CNN says Kansas Gov. Kathleen Sebelius is Obama's pick for HHS.

Gov. Schweitzer just sent out a press release, in his role as head of the Democratic Governors Association, praising the pick. So pretty clear it's an accurate report.

Well, it just gets better and better. As you know, we've been tracking the debunking of Louisiana Gov. Bobby Jindal's tall tale about being right there on the front lines fighting government bureaucracy with Sheriff Harry Lee while the boat rescues were still taking place in the aftermath of Katrina. Well, today, the New Orleans Times-Picayune has a gentle but pretty clear run-down of what happened.

In so many words, in Jindal's speech Tuesday night he said he was there and part of the story as it unfolded -- Sheriff Lee was trying to mobilize civilian boats for roof-rescues and government bureaucrats wouldn't let them head out without proof of insurance and registration. Lee put his foot down and dared the bureaucrats to come arrest him. And when Jindal put his foot down too Lee said they should come arrest Jindal too.

Only, Jindal's staff now admits that that actually didn't happen. Instead of being there and being part of the story, Jindal's reps now admit that days later Jindal overheard Lee telling the story to someone else. And Jindal retold the story he'd been told while inserting himself into it as part of the story.

It's not really any different from a lot of tall tales we've probably all heard at one point or another when someone takes a fun story they've heard and retells it making themselves one of the central characters.

Now, Jindal's reps are still in high dudgeon over this, saying Jindal was totally on the level, claiming some mix of it not making any difference whether Jindal made up his role in the story or not or that what Jindal actually said was never meant to imply that he was part of the story rather than someone who heard about it later. But that's pretty preposterous if you look at what Jindal actually said.

But now there's this. TPM Reader EA just flagged this youtube video that appears to show Jindal telling the same story last year, only with even more embroidery about his own part in the drama ..

It's hardly a capital offense. Jindal's not the first gubernatorial fibber or pol with a fish story. But, c'mon, even more in this earlier version, it's clear he made up a version of the story where he was in it.

Late Update: A little addenda on this sorry tale. The good governor's defenders have been going like gangbusters over this video that Jindal's office released. It's from a political rally in 2007, a few months before Sheriff Lee died. He's praising and endorsing Jindal and in the course of his comments he says, "That when Hurricane Katrina ... the day after, Bobby was in my office saying, what do you need?" So Lee said that Jindal was in his office "the day after." Now, you could go back and forth about just what that meant or observe ungenerously that Lee was talking up Jindal at a political rally. But there's no getting around the fact that on its own, this is a strong piece of evidence in Jindal's favor.

Unfortunately for Jindal, though, it's not on its own. And this is where the story gets a little funny. Before Camp Jindal found the video, they admitted that rather than being there during the incident, as he claimed, Jindal had only heard about it later. (You can actually see the progression of the spinning in Ben Smith's real-time blogging of their evolving claims.) The lack of press reports that he was there at the time was one (though not the only) reason that we and others were suspicious. And it's pretty obvious that if Jindal's crew had found this tape earlier they would have felt that they were on strong enough ground that they didn't have to admit anything. But once they admitted that Jindal hadn't been there during the incident in question but only heard it later and then cooked up his own fictionalized account with himself in it, it really doesn't matter whether Lee or a hundred other people say he was on the scene a day after Katrina or doing scuba rescues or tucking Lee into bed or anything else. All of which proves once again that if you're a politician who's going to make stuff up you really need to invest in some quality press representation. Because otherwise you can end up in an epic goof like this where a better press secretary probably could have kept the fib under wraps rather than becoming the fact witness against you. Oh well ...

Still Jindalriffic Update: Here's a post with a trajectory of Jindal's evolving story. It's a good list, though it doesn't seem to include the version included in the video above.

The conservative activists at the CPAC conference will grant tonight the high honor of their "Defender of the Constitution Award" to Rush Limbaugh. That and other political news in today's TPMDC Saturday Roundup.

Matt Cooper talked to Tom DeLay yesterday at CPAC. If you're over 30 or maybe 35 there's just something deeply weird about listening to Tom DeLay say that the right has to learn how to organize and raise money and build a movement infrastructure like the left. But there you have it ...

Just out from the Times-Picayune ...

Louisiana's transportation department plans to request federal dollars for a New Orleans to Baton Rouge passenger rail service from the same pot of railroad money in the president's economic stimulus package that Gov. Bobby Jindal criticized as unnecessary pork on national television Tuesday night.

With Jindal and Steele heading up the GOP, how long can Obama hope to remain president?

Highlights from President Obama's speech today at Camp Lejeune, N.C., announcing his plans to withdraw U.S. troops from Iraq:

Bobby Jindal's people have been spinning the Katrina story very hard all day. It's been pretty amusing to watch. Zack Roth deciphers the up-is-downism emanating from Camp Jindal.

California's unemployment rate hits 10.1%.

As a rule, I try to avoid link war nonsense and getting into spats with other sites. But I'll make a small exception because it illustrates a point. Yesterday, we published a post by Zack Roth noting a number of reasons to question whether the main anecdote in Bobby Jindal's GOP response talk on Tuesday night ever really happened. And I should mention that the first people to raise the key issues were diarists at Kos, who Zack links to in the post.

Not long after the piece ran we heard from Ben Domenech, a young conservative writer, pointing to what he claimed were problems with the piece. And then this morning he followed up by sending in a post on the topic at Redstate.com, the conservative website where he's on the board and where I believe he was also a founder. The post is by Erick Erickson, the site's Editor-in-Chief.

Now, when I wrote the first draft of this post, Jindal had not yet admitted that the story was in fact false, which further clarifies the matter. So, as usual when I get an email from someone saying we got something wrong, I went to read the post with a tight knot in my stomach. But when I read the post it was all what lawyers would call 'non-responsive' -- a lot of claims and facts and noise, none which addressed the points we actually made. What there was a lot of was trash talk and insults. Zack Roth as a "leftist activist pseudo-journalists" and a "leftist activist posing as a journalist" -- there are many permutations, as you can see -- and a lot more.

All of which is to say, as I referenced in the title, a very low ratio of facts to rage -- F/R ratio. I don't pretend that low F/R ratios are limited to the right. Far from it. And solid facts, if they undergird substantial allegations, can merit some outrage. But I do think this is one of the reasons why the second generation of web-based conservative news and politics sites have had some difficulty getting traction on key news stories, rather than the reasons they imagine.

Matt Cooper talks with former House Majority Leader Tom Delay (R-TX) at the CPAC conference about what conservatives need to do to regain power:

Bob Reich on what today's economic numbers mean why Obama will probably have to come back for more Stimulus.

Matt Cooper just talked to David Keene, head of CPAC, the sponsor of the big conservative confab down in DC this weekend (and a very big player in movement conservative circles) about whether we should be writing the obit of the GOP ...

Having observed this game for a long time, I still wonder why people go there. That Bobby Jindal story about being there in the office of the sheriff when he was busting through the red tape, even telling the goofball government authorities that they could come arrest Bobby too ... well, turns out Jindal didn't mean it in the sense of its actually being true. He meant it more in the very loose sense in which you say something happened when it didn't happen because you heard much later that something kind of like that had happened when you weren't there.

Late Update: Sort of funny to watch again in light of today's revelation.--DK

Just when the election court in Minnesota had given Norm Coleman's legal team a break by reversing itself on a decision to strike a witness' testimony because Norm's lawyers withheld evidence from the Franken team, it turns out there's more evidence related to Coleman's lawyers' contact with this same witness that they still hadn't divulged until Franken's lawyer brought it out this morning on cross examination of the witness.

At issue: secret emails between Coleman's lawyers and the witness informing her that they were going to put off disclosing her name and statements to the other side. Happily, Coleman's lead lawyer threw his fellow lawyers under the bus in explaining the "mistake." But how much of this was a mistake and how much of this was deliberate litigation strategy is not immediately clear. Let's just say it smells a bit.

It's pretty clear the three-judge panel has had it with Coleman's lawyers. It'll be interesting to see whether this latest episode exhausts any remaining benefit of the doubt they have in favor of Norm's team.

We're here at TPM HQ watching the CPAC conference. And Wayne LaPierre is discussing discrimination against certain classes of assault rifles.

In a 11:45 a.m. ET speech at Camp Lejeune, N.C., President Obama will present his plan for a withdrawal from Iraq. That and the day's other political news in the TPMDC Morning Roundup.

I'm going to start feeling better, or at least stop feeling worse, when I hear about the release of a major economic indicator that the economic forecasters hadn't assumed -- even after all the gloom and pessimism -- would be better than it turned out to be. Don't get me wrong: I'm not looking for 'good' numbers. I expect them all to be bad for some time to come. What continues to surprise me, however, is that even after we've gotten to an apparent consensus that we are in for a recession that is much more severe than anything we've endured in the post-war era, and even after six months in which each successive month looked worse than the last, that with each new number we're still surprised that it's even worse than we'd realized -- still worse than the consensus assumptions.

Maybe we need better assumers before we can get out of this mess.

Sir Allen Stanford's 'Chief Investment Officer' arrested for obstruction (stemming from recent SEC testimony), cooling her heels at the federal detention center in downtown Houston.

We've been following the endless Franken-Coleman Recount/Trial really, really closely over the almost four months since the November election. Wearing my hat as a publisher, you just can't get enough of the endless stream of antic, nonsensical and hilarious posts this story generates. I mean, how couldn't you with a race pitting a professional comic against a professional clown?

Anyway, Eric Kleefeld has been our reporter-blogger on this story from the beginning. And I was just leafing through his posts over recent days. And I felt a great deal of pride in the amazing job he's done. I don't think there is any better, more detailed or more entertaining coverage of this story out there.

So, if you'd like to give Eric props, just click 'recommend' on this post to run up the number and of course you can always send emails to him at our comments address up on the upper right.

Maybe Michael Steele wasn't such a great pick.

Conservatives are jamming to CCR, the Beatles, and Smashmouth while a woman dressed as a polar bear hands out ice cream sandwiches. Matt Cooper surveys the scene at CPAC.

Tattoo removal is the new marsh mouse. Greg Sargent explains.

We have a sneak preview of George Will's latest column, which is a defense of his earlier, flawed column wherein he dug his contrarian heels in on global climate change.

John Bolton, former Bush administration warlord, just showed up to a rock star reception at CPAC, the annual right-wing shindig in DC where 'wingers come together to rage about liberal freaks and other fun stuff. Matt Cooper reports from the scene.

TPM is now taking applications for our Spring 2009 intern class. TPM interns are probably as intimately and rapidly involved in the preparation and production of news coverage as interns at any other news organization. And that ranges from work on the news section of the front page to research for our news blogs to video editing to bylined articles. Former interns have gone on to jobs at the Wall Street Journal, the Washington Post, and TPM, among other places. To find out details for how to apply, click here.

Greg Anrig fact-checks Marc Ambinder on Social Security.

(ed. note: As long as we're at it, Patrick Ruffini does not work at TPMDC -- see big red No. 3 in middle of the page.)

The Rocky Mountain News will publish its final edition Friday.

Dusty Foggo gets 37 months in prison for steering CIA contracts to his old buddy Brent Wilkes, the Duke Cunningham uber-briber.

Bobby Jindal's speech the other night was bad enough -- but was a key anecdote he told during the speech really true? TPMmuckraker investigates.

Obama will lift the ban on photographing the returning American war dead at Dover Air Force Base, but will allow families of the fallen to prevent photographs on a case by case basis.

If you haven't been following Eric Kleefeld's bang-up coverage of the Minnesota Senate election saga at TPMDC (come to think of it, this fiasco pre-dates the launch of TPMDC and dates back to our TPM Election Central days -- just another reminder that here it is almost March and the results of the Nov. 4 election are still unresolved), then you may not be aware of where things are headed. But there's been an ominous turn in Minnesota, so let me bring you up to speed.

In a nutshell, Norm Coleman has lost but refuses to concede and now wants to throw out the original election, the one he lost, and hold a new one.

Coleman was ahead after the initial tally on election night, but then found himself 225 votes behind Al Franken after the state-mandated recount. So Coleman sued to have the results of the election overturned by a court, primarily (though not exclusively) on the grounds that certain absentee ballots were counted that shouldn't have been and others weren't counted but should have been. That's most of what the twists and turns of the legal dispute have been about (a political junkies dream, really).

But five weeks into the election contest trial, the court has repeatedly issued rulings that narrow Coleman's chances of either collecting enough newly counted ballots or throwing out already counted ballots -- or some combination of the two. So in recent days, the Coleman legal team has become increasingly shrill in its attacks not just on the court but on the entire electoral process in Minnesota, getting closer every day to outright calling for the Nov. 4 election be declared null and void and a whole new election be held between Coleman and Franken. And now Coleman himself has suggested that a do-over election may be necessary.

In the background of course is the fact that the longer the legal dispute drags on, the longer Senate Democrats are denied an important 59th vote, in the person of Al Franken. But let's not allow that to distract from the fact that Coleman (and the GOP) still desperately wants to win, and has shown himself willing to do just about anything to get there.

Throwing your hands up and saying let's just call the election a tie and do it again is the desperate last act of a losing candidate. That this ploy requires attacking the entire electoral process and the people who conduct elections in the state is just a sign of his desperation. But apparently even the Coleman camp is starting to see that a do-over election is the only avenue still open to Coleman that might, albeit remotely, allow him to return to his seat.

For years, and certainly most loudly since the Florida debacle of 2000, Republicans have made ill-founded election hijinks charges against Democrats. But Norm Coleman, with the support of national Republicans (keep in mind that one of Coleman's lawyers is Ben Ginsberg, the Bush campaign's top lawyer in 2000) is now poised to try to pull off what would be perhaps a bigger election robbery than Bush v. Gore: toss out the nearly three million votes cast on one of the most-anticipated election days in this nation's history in favor of a much smaller special do-over election. It's breath-taking. Yet for some reason this story still seems to be flying below the national political radar.

The three-day Conservative Political Action Conference -- which bills itself as the "Largest Annual Gathering of Conservative Students, Activists and Policymakers!" -- started today in Washington. It's quite a lineup, and should be pretty entertaining, especially this year, given the GOP's woes. You can watch the live stream here, and we've dispatched Matt Cooper with camera in hand to bring us the latest goings-on.

Late Update: Just to give you the flavor, this afternoon at 2:30 ET, TPM fave Hans von Spakovsky will be on a panel titled: "Al Franken and ACORN: How Liberals are Destroying the American Election System."

As Atrios would say, just make it stop.

Gail Collins nails it ...

Louisiana has gotten $130 billion in post-Katrina aid. How is it that the stars of the Republican austerity movement come from the states that suck up the most federal money? Taxpayers in New York send way more to Washington than they get back so more can go to places like Alaska and Louisiana. Which is fine, as long as we don't have to hear their governors bragging about how the folks who elected them want to keep their tax money to themselves. Of course they do! That's because they're living off ours.

More than 52 million TV viewers watched President Obama's address to Congress -- compared to 39.8 million viewers for President George W. Bush's first congressional address in 2001. That and the day's other political news in the TPMDC Morning Roundup.

Banks turn on the lobby spigot to derail Obama's mortgage relief plan.

The guy who plays Kenneth the Page on 30 Rock responds to Bobby Jindal's unauthorized imitation of him in the GOP response last night.

(You have to wait through about 20 seconds of an annoying promo with the sound all screwed up. But the good stuff starts after that. And the sound isn't screwed up anymore.)

We like to make important news entertaining too. So we've been having a lot of fun with Sir Allen Stanford, the Brit-wannabe, cricket-promoting, alleged-mega-defrauding Texas high flyer whose mutlinational empire has crashed and burned into oblivion over ... what, the last week or so. But there's a part of this story I'd be remiss not to have mentioned.

In addition to all the individuals Stanford scammed he's also managed to completely upend an entire small country: Antigua.

It was Antigua that knighted Sir Allen, which I guess they can do since they're a member of the Commonwealth and have Elizabeth II as their head of state(*). (He also acquired Antiguan citizenship.) But it goes much further than that. It was Antigua where Stanford located all his off-shore bank shenanigans. But he had so many different operations going on down there (a recent report said that he was "a chief financier of government projects" in the island) that he and his businesses were the second biggest employer in the country after the Antiguan government.

Now, I have an affinity for the place because I've been there three times. Not that I'm some big Caribbean island hopper or world traveller. It's the only place that I've ever been in the Caribbean. But I've been there three times. So I know the place a bit. And Stanford's flameout has completely upended the whole place because he had made himself such a player there. As a funny illustration, a few days ago I went to the website of the local newspaper, the Antigua Sun, to try to find out the latest on what was happening down there. And I couldn't find anything about it, which struck me as weird. And then I dug a little deeper to discover that ... well, the Antigua Sun is owned by Sir Allen. So maybe that explains it.

The country has been hit by a major banking panic, not surprisingly. And the entire population has been in a panic over what's going to happen to the country. Today the government announced that it is confiscating the land that Sir Allen owns in the island "to protect the national economy." And that makes me wonder if more of that might be afoot because a few days ago the Prime Minister revealed that the government of Antigua owes Stanford "more than $100 million."

(ed.note: Disillusionment aplenty tonight -- alas, it seems I managed to overstate Sir Allen's legitimacy, which is no mean feat. The knighthood had nothing to do with Antigua's Commonwealth status or head of state. The whole thing is a sham. Antigua gives out its own knighthood. And even though Stanford long claimed that it was bestowed by Prince Edward, actually he got it under a 2000 amendment to the Antiguan Honors law, which allows the current PM to give them out to whomever he or she wants. Probably a whole 'nother story there in how that amendment got passed.)

Citigroup CEO Vikram Pandit on a recent phone call with a senior government official, pleading for time before the government pushes out top management: "Don't give up on us. Give us a chance to execute."

House Minority Leader John Boehner (R-OH), on how hard it is to be a Republican:

"We have a tougher job than our friends across the aisle. They've been offering Americans a free lunch for the last 80 years, rather successfully."

Norm Coleman's legal team had a tough challenge to be sure -- trying to find enough votes to erase Al Franken's lead -- but time and again they have shot themselves in the foot, bungling their case and doing themselves and their client no favors. As our Eric Kleefeld has observed, the judges have reacted at times with scorn bordering on contempt.

This afternoon, after the Coleman team was revealed to have withheld evidence from the Franken legal team, which rightly flipped out, the court ordered the testimony of a key witness struck from the record, dealing yet another blow to Coleman's tattered case.

Open mic for suggestions on how Bobby Jindal can salvage his national political career after last night's flame out.

David Corn says he probably needs to try to get booked on Leno.

Whaddya got?

Late Update: Weirdly enough, as TPM Reader KR points out, Jindal actually did go on Leno while he was trying out to be McCain's veep and he actually didn't come off as a cartoonish tool.

Latter Update: A number of readers argue that Jindal should actually do a guest spot on 30 Rock, doing an imitation of the Kenneth character he was channeling last night. Candidly, I think Leno would be a stronger career move. But when you think about the Palin/Tina Fey thing, you could see some uncanny harmonic convergence possibilities with Jindal having his own 30 Rock doppelganger and sort of reversing the trajectory.

There have been a lot of articles over the last 48 hours arguing that the biggest banks are simply too complex and multifaceted to be taken over and run for any period of time by the relevant government agencies. It does not seem prohibitive to me. But just how the government would run Citibank in the short to medium term is a good question to start pondering. But there's a politico-economic argument for nationalization that Paul Krugman (and Noam Scheiber) references in a post he just did on his blog.

Namely, you're just not going to get another big bailout bill through Congress as long as it leaves the present crew (management and shareholders) in place, since it will be (rightly) seen as another taxpayer giveaway to the investors and executives who caused the problem in the first place. So even if you could hypothetically stabilize the banks with a massive taxpayer ripoff, the money probably isn't there. In other words, the intersection of the economics and the politics seals the deal.

As Krugman puts it ...

As long as capital injections are seen as a way to bail out the people who got us into this mess (which they are as long as the banks haven't been put into receivership), the political system won't, repeat, won't be willing to come up with enough money to make the system healthy again. At most we'll get a slow intravenous drip that's enough to keep the banks shambling along.

I never fail to be surprised by the gonzo alternative universe so many political crooks live in. It turns out that Kyle "Dusty" Foggo, the crooked CIA #3 who was the inside man for Cunningham briber Brent Wilkes, was thinking ahead to life after the CIA. He was getting ready to run for Cunningham's congressional seat in San Diego before the feds nabbed him.

As an aside, Ben Smith makes a point I've been thinking about too: after the GOP has burned through Michael Steele and Bobby Jindal, I'm not sure they have any non-white guys left.

Ben Bernanke: "Nationalization, to my mind, is when government seizes the banks, zeros out the shareholders and begins to manage and run the bank, and we don't plan anything like that."

After he got his mistress' boss at CIA fired for criticizing her job performance, Dusty Foggo told his lady friend, "You can thank me later." Wink, wink. Nudge, nudge.

From a Justice Department press release we just received:

According to a three-count complaint unsealed today in Manhattan federal court, from at least 1996 through February 2009, [Paul Greenwood, 61, of North Salem, N.Y., and Stephen Walsh, 64, of Sands Point, N.Y.] ran a fraudulent commodities trading and investment advisory scheme using an entity they controlled called WG Trading Investors. Through a marketer, Greenwood and Walsh solicited investor funds on the understanding that they would invest the funds in a program called "enhanced stock indexing," which they represented was a conservative trading strategy that had outperformed the results of the S&P 500 Index for more than 10 years.

Several institutional investors - including charitable and university foundations, retirement and pension plans and others - invested more than $668 million through WG Trading Investors, receiving in exchange promissory notes issued by WG Trading Investors that the defendants represented would pay interest at a rate equal to the investment returns earned by the enhanced stock indexing strategy.

Contrary to their representations to their investors, Greenwood and Walsh are alleged to have misappropriated the majority of the investor funds. Among other things, Greenwood is alleged to have used the funds to purchase expensive collectible items and horses, as well as for other personal expenditures. Walsh is alleged to have misappropriated investor funds for himself, and to have made large cash payments to his ex-wife. ...

In February 2009, the National Futures Association (NFA) conducted an audit of WG Investors and related entities. In the audit, the NFA discovered that of approximately $812 million purportedly on the books of WG Investors, more than $794 million was booked as receivables due from Greenwood and Walsh and investments in entities that they controlled.

Late Update: The AP has more:

The complaint alleges that since the summer of 2007, $1.3 billion in illegal wire transfers were made to bank accounts held by Greenwood and Walsh's wife. ...

The arrests come less than a week after the University of Pittsburgh and Carnegie Mellon University sued Westridge, Greenwood and Walsh, seeking the immediate return of more than $114 million they invested.

A choice, not an echo!

Sen. Vitter, fresh off his prostitution scandal might be challenged for his seat by the chief of the Family Research Council, Tony Perkins, who presumably doesn't sleep with prostitutes.

And if porn star Stormy Daniels gets into the race, it'll be a threesome.

As we've noted, Monday the federal government rolled out a new plan for the banks in which our preferred stock from the last deal could be converted into common stock. Without going into too much detail, this would strengthen the banks financial position -- at least in a notational sense. And it wouldn't require a direct injection of new money from the Feds. However, it amounts to a much better deal for the banks because it relieves them of having to pay us dividends and various other rights attached to preferred stock ownership. So we don't have to pay more money, just agree not to get the money we're currently entitled to.

In any case, the Dems don't really seem to be raising much of a ruckus over this, perhaps because it's a Democratic president calling the shots.

On the other hand, as Elana Schor found out yesterday when talking to various Republican lawmakers, Republicans are criticizing the plan -- and pinpointing a lot of the key weaknesses. That's good in one sense. But since they aren't willing to entertain the other option -- some form of nationalization -- they're criticizing this plan while refusing to sign on for the only obvious alternative.

So now that the government has released all those new documents on how former CIA No. 3 Dusty Foggo was using agency resources hidden in the black ops budget to benefit his pal Brent Wilkes, we're tying to mine them for good stories. Zack Roth is going through the docs now and already found one little gem about the kind of guy Foggo is, and he's ready to mine your comments for things you find as you go through the documents. Have fun.

TPM Reader BH gets it right:

Regarding Jindal's speech last night, I am seeing a fair amount of negative comments on the delivery. While the delivery was atrocious - really atrocious - I think this misses the more important problem.

Admittedly I was also struggling to get past the "Kenneth the Page" thing, but what really struck me was the poor substance of the speech. To my ear, it sounded like a complete rehash of the Republican talking points we have been hearing since Reagan. It might be true that Jindal is a smart, honest guy and that he really believes excessive government is the problem, but Republicans just don't have any credibility with this argument right now.

Unfortunately for Jindal (and the country), Republicans used that same argument for decades while the intrusiveness of our government and the country's deficits continued to grow at unprecedented rates. His party used the same arguments while they happily used the government to transfer obscene amounts of public wealth to a small sliver of the population and completely trash our economy.

Simply put, his party has been the one controlling our government for a long, long time. The problem isn't government, it's Republican government - and everyone knows it.

Josh mentioned this last night. David Brooks has little tolerance for the insanely nihilistic, to paraphrase, wing of his own party:

See more at PBS.org.

TPM Reader BW:

I have always been skeptical of the talk of a post-racial America but when Bobby Jindal spoke and the immediate outpouring of commentary was to compare him to perhaps the single whitest character in America (Kenneth the Page), the country was clearly seeing past skin color.

If the lesson is that people really are being judged by the content of their character rather than the color of their skin, the Jindal verdict cannot possibly bode well for Republicans.

A lot of the discussion about the daily new deals offered the big banks has gone to the fate of the shareholders and other financial stakeholders in these institutions. But as the amount of equity for the shareholders approaches zero in the more recent deals (the new one for Citi being a prime example), what's becoming obvious in a number of these cases is that all the management is really holding on for are their jobs.

Maybe the third time will be the charm? Obama introduces Bill Richardson Judd Gregg former Washington Gov. Gary Locke as his nominee for Commerce Secretary. That and the day's other political news in the TPMDC Morning Roundup.

See more at MSNBC.com.

For years I've been saying that the Duke Cunningham story reached much further than people understood into the black intel budgets where all sorts of thievery is possible because no one is scrutinizing the budgeting. Tonight, Marcus Stern, the reporter who originally broke the Cunningham story, and now works at ProPublica, unearths a big treasure trove of documents related to the crimes of Kyle "Dusty" Foggo, the former #3 at the CIA, a key player in the scandal who is about to be sentenced.

We'll be digging into the documents tomorrow to see what we can find.

But take a look now and email us the good stuff you find.

Reactions from various members of Congress.

CBS also has an initial reaction poll. (Unfortunately, their site seems to have crashed, at least for now. Thought that only happened to us.)

And you know it's bad when the folks at Fox think Jindal blew it.

CNN also has a reax poll.

As I said, I thought Jindal's comments and presentation was just weird and cringy and awful. But I'm told by multiple readers that David Brooks totally unloaded on Jindal's speech on PBS. We'll try to track down more details.

Late Update: Jonathan Singer has some more details at MyDD.

"Pre-existing condition"? Is it just me or is this absolutely cringeworthy? I mean, I really don't like Jindal. But this is awful.

10:26 PM ... Is he going to talk about his work as an exorcist?

10:28 PM ... Katrina as metaphor for opposing the Stimulus Bill. Not happening for me.

10:28 PM ... Raising taxes? Isn't the bill like 40% tax cuts?

10:30 PM ... I think this is the new angle ... referring to 'magnetic levitation' like it's some sort weird thing you do at a commune. I guess it's funny not to understand that really fast trains don't all run on diesel.

10:00 PM ... Did I get my sections mixed up or did most of the GOP legislators hop to their feet when Obama said "We do not torture"? That's a major policy switch.

10:11 PM ... Lieberman bags a hug!

9:09 PM ... tiptiptip: Hey, is this thing on?

9:10 PM ... I think Brian Williams just said Rahm Emanuel is a veteran of the IDF. I'm pretty sure that's not true. He did some sort of civilian volunteer thing during the Gulf War. (ed.note: -- he just corrected at 10:17 PM)

9:11 PM ... Huh, what happened to that Bush guy?

9:16 PM ... Hey, maybe it wasn't Roberts' fault!

9:18 PM ... Here's the text of the speech itself.

9:19 PM ... It just occurred to me that the tempo and dynamics of a congressional address are very, very different from those Obama is best known for. You never really get more than a few sentences to get warmed up before you need to stop for more applause.

9:22 PM ... Reminds me: Why did Bush destroy the country?

9:30 PM ... That was a very open-ended statement on the fate of the biggest banks and what may happen to them if they can't manage on their own. The key points were about support and continuity of institutions that can provide a banking function.

Here's the quote: "We will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy."

9:40 PM ... Simon Johnson has more on that passage on the banks in the speech.

9:56 PM ... Speech seems a bit more disjointed in these last minutes.

9:56 PM ... This point about honest budget accounting sounds very wonky. And it is in a lot of ways. But the Obama people are very big on it. It's actually amazing how much stuff was not included in the Bush era budgeting. Cost of Iraq and Afghanistan for the next 6 or 7 years? Hard to say. So just don't count it, etc.

Join Matt Cooper over at TPMDC for real-time discussion and commentary during Obama's speech, which is just about to get underway. Matt just got the conversation going. The more the merrier ...

The Reality Coalition -- formed by environmental groups to debunk the notion of "clean coal" -- just aired this ad on CNN that I hadn't seen before. It's titled "Smudge," and it's a pretty good effort:

The answer: Bob Ney.

Our longtime Abramoff junkies will remember the special shout-out in the Congressional Record that then-Rep. Bob Ney (R-OH) gave to Jack Abramoff's casino buddy, Adam Kidan, and their ill-fated SunCruz venture in Florida. The Kidan shout-out was one of the "official acts" that the feds charged Abramoff with securing from Ney in return for campaign contributions. Both men wound up in jail. (Ney has since served his sentence and been released.)

Well, it turns out a few years later, on 2005, Ney gave a similar shout-out in the Congressional Record to Allen Stanford. And wouldn't you know that the campaign contributions to Ney from Stanford picked up markedly soon after. Hmmm ...

Court gives Coleman yet another smackdown.

From, well ... The San Francisco Chronicle ...

The Hearst Corp. today announced an effort to reverse the deepening operating losses of its San Francisco Chronicle by seeking near-term cost savings that would include "significant" cuts to both union and non-union staff.

In a posted statement, Hearst said if the savings cannot be accomplished "quickly" the company will seek a buyer, and if none comes forward, it will close the Chronicle. The Chronicle lost more than $50 million in 2008 and is on a pace to lose more than that this year, Hearst said.

Turns out that Merrill Lynch lost half a billion more than Bank of America (Merrill's new owner) estimated just one month ago. $15.84 billion in the 4th quarter of last year.

Gotta feel for Sen. Durbin on this one ...

As you likely know, President Obama will be giving an address to a joint session of Congress tonight at 9 PM Eastern. We'll be here covering it live with live-blogging from me here at TPM and Matt Cooper at TPMDC. Elana Schor will be in the chamber itself, sending dispatches and talking to the members of Congress who Obama will need to get the budget and health care reform enacted into law.

Join us.

RNC Chief Steele considering pulling support from GOP Senators who voted for the Stimulus Bill.

Hmmm. Seems like being on Fox got the better of Chairman Steele. Now he's backtracking.

See more at Foxnews.com.

In recent days we've been digging into accused fraudster Allen Stanford's decade of political giving and what he got for it. A lot of our attention to date has focused on two 2001-2002 era bills that his lobbying appears to have played some role in stymying or killing. But now we're looking at a 2007 bill sponsored by Sens. Levin, Coleman and Obama that would have cracked down on off-share banks like Stanford's. The bill eventually died in the Finance Committee. Never even came up for a vote.

Now, there were a lot of organized interests who did not want this thing to happen. Many more than just Stanford. But given the scale of Stanford's fraud we're trying to get a handle on what role if any his lobbying may have played. We have a lot of DC readers, so if you have any pointers on what happened to Sen. Levin's bill back in 2007, drop us a line.

Here's what we've come up with so far.

Turns out Jim Cramer is pretty down on the idea of bank nationalization. "We must take the debate out of the hands of the dreamer academics, and into the hands of practical business people, no matter how much we despise them for getting us into this fix in the first place."

In this video interview he says nationalizing Citi, BofA and Wells Fargo would be the "end of capitalism."

Curious what others think. I'm not knowledgeable enough to evaluate what Cramer says about the collateral damage to insurance companies and the entire real economy. His history of the 1930s is completely whacked. But that's out of his area of specialty. Alas, I suspect his macroeconomics may be no better.

Late Update: TPM Reader BM not feeling the love for Cramer: "If the voice of the opposition to 'nationalization' is Jim Cramer, than I think that works as a pro to go through with the absorption of the insolvent banks. The man is consistently wrong on everything. "Subprime, a bunch of hullabaloo!" -> "Market's doing fine, don't worry about it" -> "TAKE ALL OF YOUR MONEY OUT NOW". Let alone the infatuation he had with Sears. I've actually made a point to do the opposite of whatever a screaming maniac says, and it has suited me well so far. TPM has been great info with the interviews of all the economists btw, thank you for picking up where tv outlets are failing."

Latter Update: TPM Reader CG doesn't see it either: "Cramer is an almost perfect contrarian indicator. He is virtually always wrong about everything. His lemming instinct to both lead and follow the herd off of a cliff is uncanny. With my clients, all I need say is, 'Cramer said this is a good idea' and they run for the exits. To me he has always been an idiot that is useful, but now I guess he is truly playing the Republican and Banking communities role as useful idiot. He truly is the Rush Limbaugh of investing - bellicose, without shame and always wrong. Here is a link if you are interested."

Hooker-scandal survivor David Vitter says Sen. Burris (D-IL) should resign.

"I honestly don't know anybody who would compare these situations," he told The Hill on Tuesday, comparing his pay for sex and diapers scandal with Burris's failure to detail his dealings with Blago. "They are dramatically different."

Former Sen. Norm Coleman spotted attending Senate GOP caucus luncheon today on the Hill.

From the Dallas Morning News:

Ralph S. Janvey, who was appointed by the U.S. District Court in Dallas to take control of Stanford's assets, asked Democratic and Republican national political committees on Monday to return donations from Allen Stanford and his company's political action committee.

Very, very interesting.

Late Update: Elana Schor has more.

I had conversations with a few friends yesterday. And what came out of those discussions was that even among pretty knowledgeable people there's still very basic confusion about what bank 'nationalization' even means. My point is not that there's one thing true definition and others are misinformed. But the collective 'we' is talking about this; but what's clear is that the conversation is muddled by different people meaning different things by the same word.

So, for what it's worth, what I think we're talking about, what I've been talking about when I've been blogging on this topic is basically a super-powered version of what the FDIC does when it seizes a failed bank.

The bank is taken over and treated as bankrupt. The federal government takes over the bank, cleans it up and then runs it for a while, before selling it back to private investors. It doesn't involve all banks -- only ones that are judged insolvent -- and it's not permanent. It would be longer than would normally be the case with a small bank that gets taken over by the FDIC because a) banks like Citi would probably be much more complicated to unravel, b) there is no big healthy bank that you can have take over, say, Citigroup over, and c) the economic situation is so bad that it's probably going to take a while to find investors who are prepared to take the bank or its successor banks into private hands. This is why 'receivership' is really a better term for what we're talking about.

Now, how long is "a while" under federal management? I've heard 2 to 5 years. How much do the bondholders, as opposed to the shareholders (who presumably lose everything), lose? That's not completely clear to me, but a very big question.

The key point is that the entire exercise is focused on getting healthy, privately-managed and owned banks back into private hands as soon as possible, though not sooner.

Now, this is what I understand this to mean. But I strongly recommend reading Paul Krugman's take on what we're talking about from the 22nd. Also see Matthew Richardson's and Nouriel Roubini's column from the Post on February 15th. They both have the added benefit of really knowing what they're talking about.

So, to some up, what we're talking about is very much a private sector, perhaps the ultimate market based response to the problem. The choice is between keeping a series of de facto insolvent banks on long-term life support, subsidizing them with vast amounts of tax payer money and involving the government in various aspects of their management or biting the bullet, take them over for a while and reprivatize them as totally private banks. Like I said, it's really no different from what the FDIC does to a couple banks every week this year.

The really outstanding questions that come up when I discuss this with people are basically two. First, how much do the bondholders and counter-parties of the bankrupt banks take a hit? This is one essential question since it's really a zero sum between how much they lose versus how much tax payers pay. Second, during the period of government receivership, are the banks run in such a way as to bring their management priorities into line with government policies? In other words, are they run in such a way as to minimize foreclosures for policy reasons? Or are they just run entirely on profit-maximizing goals? Perhaps a more granular question is whether the incentives are still in place which lead to excessive risk-taking.

This comes up in our interview with Joe Stiglitz at about 6:00 in. As he says "We would align the interests of the majority owner, which would almost surely be we, the taxpayer, and ... what the bank does. We would reduce the scope for the conflict of interest ..."

What that means exactly -- about an alignment of interests -- seems like a very big deal.

Reich: Halving the deficit by 2012 makes no sense.

Sen. Schumer says the Stimulus Bill actually does not allow governors to pick and choose which parts of the bill's funds they want or don't want. It's all or nothing.

More at MSNBC.com.

Biden's son and brother ran hedge fund exclusively marketed by Sir Allen Stanford. From what we can tell, Sir Allen's tie to the fund started after Biden's son active management role ended. But we're digging a little further to see what the details are.

Union group calls on Treasury to deny TARP funds to Principal Financial Group because of its heavy lobbying expenditures, especially on the Employee Free Choice Act, TPMDC reports.

Just released from Sen. Schumer's office ...

Schumer to GOP governors: Stimulus isn't a la carte menu

WASHINGTON, DC--Senator Charles Schumer released the following letter Tuesday urging the Obama administration to notify governors that they must certify acceptance of stimulus funding in full or not at all, rather than selectively approving and rejecting the law's various components.

February 24, 2009

Dear Director Orszag:

In recent days, a small minority of governors, mostly Republicans, have publicly weighed the possibility of foregoing certain emergency provisions provided under the American Economic Recovery and Reinvestment Act signed last week by President Obama. I believe this prospect not only would undercut the stimulative effect of the recovery package, but also is inconsistent with a key provision included in the law passed by Congress. To protect the integrity of the recovery program, I urge the administration to issue implementation guidance clarifying that while any Governor may exercise his or her discretion to accept or reject the federal funds provided in the stimulus, no Governor should have the authority to arbitrarily adopt a select subset of the overall package.

As you know, Section 1607(a) of the economic recovery legislation provides that the Governor of each state must certify a request for stimulus funds before any money can flow. No language in this provision, however, permits the governor to selectively adopt some components of the bill while rejecting others. To allow such picking and choosing would, in effect, empower the governors with a line-item veto authority that President Obama himself did not possess at the time he signed the legislation. It would also undermine the overall success of the bill, as the components most singled out for criticism by these governors are among the most productive measures in terms of stimulating the economy.

For instance, at least two governors have proposed rejecting a program to expand unemployment insurance for laid-off workers. Economists consistently rank unemployment insurance among the most efficient and cost-effective fiscal stimulus measures; by one frequently cited estimate, it provides an economic return of as high as $1.73 for every dollar invested. Thus, by denying this provision for their residents, these governors are not just depriving some of the neediest Americans of relief in a dire economy; they are undermining the overall stimulative impact of the package.

No one would dispute that these governors should be given the choice as to whether to accept the funds or not. But it should not be multiple choice. The composition of the package was rightly dictated by economic considerations; we should not let the implementation of the package be dictated by political considerations.

Sincerely,

Charles E. Schumer
United States Senator

Obama's first address to a joint session of Congress is tonight at 9 ET. That and the day's other political news in the TPMDC Morning Roundup.

As reported earlier today, AIG -- which is already 80% owned by the US government -- is poised to go back to the government trough for more money.

(Remember, we've already committed roughly $150 billion to AIG.)

So I want to come back again to this question: who are the counter-parties? When we pour $10 or 30$ billion into AIG, it doesn't vanish into thin air. It goes to someone else. Earlier evidence suggested that Goldman Sachs had massive exposure to a potential AIG bankruptcy. And it's been alleged -- though not on any harder evidence than a certain elementary logic -- that AIG got saved in part because of people tied to Goldman who were running Bailout Inc. last fall.

Whatever the truth of that, I think it's time we know more clearly where the $100 or so billion we've 'loaned' AIG so far went. (There's been some data on this. But I don't believe it's been exhaustive or particularly detailed.) And where's the next dollop of money likely to go? Whoever these recipients are, they are by definition companies that are in the capitalism business who made a bad bet on AIG, probably a lot of bad bets on AIG.

Perhaps there are good systemic risk arguments about why these players need to be made whole. But like I said, in the capitalism business, so it seems like they should take at least some big hit for having deals outstanding with a company that in essence went bankrupt (though we've kept them on life support too). It really is a zero sum -- your money to AIG, so that 'AIG' can make this or that bank or investment house whole. Maybe there's a good argument. But I think we need a lot more data about who's ending up with the money before we know.

Buried about half-way down in an article in tomorrow's Post on the administration's new bank rescue policy, there's this ...

A wide range of prominent economists and public figures have called for the government to take this step. But a backlash is building against government ownership.

I do not pretend for a moment that nationalization of any sort is a done deal or that it doesn't face a lot of entrenched and interested opposition. But this is completely at odds with what I'm seeing. My impression is that over the last two to three weeks there's been a clear move of elite and expert opinion -- politicians, economists, policy analysts and even industry types -- in the direction of nationalization / receivership as an unfortunate necessity or at least something that must be seriously considered.

I have not seen any public opinion data that provides any insight on where the public is on this question, though opposition to the bank bailouts as a general matter is obviously extremely high. But to the best of my knowledge I don't think I've seen any evidence at all of a backlash 'building'.

The only evidence proffered in the article is a letter from Sen. Grassley (R-IA) which doesn't even some on point about opposition to nationalization.

To be clear, I'm not trying to pick a fight on this one. I'm just genuinely interested in where they're getting this and curious whether there's something I'm missing.

Let me know your thoughts.

That's what happens when you mix poll numbers from Rasmussen and whackadoodle editorializing from The Politico. If you go to the front page right now you'll see this splash headline for an article which argues that Obama has his work cut out for him tomorrow night because most Americans, even most Democrats, see the president's mortgage adjustment program like Rick Santelli, CNBC's fat cat populist whose rant against the mortgage program last week had everyone in a twitter.

The article is based on a Rasmussen poll made up of four fairly leading questions, the featured one of which reads: "Some people say that having the government subsidize mortgage payments for financially troubled homeowners puts the government in the position of rewarding bad behavior. Is the government rewarding bad behavior when it provides subsidies to those who are most at risk of losing their homes?"

(ed.note: The poll question text is only included in the subscriber section of the Rasmussen site.)

This question yielded 55% yes and 32% no.

Now, the thrust of the article gives you the sense that unlike Obama's other programs, this is one the public is not supporting. Unless you read some other polls that pose a more straightforward question. Do you support the program or not?

The Post asked this question and got: 64% support, 35% oppose.

The Times asked it and got: 61% yes, 20% no.

In other words, the plan appears to have not just majority but something approaching overwhelming support.

(ed.note: On the question of the quality of Rasmussen polls in general, I've been watching them closely now through at least two cycles. The toplines tend to be a bit toward the Republican side of the spectrum, compared to the average of other polls. But if you factor that in they're pretty reliable. And the frequency that Rasmussen is able to turn them around -- because they're based on robocalls -- gives them added value in terms of teasing out trends. But the qualitative questions, in terms of their phrasing and so forth, are frequently skewed to give answers friendly toward GOP or conservative viewpoints. All of which is to say that his numbers are valuable. But they need to be read with that bias in mind. On the separate question of whether robocalls are as 'good' as traditional live question polls, I think they've held up quite well over the last two cycles. I see little evidence that SurveyUSA's poll haven't stood up as well as those done by live phone callers.)

Late Update: Yet another poll, this one from CNN, provides broader evidence that President Obama faces very few Santellis.

And reminding us why McCain lost ...

The Post's Shailagh Murray has apparently decided that it's so hard keeping track of all of Norm Coleman's lawyers nonsensical arguments about why he shouldn't have to leave the senate that the only reasonable answer is just to hold a whole new vote. Now, bear in mind, that's not me saying they're nonsensical. It's mainly the judges shooting him down right and left.

Here's Murray from an online chat today at WaPo.com (via Balloon-Juice) ...

Baltimore, Md.: Speaking of junior senators, do you see Al Franken being seated anytime before 2010?

Shailagh Murray: Perhaps, but it seems more and more likely that the Minnesota race will wind up as a re-vote. At this point it seems like the quickest way to resolve the situation.

For what it's worth, there is vanishingly little evidence that there will ever be a revote of this race because Franken was certified (*) the winner after the recount and Coleman's suit to overturn that result is going badly. Even if it went well, it would almost certainly lead to reopening the recount rather than having a revote.

Asked later what she was talking about, she continued ...

I don't have a revote "theory." I'm just wondering how long this is going to sit in the court system. If Coleman looks desperate, why not just hold another election and beat him handily? But there's a process in place here, and we can only assume both parties will abide by it.

So if he's really flailing so badly in his court case, why not just hold a new election?

(ed.note: * -- certification, in this context, has a particular meaning under Minnesota law. As the term is normally understood, the canvassing board certified Franken's election. But under Minnesota law, a certificate of election cannot be issued until all legal challenges have been exhausted. So, because Coleman still had the right to appeal the result, no certificate was issued.)

The Post and the Times both have new polls out tonight showing continued, strong support for President Obama. Post (68%); Times (63%).

Beneath that topline, the numbers show very negative reactions to how Republicans have managed their opposition.

Remember too that in the Gallup poll released yesterday, the internals showed that Obama's slight drop in support came entirely from a Republican drop-off. He'd actually gotten slightly more popular among Democrats and Independents.

I was just watching Chris Matthews explaining how the Dow is President Obama's "scoreboard" and how people are going to start getting angry at him soon if he's not able to get the Dow to stabilized and start going up soon:

It is of course an entirely separate matter whether that is actually true -- as to public response -- and whether it makes any logical sense at all.

There does seem to be a certain lack of comprehension of the fact that there are economic realities, actual losses, underlying the steep stock market decline.

We already own 80% of AIG. Now they're coming back for more.

And more to the point, who are the counter-parties that the money is going to go to once we give it to this company that has no value at all?

Most people who do rotten things have redeeming qualities if you look hard enough. Then there are the really low and vile characters like Sen. Jim Bunning (R-KY). After tastelessly predicting Justice Ginsburg's death in 9 months over the weekend, he's now followed up with a sneering non-apology apology in which he pins the whole dust-up on her apparently being oversensitive. Truly a rotten person. No wonder his own party is trying to find someone to run against him.

"I apologize if my comments offended Justice Ginsberg," Bunning said. "That certainly was not my intent. It is great to see her back at the Supreme Court today and I hope she recovers quickly. My thoughts and prayers are with her and her family."

We're trying to dig in to find out just what accused securities crook Allen Stanford was getting for all that money he was pouring into Washington. But just looking on the surface, what's remarkable is how many of the members of Congress who went on his various junkets ended up getting in legal trouble or going to the slammer for entirely different scandals. Here's a photogallery of an event he held at the Longworth House Office Building. And here's another photo gallery of a junket to Antigua.

Now there are a number of members of Congress in good standing. It's not that everyone on the trip was a crook. Far from it. But if you were a crook, not much question that Sir Allen sought you out. You've got Rep. Bob Ney, Rep. John Sweeney, Rep. Katherine Harris, Rep. Tom Feeney.

Say whatever else you want about him, he knew his mark. Check out the galleries to see more.

Rove a no-show for latest US Attorneys scandal testimony.

Well, okay maybe that's an overstatement. But this article in Wharton's online business journal tentatively supports a temporary period of nationalization / receivership for the shitibanks.

TPM Reader JA adds this on scary nationalization ...

First, we already nationalize banks, although smaller ones than Citi or BoA. Second, you miss an important point. The shareholders in big banks likely to be nationalized aren't our major concern (yes, I do have some sympathy for them, as I do for anyone whose investments go south). It isn't the threat of nationalization that has harmed the shareholders, but the irresponsible actions of the banks themselves. We must do something to "rescue" the banks because their failure threatens us all, not just the shareholders. Strive to overcome your fear of a word, "nationalization". If you want real words to fear, consider "The World's Most Horrendous Economy Depression Ever And We're Worried About Shareholders?"

I think JA misses my point about whether I find 'nationalization' scary. I think every potential action in the current situation is fraught with danger because we're in such a bad situation and it is in many respects unprecedented. So there's no way to have certainty about the outcomes. But nationalization is much less scary than the alternatives. And JA makes the key point that the country as a whole, the economy as a whole, needs a functioning banking sector. So we don't necessarily have the luxury to wait years to let the big incumbent banks get their house in order, even if we didn't mind footing the whole bill.

As we found in the case of Ponzi schemer Bernie Madoff, we're now discovering that numerous government agencies had heads-ups or even started investigations (that were later shut down) into Sir Allen Stanford's Antigua-based banking empire. Of particular interest is an investigation the SEC began back in 2006, only to be asked by another unnamed government agency to "stand down". Zack Roth reviews the timeline and key events.

TPM Reader AC reacts to 'Scary Nationalization' ...

Rick's conclusion that "nationalization" would remove shareholders' chance of recovering their losses misses two important points. First, the only reason that the 90% to 95% losses that many have taken is not 100% is because of the chance that the feds bail out the banks but leave some equity outstanding (e.g., the 40% Citi solution). This, of course, is just a transfer of wealth from taxpayers to bank shareholders--like Paulson's funding of Citi greater than their market cap, to take meaningfully less than a 100% stake. The second point that he misses is that if it's just about keeping some money in the game with a chance of a recovery, bank investors can always sell their remaining investment in banks and put the funds in another investment with a chance of growth. The only thing that makes the bank investment more attractive than any other equally high risk investment is the chance that the bank investors will get a free transfer of wealth from taxpayers. With apologies for the double-negative, Rick's "leaving the equity in the game" argument is no reason not to temporarily nationalize the banks.

Over at US News, Rick Newman has an article on why bank nationalization is allegedly such a scary prospect. Now, let me start by saying that it is scary. Not because it's 'nationalization' and that's somehow inherently scary. But because we're in a midst of an historic financial crisis -- and it's global. There are so many moving parts that the results of any potential actions are inherently unpredictable. And the stakes are very high. (The biggest fear I have is that the take over of a few big banks could start a cascade effect with runs on others, though I don't have the specialized knowledge to have a good sense of how likely that is, what steps you'd take prevent it.)

But one point in Newman's list stuck out at me -- that nationalization would 'vaporize' a lot of wealth.

This is why the markets freak out every time there's a rumor, or a rumor of a rumor, about nationalization. If the government took over a bank, public shares would suddenly be worthless and shareholders would lose everything. With Citi and Bank of America shares down more than 90 percent over the last 12 months, many shareholders have already lost a fortune. But there's still a chance they'll get some of it back if the bank recovers. That potential upside would disappear if the feds stepped in.

Even worse, the banks' bondholders and other creditors could lose a bundle too. Same with depositors and institutional customers whose account balances exceed the amount guaranteed by the FDIC. To prevent a panic, the government would probably cover those stakeholders up to a certain level - with taxpayers footing the bill once again.

Now, this is a key point. I'm frequently told that the whole issue of wiping out the shareholders is a non-issue, or an overblown issue, since the shareholders are already basically wiped out, having lost like 90% or 95% of their investment on some of the big bank stocks. But this is the point -- if the US government takes responsibility for keeping Citigroup on life support and nursing it back to health over 5 years or so at massive taxpayer expense, the value of that stock is going to go way up. That's especially the case since the equity the government is getting doesn't come close to market value for the money being invested. So yes, it's scary how many people could 'lose a bundle', unless you come to grips with the fact that that bundle has already been lost and that the only thing preventing them from coming to grips with that fact is the assumption that the taxpayers will come in and make all those folks whole.

As Joe Stiglitz says (and many other do too) it really is a zero sum. How much do the investors pay for and how much do the taxpayers pay for?

Perhaps because there's so much else going on, the fact that this is budget week still doesn't seem like it's really broken through in the headlines. Today you've got the president's 'fiscal responsibility' summit. Tomorrow he gives his speech to a joint session of Congress -- which is like a quasi State of the Union address -- to present the outlines of his budget. And then the president's actual budget is presented on Thursday.

The White House has been saying they want to find significant savings from Medicare and Medicaid to free up money for a major down payment on health care reform this year. My own sense is that a lot of the chatter about the administration wanting to move in any way on Social Security is overblown.

In this post Jon Cohn games out what the White House has in mind on the health care front.

As we noted last night, Citigroup had gone back to the Feds for a further restructuring of the government's ownership stake in the company based on converting preferred shares to common stock. According to this article in the Post, the federal government has agreed to that and also made the same terms available to the 350 other banks that have accepted government money. Bloomberg has more details. Here's the joint statement from Fed, Treasury, FDIC, et al.

The economic stimulus package has been signed into law by President Obama, guaranteeing billions of dollars to individual states. Most governors are taking the money, but some Republican governors are refusing it in opposition to the stimulus package. And still others oppose the stimulus, but are taking the money anyway, because hey, it's free money. The question in today's Sunday Show Roundup: who wants it more?

Full-size video at TPMtv.com.

Despite all the "honeymoon is over" silly talk (starts at 3:28 mark), Gallup polling shows that the drop off in Obama's approval ratings from January highs is attributable solely to disenchantment among conservatives -- and that his standing among Democrats and independents has either held steady or actually risen.

The GOP wants to party like it's 1993. That and the day's other political news in the TPMDC Morning Roundup.

You know we're not in a good place when a piece in Bloomberg starts like this ...

Asian investors won't buy debt and mortgage-backed securities from Fannie Mae and Freddie Mac until they carry explicit U.S. guarantees, similar to those given on bonds issued by Bank of America Corp. or Citigroup Inc.

Halfway down into Edmund Andrews' piece in the Times about the bank 'stress tests' which start this week ...

In yet another sign of distress for the banks, Citigroup officials were in active talks with federal regulators on Sunday night about the government's potentially buying a bigger chunk of the giant bank, according to a person with knowledge of the talks.

Citigroup officials approached the regulators with a plan that would allow them to convert a substantial amount of the $45 billion of preferred shares held by the government into common stock, this person said. That would give the government a much bigger ownership stake in the company, and would probably increase the government's influence in the bank's business dealings. Federal officials have already pressured the company to shrink itself and shake up its board.

Eric Dash has more at DealBook. Seems to be an effort to get the government to convert its preferred shares into common stock (and perhaps get other sovereign wealth funds to do the same -- good point since the USG sort of is a SWF at this point) to get into a better position ahead of the 'stress test'. This is all to avoid having to come to the Feds for another lifeline. And I confess I don't fully grasp the value implications of the stock conversion. But it doesn't exactly inspire one with a great deal of confidence in Citi's viability.

And come to think of it, TPM banks with Citi. Hmmm ...

Late Update: FT has a bit more. They say it would leave the US govt. with a 40% stake in Citigroup, though it seems unclear how the current shareholders can really offer anything less than a controlling stake now since the bank has essentially zero value. It all seems like some sort of desperate last minute gambit in advance of the stress test when Citi's really not holding any cards. Sort of like proposing mini-nationalization (USG owning just under half) to get the government off the idea of eating the full meal. (The best discussion I've seen is this one in the Journal.)

Latter Update: As I read more about what's happening here, I almost wonder if this is the nationalization decision, just in a way that no one quite wants to concede, since it makes even more explicit that the US is effectively in control of the bank. That said, the whole thing just seems to show that the institution is not viable. So why are the existing shareholders holding on to anything? They're trying for yet another ad hoc temporary fix. Which may be why the Feds appear to be hesitant, if not outright balking.

John McCain best pal Carly Fiorina ...

"If we don't change, we're going to go back to the old ways, and we're going to continue to lose," said Maldonado, who faulted the party's hard line against illegal immigration. "They don't get it on illegal immigration," he said.

But a tough stance toward illegal immigrants was a given for the 1,250 delegates and guests at the convention. Carly Fiorina, a possible contender in the party's U.S. Senate primary next year to challenge Democratic incumbent Barbara Boxer, made them the butt of a joke in a hotel penthouse breakfast speech. When her family first moved to California, Fiorina recalled, her little brother asked, "Mommy, do they speak English there?"

"Wasn't that prescient," she joked, sparking a burst of guffaws.

A former Hewlett-Packard chief executive who left the troubled company with a severance package worth an estimated $21 million to $42 million, Fiorina also bucked the populist tide against lavish corporate salaries by denouncing President Obama's effort to cap annual pay at $500,000 for leaders of banks taking federal bailout money.

From the Louisville Courier-Journal ...

U.S. Sen. Jim Bunning predicted over the weekend that U.S. Supreme Court Justice Ruth Bader Ginsburg would likely be dead from pancreatic cancer within nine months.

During a wide-ranging 30-minute speech on Saturday at the Hardin County Republican Party's Lincoln Day Dinner, Bunning said he supports conservative judges "and that's going to be in place very shortly because Ruth Bader Ginsburg ... has cancer."

"Bad cancer. The kind that you don't get better from," he told a crowd of about 100 at the old State Theater.

"Even though she was operated on, usually, nine months is the longest that anybody would live after (being diagnosed) with pancreatic cancer," he said.

CBS News hires Dem-hating right-wing consultant as new PR Chief.

As you can see in our feature story about Louisiana Gov. Jindal refusing $98 million of the stimulus money headed for his state, that amounts to under 2% of the total money Louisiana will be receiving. So not exactly going out on a limb. We were all set to have that be our headline. But what's less clear is how much of the total $7.68 billion his state is getting he's in a position to turn down. A lot of it doesn't go through him in the first place. So we felt compelled to leave it implicitly clear that Jindal had apparently found the ideal number that would give him some shred of credibility with the neo-Hooverite right while also allowing him to get through his term as governor without getting impeached.

Glenn Beck and his pals start gaming out scenarios for their hoped-for anti-tax race war sparked by new taxes to pay for Obama's stimulus plan ...

Special thanks to TPM Reader ND for bracing the fever fields of Fox News to bring us this dreck.

Just out from the Wall Street Journal:

President Barack Obama's climate czar said Sunday the Environmental Protection Agency would soon issue a rule on regulation of carbon dioxide, finding that it represents a danger to the public. ...

"EPA's going to look at Mass. Vs. EPA and will make an endangerment finding," Browner told Dow Jones Newswires in an interview. The Supreme Court ordered the EPA in the case to determine if carbon dioxide endangered public health or welfare.

"The next step is a notice of proposed rulemaking," for new regulations on CO2 emissions, Ms. Browner said one the sidelines of the National Governors Association meeting, one of her first public appearances since inauguration.

Ms. Browner declined to say exactly when the EPA would issue the finding or rulemaking, but EPA chief Lisa Jackson has indicated it could be on April 2, the anniversary of Mass Vs. EPA.

Officially recognizing that carbon dioxide is a danger to the public sets would trigger regulation of the greenhouse gas emissions from coal-fired power plants, refineries, chemical plants, cement firms, vehicles and any other emitting sectors across the economy.

Alright, how long do you give Burris?