Two years after the Supreme Court directed the Environmental Protection Agency to determine if greenhouse gases were a threat to public health and the environment, the EPA formally concluded Friday that carbon dioxide and five other gases should be declared pollutants that could be regulated under the Clean Air Act.

The EPA's findings aren't surprising; most everyone knew these gases—carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride—were harmful. Those who denied it were simply denying the reality of climate change. Unfortunately for us, men and women from that pack of stubborn detractors ran the federal government for the last eight years.

David Doniger at the Natural Resources Defense Council touched on this when he credited President Obama and EPA director Lisa Jackson with "going a long way to restore respect for both science and law. The era of defying science and the Supreme Court has ended."

Doniger is correct; the EPA's declaration does go a long way. But that just demonstrates how out of touch—whether because of hard-headed ignorance or the influence of lobbyists and money from polluting industries—the last administration was with the real world. A federal agency acknowledging and accepting scientific evidence is always going to look like a big stride in the right direction if that agency has spent the last decade doing the exact opposite.

As for the polluters affected by the EPA's declaration, the Times reports they are cautiously reacting to the news because they're hopeful the climate change legislation in the House Energy and Commerce Committee will give them a break. That would have been the case during the 16 years John Dingell headed the committee. But Henry Waxman is much less polluter-friendly than Dingell was during his tenure in the House.

Prosecuting Torture

Several emailers want to know why I support Obama's decision not to prosecute the CIA agents who engaged in torture of prisoners during the Bush administration.  To be honest, I'm not entirely sure that I do, but in case you're interested, here are the arguments against prosecution that have run through my mind:

First: I hate the idea of spending time prosecuting the little guys while the big fish go free.  If there's anyone we should be prosecuting, it's Bush, Cheney, Addington, Bybee, Yoo, and Tenet.  Until that happens, it's hard to justify prosecuting their underlings.

Second: Every agent would be entitled to a vigorous defense, which would almost certainly require them to make extensive use of classified information.  The government would naturally invoke the state secret doctrine in virtually every case, which would make it nearly impossible to conduct trials that are both fair and reasonably public.

Third: This would be a very, very big operation involving hundreds of prosecutions.  It would almost certainly drag on for many years, and although I'm not a lawyer, my sense is that successful prosecution would be extremely difficult.  The result would quite likely be a long, gruesome, process that would mostly disappear from public view except toward the end, when nearly everyone is acquitted.  Frankly, this might be worse than nothing at all.

Fourth: "I was just following orders" is obviously not an acceptable excuse in cases of clearly illegal instructions.  On the other hand, CIA agents should be able to rely on OLC opinions without constant fear that a successor administration will decide on different legal interpretations.  There isn't a hard and fast rule here, but it's legitimately something that needs to be balanced.

Anyway, my mind is still not made up on this.  It's just a really hard problem.  But I will say that I find #1 persuasive almost all by itself.  If we're going to prosecute the top guys, that's one thing.  But if we don't, it would be a massive miscarriage of justice to prosecute the field agents just because that's politically more feasible.  We really don't want to live in a country that does such things.

You know a term has made it when there are patents pending. In the Urban Dictionary under the most popular spelling "vajayjay," the term benefited from the Oprah effect a couple years ago after Lady O gave it a bump. Firmly in pop culture verbiage, the vaginal euphemism has now seen its first official product (though not its first trademark application, apparently) as the Vaj-j Visor. The visor, which is meant to cover the goods during waxing, depillatories, and other landscaping efforts, is the brainchild of, yes, VJJ Enterprises, Inc. (three ladies, two dudes), though it doesn't seem to license any other vagina products at the moment.

The plastic insert claims to be "the first ever women's cup" and it comes in green and purple and pink. You have to discard it after a single use, which sounds a lot like other feminine hygiene products, spend and toss, buy some more. Protective men's gear, like the jockstrap and the cup, these are manly items (not in pink, green, and purple) that can hang for years (sometimes too long) in lockers. So let's see if the VJJ people can come up with a reuseable product. And one more wondering: Why wasn't vagina part of even one of the possible names batted around by the VJJ crew? Probably because they don't want to scare people off since the vagina is scary. Or maybe it's because vagina isn't even an adequate anatomical term (though neither is Hoo Ha or Beaver) leaving out the all-important clitoris, labia, and vulva.

I'm glad that the ladies who take so much care down there have options now, but it's too bad that the "women's cup" is all about cosmetic improvements. Where's the cup for horsebackriding, for hockey, for soccer? Because sometimes we need to protect our privates simply for the good of the goods, not just for tanning and waxing and making ourselves pretty.

CDS and Bankruptcy

Via Megan McArdle, the Financial Times reports that credit default swaps may be responsible for forcing more companies into bankruptcy proceedings.  The problem, apparently, is that normally bondholders have an incentive to negotiate a deal that would stave off Chapter 11, since a judge in a bankruptcy settlement is likely to force them to take big haircuts on their debt.  If they can do a little better in a negotiated settlement, they'll play ball.

But if their debt is insured via CDS, and the U.S. government has made it clear that CDS will be paid off 100% even if the insurer is underwater, they're actually better off if the company defaults.  From the FT on a couple of recent failures:

"We have seen CDS becoming a significant factor" when negotiations on out-of-court restructurings fail, said Alan Kornberg, the partner in charge of the bankruptcy practice at Paul, Weiss, Rifkind, Wharton & Rice, speaking generally. "We used to talk about the practice theoretically but now we see cases where it is hard to get lenders to agree to tender or to compromise and then you find out that these holdouts had significant CDS protection."

....Some creditors, including Citigroup, which held a small exposure to AbitibiBowater, hedged themselves in the CDS market, meaning their economic interest in the deal was different to lenders who had not bought credit insurance, according to people familiar with the matter. Citigroup declined to comment.

Lawyers say CDS holdings were also a factor in the default and filing for Chapter 11 protection of General Growth Properties this week. Restructuring advisers expect many more such cases involving so-called fallen angels, or firms originally investment grade, since CDS was widely sold on such names.

Presumably this happens because CDS buyers get paid off in the event of a Chapter 11 proceeding, but they don't if they've negotiated the haircut themselves.  This makes sense, since doing otherwise would align incentives too far in the other direction (i.e.,  bondholders would have no incentive to negotiate any value at all in a settlement if they're going to be made whole regardless).  Megan suggests that maybe CDS issuers should be allowed to join reorganization negotiations, the same way ordinary insurers are.  Perhaps so, though that doesn't help with the trillions of dollars of existing CDS whose terms are already set in stone.

Sigh.  Yet another problem for CDS fans to address.

You may have seen a Connecticut Post report floating around the Internet this morning that looks at Sen. Chris Dodd's fundraising report from the first quarter of 2009 and finds that there are only five citizens from Connecticut who donated. Those five plucky Nutmeg Staters gave a total of $4,250. Dodd has a 33 percent popularity rating and is losing in hypothetical match-ups to basically every Republican pollsters can find. The citizens of CT clearly don't want him around. So how did Dodd raise $1,048,674 in just three months?

As Daniel Schulman and I report in our story today, it mostly came from Big Finance. Here's the breakdown. Executives and PACs representing banks, financial services companies, and real estate brokerages gave Dodd at least $299,000. (NB: That means the folks that Dodd, chairman of the Banking committee, is supposed to oversee gave 70 times more than the folks Dodd is supposed to represent.) Insurers and health care interests gave $48,000. And lobbyists, many of whom have Wall Street clients, chipped in $62,800 more.

So there you have it. It's no wonder the folks that Dodd represents aren't terribly excited about having him back. It's not clear who he represents anymore.

Update: Keep in mind, there is a way to eliminate this whole money-in-politics game....

Back in September, Goldman Sachs received a $5 billion capital investment from Warren Buffett that requires interest payments of 10%.  A month later they received a $10 billion capital injection from the Treasury that requires interest payments of only 5%.  Given that Buffett's terms are far more onerous, Richard Bove wants to know why Goldman is planning to pay back the Treasury's investment:

"If you were thinking of shareholders first, you would get rid of the most onerous amount first, and that would benefit shareholders....However, if you pay off TARP you are eliminating all of the restrictions on paying management," Bove told TheStreet.com. "You shouldn't be diluting existing shareholders to pay off TARP so you can pay management more money."

This should become a case study in principal-agent research.  If Goldman management were primarily concerned with shareholder value, they'd pay off Buffett.  But if they're more concerned with their own personal welfare, they'll pay off Treasury.  Apparently they've made their choice.

Needless to say, though, they're not planning to give up all the other government aid they're getting.  From the Washington Post:

Even as they clamor to exit the most prominent part of the bailout program by repaying government investments, firms continue to rely on other federal programs to raise even larger amounts of money....The Federal Deposit Insurance Corp. has helped companies [] borrow more than $336 billion through the end of March, by guaranteeing to repay investors if the firms defaulted. And financial firms hold more than $1 trillion in emergency loans from the Federal Reserve.

Goldman Sachs declared a "duty" to repay the Treasury after posting a first-quarter profit. The chief executives of several large banks at a meeting last month urged President Obama to accept repayments. But no company has similarly pledged to leave the government's other aid programs.

The explanation appears to be simple: Only the capital investments by the Treasury require the companies to make significant sacrifices, such as restricting executive pay.

"The capitalization efforts are actually the most important and are doing the most good, but they come with strings attached, and because they come with substantial strings attached they are getting the most push-back from the banks," said Douglas Elliott, a financial policy expert at the Brookings Institution. The other programs "have no strings attached," he said. "What's not to like about it from the perspective of the banks?"

Perhaps it's time to attach strings to anyone who takes advantage of any extraordinary aid from the government.  If that happened, I wonder how many of these rock-jawed titans of capitalism would still be willing to put their money where their mouths are?

UPDATE: It turns out this is less mysterious than I thought.  Apparently Goldman Sachs paid back the Treasury money first because they were required to under the terms of the TARP agreement.  Details here.

All About Fundraising

CQ reports:

“Raise money early” is probably the most oft-repeated advice given to the 40 House Democrats singled out by party officials to receive special assistance, as they prepare to defend against potentially serious challenges in the 2010 elections.

A CQ Politics analysis of campaign finance reports filed by the midnight deadline shows that these members are fast learners — they gathered an average of $266,000 in campaign receipts for the first three months of this year.

How depressing.  They've been in town for all of 12 weeks, and instead of spending their time on the million and one real problems we have, they're spending their time raising $20,000 a week.  How many hours a day do you think that takes?

Actually, I read a great piece on exactly this subject once.  I forget where, though.  Washington PostNew Republic?  Not sure.  But it was all about a freshman House member and the endless hours he spent down in the basement of party headquarters (or somewhere), where they have a room full of little booths furnished with nothing but a desk and a telephone.  He'd go down there every day armed with a list of phone numbers of car dealers and bank presidents and assorted other potential donors from his district, and he'd methodically work his way down the list, calling each one and cajoling them for a few hundred or a thousand bucks.  He did this every single day.  For hours.  It gave new meaning to word demeaning.

Anyway, like I said, I don't remember where I saw it.  Which is too bad, because it was a really great piece.  If it rings a bell with anyone, let us know in comments.

At a University of California San Francisco campus this afternoon, environmentalists made quite the display. People dressed as polar bears (at least 5), sea turtles (4), dolphins (2), jellyfish/coral (2), a kangaroo, and a seal. Two surfer girls in bikini tops walked past, leaving a trail of what looked like crude oil on the cement. ("It's actually chocolate," one confided.) The polar bears and surfer girls mingled in front of the university's conference center in hopes of influencing Deparment of the Interior Secretary Ken Salazar, who was in San Francisco to hear public comment on offshore drilling plans. While Salazar criticized Bush's plan to drill "the entire Eastern seaboard, portions of offshore California and the far eastern Gulf of Mexico with almost no consultation from states, industry or community input," he and Obama are considering expanding existing offshore operations.

At the podium, Salazar received emotional suggestions and comments from the hundreds who packed the hall. Salazar often asked follow-up questions, sometimes uncomfortable ones. Scott Johnson, from CalWind, asked Salazar to consider offshore wind projects, but when asked how much electricity on-shore turbines in California currently generated, Johnson couldn't quote a figure. The goal, Salazar told the crowd, wasn't to favor one form of energy over another. "We need to have a comprehensive energy plan going forward," Salazar said. "We recognize that some of the energy sources we have are necessary to keep the nation going economically." Oil and gas, Salazar said, "have never been off the table" and warned the crowd that "we may not be able to do what's popular."

As the hall cleared for lunch, polar bears and politicians wandered out into the hot sunshine. In front of the Peasant Pie shop, non-profits and activist organizations tended booths and a small stage to further voice their concerns, not all drilling-related. Shay Wolfe, a biologist with the Center for Biological Diversity, was in a polar bear suit, manning the tables. "We've been here since 7:30," she said. Her organization was concerned with offshore drilling, yes, but not perhaps as much as last-minute Bush regulations that “took away the scientific review requirement under the Endangered Species Act." Wolfe said Salazar has until May 9 to revoke those regulations. A San Francisco Baykeeper representative said her group was there to show support for the other environmental groups, but also yes, to say no to drilling. None of the groups brought up economic issues.

As the rally continued, Center for Biological Diversity attorney Miyoko Sakashita and her infant son Kai danced to the music in matching furry white polar bear suits. "I think people can relate to polar bears," said Wolfe. "We hope he [Salazar] got our message... we sent polar bears to greet him."

From Megan McArdle, after noting that virtually everyone these days is holding sales allegedly to help us all through the recession:

The one industry not ostentatiously offering to help me save money is the banking industry, which hasn't been trying to entice me into their savings vehicles with high rates and low fees.  We have a long way to go before the American savings culture turns into what it should have been all along.

It's almost as if there isn't any real competition in the banking industry at all.  Funny that.

Defining Torture Down

Reading the OLC torture memos is enough to make you ill.  The techniques in question are plainly and instinctively abhorrent by any common sense definition, and the authors of the memos obviously know it.  But somehow they have to conclude otherwise, so they write page after mind-numbing page of sterile legal language designed to justify authorizing it anyway.  It's not torture if the victim survives it intact.  It's not against the law if it takes place outside the United States.  Waterboarding is OK as long as it isn't performed more than twice in a 24-hour period.  Sleep deprivation of shackled prisoners for seven days at a time is permissible as long as the victim's diaper is changed frequently.  And on and on and on.

Do they know this is torture?  Of course they do.  Glenn Greenwald is right when he says the excerpt below is probably all you need to read.  What it says, in a nutshell, is that when other people do this stuff, we naturally call it torture.  But when we do it, it's not.  Sickening.

UPDATE: More here from David Corn.