Mojo - January 2009

How to Rebuild the SEC

| Mon Jan. 5, 2009 12:17 PM EST

The portions of Michael Lewis and David Einhorn's NYT op-ed that Noam Scheiber highlights are really worth sharing. On the campaign trail, Obama made it appear that he was going to use the financial crisis to bring back regulation to our financial markets. Lewis and Einhorn have an easy way for him to start. Let's hope our President-elect doesn't go weak in the knees.

It's not hard to see why the S.E.C. behaves as it does. If you work for the enforcement division of the S.E.C. you probably know in the back of your mind, and in the front too, that if you maintain good relations with Wall Street you might soon be paid huge sums of money to be employed by it.
The commission's most recent director of enforcement is the general counsel at JPMorgan Chase; the enforcement chief before him became general counsel at Deutsche Bank; and one of his predecessors became a managing director for Credit Suisse before moving on to Morgan Stanley. A casual observer could be forgiven for thinking that the whole point of landing the job as the S.E.C.'s director of enforcement is to position oneself for the better paying one on Wall Street....

The key suggestion:

If the S.E.C. is to restore its credibility as an investor protection agency, it should have some experienced, respected investors (which is not the same thing as investment bankers) as commissioners. President-elect Barack Obama should nominate at least one with a notable career investing capital, and another with experience uncovering corporate misconduct. As it happens, the most critical job, chief of enforcement, now has a perfect candidate, a civic-minded former investor with firsthand experience of the S.E.C.'s ineptitude: Harry Markopolos [the investor who spent years trying to alert the SEC to Bernie Madoff].

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Obama Transition Releases Donors

| Mon Jan. 5, 2009 12:03 PM EST

With this little toot of its own horn:

We refuse all donations from corporations, labor unions and PACs. Individuals may not donate more than $5,000. We also refuse all contributions from registered federal lobbyists and registered foreign agents.

You can search through the donors here. So far, I can tell you that Bill and Hillary Clinton, Bill Richardson, Rod Blagojevich, and Roland Burris have all chosen not to donate. Like every journalist in America, I plugged their names in before anyone else's.

"Senator Franken": Getting Closer

| Mon Jan. 5, 2009 8:39 AM EST

Here's CNN:

A state election board on Monday will announce Democrat Al Franken has defeated Republican incumbent Norm Coleman in Minnesota's U.S. Senate race, state officials told CNN Sunday....
The canvassing board on Monday will say a recount determined Franken won by 225 votes, Secretary of State Mark Ritchie told CNN.

The Coleman campaign is expected to file a legal challenge, alleging that about 650 absentee ballots, many from pro-Coleman areas, were improperly rejected in the course of the recount. Chuck Schumer and Senate Democrats have declared Franken the winner, but Republican senators have promised they will filibuster to keep Franken from being seated while legal challenges are still outstanding. It appears "Senator Franken" could be seated in January, February, or even March.

Update: What's the takeaway? We will soon have a senator who once did things like this.

Return a Hyundai: Further (Crazy?) Innovations from Desperate Carmakers

| Sun Jan. 4, 2009 6:27 PM EST

Remember the "Buy One, Get One Free" Dodge trucks? This rivals that in the we'll-do-anything-to-sell-cars category. I heard about it while watching the Eagles-Vikings playoff game on Fox. It's called Hyundai Assurance:

Finance or lease any new Hyundai, and if in the next year you lose your income*, we'll let you return it. That's the Hyundai Assurance.
Starting today you can feel good about buying a car, despite these current times. If you find that you cannot make your payment because of a covered life changing event, we'll allow you to return your vehicle and walk away from your loan obligation — and in most cases we will cover most, if not all of the difference.

Notice that asterisk? Hyundai doesn't explain on its website what it means to "lose your income." They suggest you visit a Hyundai dealer to find out, which I am most certainly not going to do. Lot of that going around, I guess.

Why Did Obama's Transition Team Ignore Bill Richardson's Long History of Dubious Dealings?

| Sun Jan. 4, 2009 5:52 PM EST

The wreck of Bill Richardson, who withdrew earlier today as President-elect Obama's nominee for Commerce Secretary, surely should have been anticipated by the Obama vetters. As previously reported by Mother Jones, the New Mexico governor has, over the last decade, left behind a wide trail of questionable business dealings, many of them involving the energy industry.

Obama's transition team apparently chose to ignore these past whiffs of scandal. They also seem to have been unfazed by the current federal investigation into a possible pay-to-play scandal, which was already well underway when Richardson's nomination was announced on December 3. Within two weeks of the nomination, the media was widely reportingthat Richardson was the subject of a grand jury probe in a "highly active stage."

Richardson insists that he and his administration "have acted properly in all matters" and that he is withdrawing his name from consideration only because "the ongoing investigation also would have forced an untenable delay in the confirmation process." But the accusations are pretty damning. The Washington Post reports:

The probe in New Mexico involves questions about a California firm, CDR Financial Products, and its president, David Rubin. The grand jury in Albuquerque is looking into whether the firm was given a contract with the New Mexico Finance Authority because of pressure from Richardson. CDR made $1.48 million advising the authority on interest-rate swaps and refinancing of funds related to $1.6 billion in transportation bonds issued by the agency, state officials confirmed.The firm and Rubin together gave $100,000 to two Richardson organizations shortly before winning those contracts.

Back in July 2007, when Richardson was a contender for the Democratic nomination, and was also being discussed as a possible vice-presidential pick for Hillary Clinton, I reported here on the considerable baggage Richardson carried when it came to his relationships in the private sector:

Obama, Richardson Finger-Pointing Begins

| Sun Jan. 4, 2009 5:49 PM EST

Well, we've already got a lead on which of three possible explanations applies to this Richardson situation. Here's Jake Tapper:

Sources tell ABC News that officials on the Obama Transition Team feel that before he was formally offered the job of commerce secretary, New Mexico Gov. Bill Richardson was not forthcoming with them about the federal investigation that is looking into whether the governor steered a state contract towards a major financial contributor....

And the Richardson people respond as you would expect:

The Richardson camp says the governor was forthcoming, with sources close to the governor noting that there had been reports about the controversy in local media such as the Albuquerque Journal as far back as August 2008. The governor discussed the investigation with the Obama team, they say, and believes that he and his administration have done nothing wrong.

So it took, oh, less than three hours for the Obama and Richardson camps to begin pointing fingers at one another. Richardson has already fallen on his sword; it's probably better for everyone involved if both parties keep their mouths shut from this point forward. Assigning blame just prolongs the media's interest.

Update: Richardson sources are suggesting that they did tell the Obama team about the Governor's problems before he was nominated; they had hoped the Governor would be cleared in a fast-moving inquiry that failed to materialize.

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Richardson Withdraws

| Sun Jan. 4, 2009 4:56 PM EST

There must be something legitimate to the allegation that New Mexico Governor Bill Richardson and/or his aides pushed state business to a company that was a ample supporter of Richardson's campaigns and other activities ($100,000 for Richardson and pals to travel to the Democratic Convention, for example). Richardson has withdrawn himself from Obama's future cabinet, where he was slated to become Secretary of Commerce, citing the desire to avoid a lengthy and distracting confirmation process. Here's part of a statement from Richardson that the Obama transition team released to the press.

...when the President-elect asked me to serve as Secretary of Commerce, I felt a duty to answer the call. I felt that duty particularly because America is facing such extraordinary economic challenges. The Department of Commerce must play an important role in solving them by helping to grow the new jobs and businesses America so badly needs.
It is also because of that sense of urgency about the work of the Commerce Department that I have asked the President-elect not to move forward with my nomination at this time. I do so with great sorrow. But a pending investigation of a company that has done business with New Mexico state government promises to extend for several weeks or, perhaps, even months.

A Denver School Teacher Responds to the Bennet Appointment

| Sat Jan. 3, 2009 2:21 PM EST

Colorado Governor Bill Ritter's choice of Michael Bennet to replace departing Senator Ken Salazar (Salazar is leaving Congress' esteemed higher body to become Obama's Secretary of the Interior) is already drawing criticism. Bennet, the reform-oriented head of the Denver school system, has never run for office in his life and has never held a statewide position. There is little evidence that suggests he can hold onto the seat when challenged by a Republican in 2010.

A few weeks ago, when Bennet was generating buzz as a possible Secretary of Education, I spoke to a friend who is a charter school teacher in Denver. She was skeptical. Naturally, I asked her for her thoughts on Bennet's latest move. They are below.

A Former Blago-ite Fills In Some Blago/Burris History

| Sat Jan. 3, 2009 1:53 PM EST

A Capitol Hill-type who got his start interning for Blagojevich responds to a blog post from yesterday that raised the possibility that Blago appointed Burris because Burris helped Blago win the 2002 governor's race. Blago, who had no standing in the black community at the time, won the Democratic primary only because Burris stole some of the black vote away from a man named Paul Vallas who had assiduously courted the black community.

Sorry, no. Blago's not the kind of guy who returns favors, and Burris (a man who has built a lavish monument to himself listing his accomplishments) is not the kind of guy that would do a massive favor like this and then wait around 6 years for a Senate appointment that no one could have predicted in 2002. Burris ran because he thought he could get the nomination by having Vallas and Blago split the white/downstate vote, leaving Burris with the nomination in a year with a remarkably weak Republican party and candidate.
Why has Blagojevich picked Burris now? Because he needs 19 votes from State Senators to survive impeachment. 9 State Senators are black. I think Blago's hoping they're all getting calls from community leaders asking them to stand by him since he stood by them.

Maybe Blagojevich Does Owe Burris Something

| Fri Jan. 2, 2009 2:48 PM EST

The media has been looking for evidence that Roland Burris' appointment to the United States Senate is payback for something Burris once did for Governor Rod Blagojevich. Ben Joravsky, publishing over at TNR, may have put his finger on it. Without Burris, Balgo would have never made it out of the Democratic primary in the 2002 race for Illinois governor: