still qualify for food stamps, but that's a limited amount and only covers food. There are some rental assistance programs, but they are small with long waiting lists. Most of these people are just going to hit a wall."

Reid was just one in a line of Democrats who could say only that Republicans will have to answer for the obstruction that will leave a growing number of Americans in dire financial circumstances.

“I am deeply disappointed that Republicans continue to block this good bill. Unemployment in Nevada has climbed to the highest in the nation, and Nevadans need our help to create jobs and make ends meet while they look for work,” Reid says in a statement released after the defeat. “On top of that, difficult budget decisions at the state level are leaving our teachers, firefighters and policeman vulnerable to layoffs. This bill would go a long way to addressing these challenges in a fiscally-responsible way.

“Democrats have given Republicans every chance to say ‘yes’ to this bill and support economic recovery for our middle class,” the majority leader adds. “But they made a choice to say ‘no’ yet again and now they owe the American people an explanation for why they refuse to do anything to help those hurt by their failed policies.”

Democratic frustration was felt not only within the walls of the Senate chamber.

Across the Capitol, House Majority Leader Steny Hoyer (D-Md.) bemoaned the filibuster, and called out Republicans for fiscal hypocracy.

“More than a million Americans have lost their unemployment insurance because a minority of obstructionist Republicans has, for the third time, blocked the Senate from extending this vital protection for the middle class,” Hoyer says. “Those Americans—contrary to some of the outrageous statements we’ve heard from Republicans in recent weeks—are not lazy; they are not undeserving; they do not enjoy being unemployed. They are hardworking men and women who lost their jobs in an economic crisis created by Wall Street recklessness that occurred under Republicans’ watch. ...

“It’s also worth noting that many of the same Republicans who blocked unemployment insurance and tax relief for small businesses and families out of concerns over the deficit are personally responsible for wiping out the largest surplus in our history. If Republicans applied the same scrutiny to massive tax cuts for the privileged and debt-financed war as they do to assistance for struggling middle-class families, our nation's fiscal future would be far healthier.”

EPI, the Washington-based policy center, argues that not only would an extension of unemployment benefits assist the jobless who depend upon them, but cites a study that finds such benefits are the best form of economic stimulus.

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Bill Reaches Out To Legally American Children Left Abandoned By U.S. Immigration Raids

On December 12, 2006, immigration agents carried out enforcement actions on Swift & Company meatpacking plants in six states, including a plant in Worthington, Minn.

The raids left numerous children –- most of them U.S. citizens and legal residents -– without their parents and with no way of finding them. One second-grader in Worthington came home that night to find his two-year old brother alone and his mother and father missing. For the next week, the second-grader stayed home to care for his brother while his grandmother traveled to Worthington to meet them.

The U.S. Customs and Immigration Service (ICE), the agency charged with carrying out such raids against illegal immigrants, itself estimates that 108,434 parents of U.S. citizen children were deported in the past 10 years.

Sens. Herb Kohl (D-Wisc.) and Al Franken (D-Minn.) say stories such as these prompted them to introduce their new bill, the Humane Enforcement and Legal Protections (HELP) for Separated Children Act to keep kids safe, informed, and accounted for during ICE raids.

“Four million U.S. citizen children in our country have at least one undocumented immigrant parent,” says Franken. “Forty-thousand of those children live in Minnesota. They should not have to live in fear that one day their parents will simply not come home. They deserve much better than being abandoned without explanation.”

Kohl and Franken are not the only ones who have taken notice of tens of thousands of legally American children left behind in the wake of immigration crackdowns. The University of California, Berkeley, and the University of California, Davis law schools earlier this year released a report that also documented the issue.


Protections That The Bill Would Afford


The Democrats say their HELP for Separated Children Act builds on protections for children already established by the Bush and Obama administrations and extends them to any enforcement action. Specifically, would

· Keep state and local authorities in the know. It’s state schools and child welfare agencies that address the aftermath of immigration enforcement actions. Building on existing standards, this bill makes sure that state authorities are notified before or soon after enforcement actions.

· Effectively identify at-risk kids. Detainees are afraid to tell ICE that they have kids at home. This bill permits child welfare agencies and local NGOs to screen detainees to identify parents and locate at-risk children.

· Allow parents to arrange for care of their children. Detained parents must receive free, confidential calls to arrange for their kids’ care. They should not be transferred unless they know how to contact their kids – and what will happen to them. No matter where they are, parents must be allowed daily calls and regular visits with their children.

· Protect kids during interrogations. Kids should not be forced to witness their parents’ interrogations or translate for ICE agents.

· Allow parents to participate in family court proceedings – and alert authorities to abuse. This bill requires authorities to help detained parents participate in family court proceedings affecting their children. It also gives parents free calls to report child abuse.

· Protect the best interests of children. This bill requires ICE to consider the best interests of children in detention, release, and transfer decisions affecting their parents.

Its supporters say 150 organizations support the Kohl/Franken legislation, including the American Humane Association, a national child welfare policy and research group.

"Without legislation of this kind, the law enforcement actions ignore the tremendous impact on children and are not mandated to shield them," says Sonia Velazquez, American Humane vice president of child welfare. "Beyond the immediate safety issue, children suffer trauma and their mental health is impacted when they have to go into hiding, suffer stigma, or lose connection with all the people they know. We are aware that time is limited for action on the HELP Separated Children Act this year, but Congress must ensure that any policy moving forward will safeguard the well-being of children, regardless of their parents' legal status."

The HELP Separated Children Act is co-sponsored by Sens. Robert Menendez (D-N.J.), Amy Klobuchar (D-Minn.), Russ Feingold (D-Wisc.), Dick Durbin (D-Ill.), and Diane Feinstein (D-Calif.). Related legislation was introduced in the House by Rep. Lynn Woolsey (D-Calif.).

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The 'Longest-Serving Independent' Raises Campaign Cash For Senate Democrats

A longtime lawmaker whose relationship with the Democratic Party has had its ups and downs nevertheless has decided to raise funds for Democrats running for Senate this year.

Sen. Bernie Sanders, the Vermont independent who sits with the Democrats in the Senate but describes himself as a socialist, has sent an email seeking contributions on behalf of the Democratic Senate Campaign Committee (DSCC).

The DSCC sends out many such fundraising emails to supporters signed by senators, but more often they feature those who are seen as much more loyal to the Democratic Party, such as Sen. John Kerry of Massachusetts.

Sanders' appeal repeats a theme the DSCC has often used this year in its fundraising--namely, that Republicans' perpetual reliance on obstruction of Democratic priorities simply is too "dangerous" to allow to succeed in November.

"Why is the longest-serving Independent in congressional history writing to you on behalf of Democrats? Like you, I'm angry. I'm frustrated. And I want action. I've had my differences with both sides of the aisle, but I have never seen tactics as dangerous as the ones Republicans are using," the 68-year-old Sanders says.

"Republicans have said 'No' to the very changes Americans elected President Obama to make. No to health care reform. Jobs. Clean energy. Regulations so big banks can't wreck our economy and get rich in the process," he adds. "They're saying 'No' for one explicit reason -- to make President Obama fail."

Sanders says that Democrats cannot allow that strategy to yield GOP pickups in the November midterms, which are seen as particularly challenging for Democrats after two big election cycles which began in 2006, the year Sanders came to the Senate.

"That strategy, my friends, must be stopped. We cannot go back to the Bush-Cheney policies, which caused many of the crises we currently face," Sanders says. "Republicans are furiously raising money, and they'll have help. The largest U.S. business lobby for insurance companies and big corporations is planning to spend $50 million to elect 'big business' candidates. And the Supreme Court's Citizens United decision allows corporations to give as much money as they want in support of candidates. Candidates who stand up to corporate influence risk their voices being drowned out by the big dollars of special interests."

An earlier email from the DSCC noted that Republicans are targeting 14 Democratic Senate seats in the 2010 election, including those held by veteran lawmakers like Sens. Barbara Boxer of California, Patty Murray of Washington and Russ Feingold of Wisconsin.

Democrats currently hold a 59-seat majority in the Senate; one vote shy of a 60-vote supermajority for purposes of overcoming GOP filibusters.

In many states, Sanders says, Democrats' chances in November will all come down to critical early funding for the advertising, polling and "extensive grassroots mobilization that it takes to defeat the GOP machine."

"It's what the DSCC does best, but it can't do it without your help," he says.

Despite the praise Sanders offers the DSCC, the organization has come under criticism lately as its favored candidate in the North Carolina primary lost to an opponent seen as more progressive.

The DSCC also got its share of the blame in January for fumbling a special election in Massachusetts that ended up sending a Republican to the Senate from the Bay State for the first time in decades.

Sanders represented Vermont's at-large seat in the House for 16 years before getting elected to the Senate and is one of two independent sitting senators; Sen. Joe Lieberman of Connecticut being the other.

Prior to his congressional career, Sanders was mayor of Burlington, Vt., where he wore the socialist label.

Sanders is counted as a Democrat in the Senate for the purposes of committee assignments.

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Top Democrats Rally Around Gen. Petraeus, As Even MoveOn Goes Silent On 'Betray Us'

A number of key Democrats quickly announced their support Wednesday for President Obama's decision to replace his "Runaway General" in Afghanistan with another military commander best known for his service in Iraq. Further, the chairman of the Senate Armed Services Committee promised a speedy confirmation process for Gen. David Petraeus.

Top congressional Democrats acknowledged that Gen. Stanley McChrystal had to go following published comments in Rolling Stone magazine which disparaged Vice President Biden and other top administration officials.

McChrystal had been recalled to Washington to explain those comments in person. He met briefly with President Obama, before the president announced his intention to replace McChrystal with Petraeus.

“Relieving General McChrystal of his command was the right course of action to ensure there is full faith and confidence in our military leadership,” says House Majority Leader Steny Hoyer (D-Md.). “General David Petraeus is a strong, distinguished leader, and will serve the U.S. well in Afghanistan, as he did in Iraq. Although this is a period of transition, President Obama and Democrats remain committed and ever grateful to our men and women in uniform, and absolutely focused on taking the fight to the terrorists and keeping our nation safe.”

Senate Majority Leader Harry Reid (D-Nev.) also signaled his support for dumping McChrystal, to prevent "any distractions from achieving our objectives" in Afghanistan.

Sen. Carl Levin (D-Mich.), chairman of the Senate Armed Services Committee, released similar comments, and vowed to begin confirmation hearings on the nomination of Petraeus no later than this coming Tuesday.

“For many reasons, General Petraeus is a solid choice to take over in Afghanistan. He provides strength and continuity. Indeed, he was the architect of the counter-insurgency strategy -- he literally wrote the book setting it out,” Levin says. “He also agrees with both key parts of that strategy: first, that additional troops be surged into Afghanistan by the end of the summer, and, second, that there be reductions in our troops levels in Afghanistan beginning in July 2011 as the essential way of getting the Afghans to focus on the need to transition to them the responsibility for their own security.”

It's a bit remarkable that Petraeus could win such solid support so quickly from Democrats given that Petraeus is best known as an architect of a war in Iraq begun by their erstwhile nemesis, former president George W. Bush.

Petraeus became such a lightning rod among the Left for his role in that war that the prominent advocacy group MoveOn.org took out a controversial ad in 2007 which made a play on Petraeus' name to label him, "General Betray Us," allegedly whitewashing the truth about the Iraq conflict in a report to Congress.

MoveOn.org reportedly maintained web pages about that advertisement on the Internet in the years since, but allegedly pulled them down on Wednesday. Links to those pages do appear to now redirect users elsewhere on the MoveOn.org website.

Despite the outpouring of support for Petraeus among congressional Democrats, one of the Senate's most notable war critics continued to voice concern for the direction of U.S. involvement in Afghanistan, which has been underway since 2002 and has claimed more than 1,000 American lives.

“The comments of General McChrystal and his aides were very troubling, and the president’s decision to accept his resignation is appropriate,” says Sen. Russ Feingold (D-Wisc.), who recently lost a vote to force a timetable on further U.S. operations in Afghanistan. “But I continue to have strong concerns about our misguided policy in Afghanistan. The massive, open-ended military operation in Afghanistan will cost a hundred billion dollars this year with no end in sight. Meanwhile, al Qaeda continues to operate and recruit around the world. After nine years, it is time to give the American people, as well as the people of Afghanistan, a timetable to end this war so our nation is better able to focus on the global threat posed by al Qaeda and its affiliates.”

Feingold, however, is not a member of the Armed Services panel, and therefore won't have an opportunity to question Petraeus directly in the confirmation hearings.

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Fracking Tales: Stories From the Frontlines of Gas Drilling

by Karen Weise, ProPublica

Since we launched, we've been reporting on the environmental threats of drilling in natural gas reserves around the country. (Here’s a good primer on the process of hydraulic fracking that is used to release the gas.) The potential risks of hydro-facking have been gaining attention, and we wanted to point to two on-the-ground stories that have recently come out.

This month's Vanity Fair has a long piece, "A Colossal Fracking Mess," on the human and environmental effects of the drilling. It follows Dimock, a town in northeastern Pennsylvania, where residents are fighting the hydraulic fracking that they say has contaminated the town's aquifer. The story reports that the water supply is so harmful that the town is "now known as the place where, over the past two years, people's water started turning brown and making them sick, one woman's water well spontaneously combusted, and horses and pets mysteriously began to lose their hair." We reported on Dimock multiple times last year. Our lead reporter on gas drilling, Abrahm Lustgarten, wrote that Dimock was "ground zero for drilling the Marcellus Shale, a prized deposit of natural gas that is increasingly touted as one of the country's most abundant and cleanest alternatives to oil."

Also, last night HBO premiered the film Gasland, a feature-length documentary that looks at how communities across the country have been affected by fracking. Filmmaker Josh Fox started his reporting when he was asked to lease his own land for drilling. In a much discussed scene, the film shows sink water with such high levels of methane, it ignites on fire from the small flame of a cigarette lighter.

Here's a trailer of the film: Trailer

Write to Karen Weise at Karen.Weise@propublica.org.

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Senator Wants Attorney General To Have Power To Clean Up 'Captive Regulators'

A Democratic senator has proposed granting the U.S. attorney general new powers to overhaul federal regulatory agencies found to have become "captive" of the industries they are intended to oversee, as was the case with the Interior Department branch which was supposed to prevent a catastrophe such as the Gulf Coast oil spill.

Sen. Sheldon Whitehouse of Rhode Island wants the attorney general to be able to act as "an ethics trusteeship or receivership" when federal regulators are found to no longer be doing their jobs effectively, and essentially come in to hire and fire personnel, put forward interim regulations and take other steps on an interim basis.

Events at the Interior Department's Minerals Management Service (MMS) leading up to the April explosion of the BP-leased Deepwater Horizon drilling rig and subsequent massive flow of oil pollution from the sea floor demonstrate the need for the nation's top law enforcement official to have such authority, says Whitehouse, himself a former state attorney general.

In his speech on the Senate floor, Whitehouse quotes from a Wall Street Journal article, in which a senior fellow at the libertarian Cato Institute writes, "By all accounts, MMS operated as a rubber stamp for BP. It is a striking example of regulatory capture: Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public."

For instance, Whitehouse says, MMS officials allowed BP and other big oil companies to use "cut-and-paste environmental assessments" of their drilling operations.

"BP's Environmental Assessment listed walruses as a species of concern in the Gulf of Mexico," the senator says. "... [T]here are not, and never have been, in the memory of man, walruses in the Gulf of Mexico. When they are writing about walruses in the Gulf of Mexico, you know 1) they are cutting and pasting out of documents in Alaska, 2) they are paying no attention to what they write because they know it doesn't matter, and 3) they know perfectly well that MMS will never catch the fact that they've cut and pasted, because they're not looking at it either."

Whitehouse also cites the findings of a recent inspector general investigation of MMS, in which MMS staff took substantial gifts from the firms they were regulating, and in one case, a MMS worker was allowed to conduct an inspection of an oil company's drilling platforms while also trying to negotiate a job for himself with the same corporation. MMS staff also took part in social events with regulated companies, that included sex and illegal drug use.

President Obama also described the relationship between MMS and the oil and gas industry as "too cozy," and Obama's interior secretary, Ken Salazar, has ordered a break-up and restructuring of the agency.

But the captive-regulator phenonemon is neither new, nor is it limited just to MMS, Whitehouse says. He says the Securities and Exchange Commission also became a "lap dog" of the financial industry, leading to the 2008 economic meltdown, and he also cites a 2004 rewrite of Mine Safety and Health Administration (MSHA) regulations which allowed conveyor belt tunnels to double as ventilation shafts, a practice that contributed to a fatal 2006 mine disaster. Whitehouse describes MSHA as a "revolving door" with industry, "staffed by people with mining companies' interests at heart, even at the expense of worker safety."


'Who Knows How Far It Leads?'


"Who knows how far it leads? Think of the timber rights the taxpayer gives up every year, the grazing rights, the multi-billion dollar contracts to big government contractors, the oil and coal leases on land, the carnival of public wealth at which these big corporations feed," the senator says.

"The vital question is this: are these assets of our nation still in the hands of servants of the nation?" he asks. "Or have the servants of the nation quietly and insidiously become the servants of the big private corporations who want to profit from that public wealth-corporations for whom every dollar of a sweet deal, every avoided expense allowed by a cozy regulator, every corner cut in safety or environmental protection, goes straight to their bottom line and right into their pockets?"

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Democrats Hope Main St. Pressure Unlocks Jobs, Unemployment Extension Bill

Senate Democrats hope a push from Main Street convinces Republicans to drop their obstruction of a bill to extend aid to states, as well as unemployment benefits for the nation's jobless.

Sens. Ben Cardin of Maryland, Bob Casey of Pennsylvania, and Kay Hagan of North Carolina joined Randi Weingarten of the American Federation of Teachers (AFT) and Kevin O’Connor of the International Association of Firefighters (IAFF) at a press conference Tuesday to call on Republicans to stop blocking a vote on the American Jobs and Closing Tax Loopholes Act.

The Senate GOP last week blocked a vote on the bill, which contains a variety of jobs-related provisions, including FMAP funding to states to bolster their Medicaid programs, and extension of supplemental income for millions of unemployed Americans.

The nation's unemployment rate remains at a decades-high 9.7 percent, with five or six Americans competing for each job opening.

The Democrats at today's press event cited a study from the Center for Budget and Policy Priorities that finds state governments nationwide facing severe budget shortfalls. Without federal assistance to cover Medicaid costs to provide health care to the poor, 900,000 public- and private-sector jobs would be at risk nationally, including teachers, police officers and firefighters.

In recent weeks, Republicans have blocked several efforts by Senate Democrats to pass the legislation.

“If we do not extend these funds, the states like Maryland will hit a fiscal wall that will have an immediate impact on our most vulnerable citizens. It also will cost us jobs as local governments are forced to make painful cuts just at the very time we were beginning to feel the positive results of our recovery,” says Cardin. “This is critically important for our nation as a whole and should not be a partisan issue.”

The bill also includes an extension of unemployment benefits for jobless Americans, which are in jeopardy of running out soon without action by Congress.

“Right now, Nevada’s unemployment rate is the highest in the country," Senate Majority Leader Harry Reid of Nevada says in a floor statement Monday. "Victims of the recession who have been out of work for a long time are struggling to make ends meet while they try to find a job. This bill extends the emergency unemployment assistance they need – critical help that, for many, has expired and dried up.

“Every day we don’t act, those families in Nevada and across the nation continue to suffer unnecessary pain," Reid adds.

Democrats have hoped the so-called FMAP funding would be a sweetener to entice Republicans to support the bill.

"It's time for Congress to stop talking and start acting. It's time to put our communities and the safety of our citizens first,” says Kevin O’Connor of the IAFF. The price of Congressional inaction will force cities and towns to lay off thousands of fire fighters and jeopardize public safety. Stop the delays, pass the FMAP funding extension immediately."

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Loan Mod Program Still Sputtering, Despite Attempted Fixes

by Paul Kiel, ProPublica

New data released Monday by the Treasury Department shows continued delays and disappointment faced by homeowners in the administration’s mortgage modification program.

190,000 homeowners remain stuck in trial mods that have lasted over six months, still waiting to hear whether they’ll receive a permanent modification. Most of those homeowners will likely be dropped from the program.

Even homeowners who’ve successfully obtained a permanent modification have done so after months of waiting. The average trial modification at the servicer with the worst delays, JPMorgan Chase (the second largest in the program), has lasted over seven months before becoming permanent. Under the program’s guidelines, the trials are supposed to last only three months. The prolonged trials hurt homeowners by damaging their credit, increasing the balance of their mortgage, and preventing them from saving for the possibility of foreclosure.

Here is our interactive breakdown of the data. It shows which mortgage servicers are primarily responsible for the continued logjam.

The overall numbers for the program remain bleak: 1.24 million homeowners have begun a trial modification since the program launched last year. But so far more homeowners, 436,053, have been dropped from the program than have received a permanent modification, 340,459.

Since the beginning of the program, we’ve reported on problems homeowners have encountered with their servicer – lost documents, delays, and costly errors. Although Treasury Secretary Tim Geithner sharply criticized servicers for these problems earlier this year, so far it’s been all bark and no bite from the administration. The Treasury has yet to penalize any servicer for breaking the program’s rules.

Last month, administration officials said they’d extracted a promise from servicers that they would clear their backlogs by the end of this month. That seems unlikely, given the current pace.
The Treasury count of about 190,000 homeowners stuck in limbo is only a modest improvement from the 265,000 homeowners the government estimated last month were in limbo. In a conference call with reporters Monday, Herb Allison head of the TARP, which in turn oversees the loan mod program, said that it would “take another month or two” for servicers to work through their backlogs. He added that the level of homeowners being dropped from the program would remain high as those homeowners received their final answer.

Homeowners can be dropped because they fail to keep up the payments or because the servicer deems them ineligible. In the conference call, Allison attributed the high cancellation rates to the fact that some servicers had put homeowners into trials without requiring them to document their income. The Treasury changed the program’s rules earlier this year to require up-front documentation.

Given the high level of homeowners who are being dropped from the program, the Treasury has put new emphasis on what happens to those homeowners. About 49 percent have received modifications completely outside the government’s program, according to the new data. (PDF)

Such modifications are not bound by the rules of the program and the terms vary from servicer to servicer. Some modifications don’t even lower payments: a portion even increases them. A report issued earlier this year by regulators (PDF) found that about 82 percent of private modifications decreased monthly payments (only half were substantial cuts, by 20 percent or more).

Write to Paul Kiel at paul.kiel@propublica.org.

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Left, Right Agree: 'There Is Much We Do Not Know About Kagan's Views'

It's rare for conservatives and progressives to find common ground on anything in Washington these days, and rarer still for Left and Right to concur when it comes to something as contentious as a Supreme Court nomination.

Yet both sides of the political spectrum can agree on this much heading into the start of next week's confirmation hearings for President Obama's nomination to the high court: very little is known about how Elena Kagan could rule should she be confirmed as the next associate justice.

The Senate Judiciary Committee is scheduled to begin hearings Monday to consider the nomination of Kagan to succeed retiring Justice John Paul Stevens.

Conservatives have come out strongly to oppose Kagan's nomination. Sen. Jeff Sessions, the ranking Republican on Judiciary and likely to be among Kagan's fiercest opponents during her hearings, on Monday raised what is probably the least perjorative criticism she faces.

"The truth is, her legal record is thin. She has never been a judge and has very limited experience even in the practice of law. She has never tried a case, never cross-examined a witness or made a closing argument in a trial," Sessions says.

To be sure, Republicans are expected to raise many more controversial and stinging arguments against Kagan's nomination, including her handling of military recruiters on campus when she was dean of the Harvard Law School.

And while certainly there is no love lost between the Alabama conservative and the American Civil Liberties Union, the ACLU came to exactly the same conclusion about a general lack of knowledge of Kagan's fundamental views in an analysis of the nominee's legal career which also was released Monday.

"The simple truth is that there is much that we do not know about Kagan’s views on the Constitution and the Court," the ACLU report says. "Most fundamentally, she has said very little so far about her approach to constitutional interpretation. More specifically, the available record offers very few clues about her constitutional views on criminal justice, immigration, voting rights, prisoners’ rights, due process, the Establishment Clause, and a host of other recurring Supreme Court topics."

As the ACLU notes, Kagan has spent her entire professional career in government and academia except for one three-year stint as an associate at the firm of Williams & Connolly in Washington during the late 1980s. She currently serves as Obama's solicitor general, his top lawyer before the Supreme Court.

The ACLU finds little to go on even in Kagan's published writings over the years in law journals.

"By comparison to most recent Supreme Court nominees, there is a relatively slim paper record on which to evaluate Kagan’s views on a wide range of issues," the ACLU report finds. "Her legal scholarship is impressive but it has been focused primarily on two areas: free speech and presidential power. Even where she has written extensively, her conclusions are often framed cautiously. Her articles frequently begin with a disclaimer that they are intended to be descriptive rather than normative, to raise questions rather than to offer solutions."

The report notes that although Kagan's current work as solicitor general is more forceful in its advocacy, she represents the views of the Obama administration -- not necessarily how she would rule as a sitting court justice.

Elena Kagan has spent the past quarter century in academic life and government service, and the ACLU notes that even her critics acknowledge her intellect and knowledge of the law.

"Over that time, she has compiled an impressive record of personal accomplishment while revealing very few of her personal views on most of the difficult issues she is likely to face if confirmed to the Supreme Court," the ACLU says.

Next week will reveal how senators deal with so little to go on when they engage Kagan in what is often a cat-and-mouse game during Supreme Court nomination hearings.

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