Due Diligence. Due diligence is a blog site which attempts to refine the news and to provide bits of irony in the course of every-day events. Due Diligence. ..trying to work for truth
Andrew Clark -- The White House has reluctantly decided to prop up America's motor industry by providing $17.4bn of emergency funding to avert a potentially disastrous collapse of Detroit's leading car manufacturers.
Throwing aside his usual free market orthodoxy, President Bush used taxpayers' money to provide a three-month financial reprieve for General Motors and Chrysler in return for swingeing wage cuts among factory workers which provoked immediate anguish among unions.
In a speech from the White House's Roosevelt room, Bush said: "In the midst of a financial crisis and a recession, allowing the US auto industry to collapse is not a responsible course of action."
From an initial fund of $13.4bn, GM will get $9.4bn and Chrysler will receive $4bn. The treasury will make a further $4bn available to GM in February. Detroit's third major firm, Ford, told the administration that it could get by without a handout.
Bush said without the money, manufacturers faced the prospect of disorderly bankruptcy and liquidation. Experts believe the loss of one of Detroit's "big three" would cause more than a million job losses among suppliers and contractors.
"Such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry," said Bush.
"It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession."
The decision ends a month of bitter political wrangling in which motor industry bosses shuttled between Detroit and Washington to plead for aid.
Congress failed to agree on a legislative rescue plan a week ago, leaving an executive order from the White House as the last hope.
The money will come from the US government's $700bn economic bail-out fund intended to support struggling banks. But the money comes with tight strings attached, which angered Detroit politicians and the UAW car workers' union.
Under the deal, GM and Chrysler must cut workers' wages and benefits to the level of counterparts at Japanese manufacturers by the end of next year, a timetable which employees view as unfair. In a direct challenge to Bush's authority, the UAW said it would appeal to president-elect Barack Obama to change the terms when he takes office next month. "While we appreciate that President Bush has taken the emergency action needed to help America's auto companies weather the current financial crisis, we are disappointed that he has added unfair conditions singling out workers," said the UAW president, Ron Gettelfinger.
His view was echoed by John Dingell, a congressman representing the car manufacturing city of Dearborn, who said: "It is irresponsible during a time of economic crisis for the White House to insist that workers take further wage cuts on top of the historic concession they have already made."
The White House's terms were put before carmakers late on Thursday and agreed in late-night discussions. They give the treasury significant involvement in day-to-day decisions at GM and Chrysler.
In return for the money, the firms must prove by the end of March that they are financially viable, with prospects for long-term profits.
They will have to sell their private jets, halt bonus payments to senior executives and seek government approval of transactions worth more than $100m. They must even tell the treasury of any deviations from expenses policy on minutiae such as travel, Christmas parties and conferences.
GM's chief executive, Rick Wagoner, said there had been little room for negotiation after a "stunning slowdown" in business.
"You wouldn't wish this kind of crisis on any industry, or company, or on our people," he said. "It's been very difficult."
The White House's intervention came on the day Chrysler shut its manufacturing operation of 30 factories for an extended Christmas break of a month, temporarily laying off 46,000 workers.
Barack Obama has outlined what he believes will be the main challenges he will face in his first two years in the White House, including closing Guantánamo Bay, withdrawing US troops from Iraq and employing a multilateral approach to the Middle East.
In an interview with Time magazine, who named the president-elect as their Person of the Year 2008, he also promised tax cuts for 95% of working Americans and said the health and school systems would be domestic priorities.
"On foreign policy, have we closed down Guantánamo in a responsible way, put a clear end to torture and restored a balance between the demands of our security and our constitution? Have I drawn down US troops out of Iraq, and have we strengthened our approach in Afghanistan — not just militarily but also diplomatically and in terms of development? " he told the magazine, which named him their Person of the Year 2008.
Obama said managing the transition of military power in Iraq would be a top priority, as was taking a multilateral approach to foreign policy. "Managing a more effective strategy in Afghanistan will be a top priority. Recognising that it is not simply an Afghanistan problem but it's an Afghanistan-Pakistan-India-Kashmir-Iran problem is going to be a priority.
"Sorting through our policy with respect to Iran effectively — that will be a priority. Dealing with our transatlantic alliance in a more constructive way and trying to build a more effective relationship with the newly assertive and, I believe, inappropriately aggressive Russia."
The Obama interview coincides with the announcement that more than 11,000 US troops will provide support, air defence and medical assistance at his inauguration on January 20 next year. General Gene Renuart, head of the US northern command, said although a "big chunk" of military and national guard units would do ceremonial work, the troops would also contain a contingent on alert to respond to a potential chemical attack. There also will be some 8,000 police and security agents.
Renuart said planners are working under the assumption that a terrorist or rogue element might try to interrupt the inauguration. "Not because we see a specific threat, but because [for] an event this visible and this important and this historic, we ought to be prepared to respond if something does happen.".
Comparing the economic situation to that of Japan in the 1990s, Obama warned that an American recession could take as long as a decade to recover. "I don't have a crystal ball, and economists are all over the map on this. I think we should anticipate that 2009 is going to be a tough year. And if we make some good choices, I'm confident that we can limit some of the damage in 2009 and that in 2010 we can start seeing an upward trajectory on the economy.
"But this is a difficult hole that we've dug ourselves into. You know, Japan found itself in a somewhat similar situation in the 90s, made some poor decisions, didn't squarely face some of the problems in its banking system and, despite significant stimulus, still saw this thing drag on for almost a decade."
Americans earning over £750,000 would go back to 1990s tax rates, he said. "In part to pay for the tax cut for people who desperately need it, I've proposed that people who are making more than a quarter-million dollars a year lose the tax cuts they received from George Bush and that we go back to the rates they had in the 1990s. And that is a pledge I intend to keep."
Obama said tackling climate change and the nuclear question would still be a priority. "Now, I mention those things, but keep in mind that some of the long-term priorities I identified in the campaign remain just as urgent today. I already mentioned nuclear proliferation. I already mentioned climate change. I think dealing with development and poverty around the world is going to be a critical component of our foreign policy. It's good for our security and not just charity."
Barack Obama and Ken Salazar at an Obama campaign rally in September.
Then-Sen. Barack Obama and Sen. Ken Salazar (D-CO) appear at a September campaign rally for Obama at the Colorado State Fair Grounds in Pueblo.
President-elect Obama's apparent pick to head the Department of the Interior has angered environmentalists who supported him during the election.
Citing anonymous sources, media outlets are reporting that Obama is close to announcing that Colorado Sen. Ken Salazar will be his nominee for Interior secretary.
Salazar is a rancher and considered a moderate Democrat. He is rarely seen without his trademark cowboy boots and hat. In public settings a favorite topic is economic development for rural America. Environmentalists were hoping instead for a loyal ally of the movement such as Rep. Raul Grijalva (D-AZ) or Rep. Jay Inslee (D-WA).
Last week, more than 150 environmental groups signed a letter to Obama specifically backing Grijalva.
"We've seen his record — that's very strong in regard to public lands and endangered species," said Oregon Wild spokesman Sean Stevens. "And I don't think we have the same sort of confidence in Ken Salazar. Hopefully we can grow to have that confidence."
Adds Kieran Suckling of the Tucson-based Center for Biological Diversity: "Ken Salazar is very closely tied to ranching and mining and very traditional, old-time, Western, extraction industries. We were promised that an Obama presidency would bring change."
Among those cheering the apparent Salazar nomination are the mining and agriculture industries, which generally backed Republican John McCain for president.
"I first heard it Monday and was excited because I have worked with him when I used to live in Colorado," said Laura Skaer, executive director of the Northwest Mining Association. "I know that he's fair and balanced."
The secretary of the Interior, perhaps more than any other Cabinet post, affects the lives of rural Americans, many of whom depend on natural resource development for their living.
"So the people I represent in rural communities are going to want somebody as secretary of the Interior that understands rural issues," said Dan Keppen, executive director of the Family Farm Alliance.
"It looks like many of the folks that might be opposing or upset about Sen. Salazar's appointment are activist groups from urban areas," said Keppen.
As much as politicians in Illinois have had a tradition of corruption, the people of Illinois have had a tradition of accepting it, even expecting it, long before Gov. Rod R. Blagojevich was accused of trying to put a United States Senate seat up to the highest bidder.
Otto Kerner, who served as governor in the 1960s, was found to have accepted bribes of racetrack stock but only after the track owner deducted it on her taxes as a cost of doing business.
After Paul Powell, an Illinois secretary of state, longtime state legislator and infamous dealmaker, died in 1970, associates discovered $800,000 in undocumented cash in shoeboxes, briefcases and strongboxes in his closet, a considerable cache for a man who had never earned a salary of more than $30,000.
Mr. Powell had emerged unscathed from a grand jury investigation into accusations that he bought stock in a harness racing company. As he said, “It wound up with the grand jurors wanting to know from me where they could buy racetrack stock.”
The state’s unusually lax laws have allowed corruption to flourish — in fact, prosecutors say, it was the threat of a new campaign finance law that takes effect in January that set Mr. Blagojevich on a last spree of pay-to-play. The tradition was established by the immigrants who settled the state in the 19th century and nurtured by a stubborn system of machine politics that other states eradicated long ago.
“There is this attitude among politicians, and frankly among citizens, that this is the way things are,” said Kent Redfield, a professor of political science at the University of Illinois at Springfield. “Politics is for professionals.”
The surprise for many Illinoisans last week was not that their governor was arrested, but that he could be brazen enough to try to sell a Senate seat when he was already under federal investigation.
Now the culture of his adopted home state threatens to dog President-elect Barack Obama, whose vacated seat in the Senate is the one that Mr. Blagojevich is accused of putting up for auction, much as swampy Arkansas politics dogged the last young Democratic politician elected on a platform of change, Bill Clinton.
Prosecutors say Mr. Obama is not a subject of the investigation. And he has been a champion of ethics reform in the Illinois Legislature and in the Senate. But some Republicans have seized the opportunity to try to tie him to the worst side of the state’s politics.
As he faced questions at a press conference in Chicago last week, Mr. Obama argued that there were two Illinoises — and that he came from the one not represented in the criminal complaint against Mr. Blagojevich.
Cindi Canary, director of the Illinois Campaign for Political Reform, said, “It’s as if we have a good angel on one shoulder and a bad angel on the other.”
“We have produced some real leaders,” Ms. Canary continued, mentioning former Senator Paul Simon, the former federal judge Abner J. Mikva and, of course, Abraham Lincoln. “At the same time, for historic and systemic reasons, we have real institutional corruption.”
Certainly, other states have their problems. The Corporate Crime Reporter ranked Illinois a mere sixth on a list of the most corrupt states last year, based on the federal public corruption convictions per 100,000 residents. (It was beaten by Louisiana, Mississippi, Kentucky, Alabama and Ohio; it was slightly ahead of New Jersey and New York.)
Still, as Mr. Mikva, who for many years was a member of Congress, said, “There’s a kind of Gresham’s law that operates: the bad drives out the good.”
If indicted, Mr. Blagojevich would be the fifth of the last eight elected Illinois governors to be charged with a crime, and if he is sent to jail, the fourth to serve time.
Since 1971, said Dick Simpson, head of the political science department at the University of Illinois at Chicago and a former Chicago alderman, 1,000 Illinois public servants have been convicted of corruption, and in Chicago, 30 aldermen have gone to jail.
Mr. Simpson said corruption went back at least to 1869, when three Chicago commissioners gave out a contract to paint City Hall and then used whitewash instead, pocketing the savings.
Now Illinois remains the rare place where one governor who served jail time (he used fraudulent loans to repair his yacht) writes an opinion article in a newspaper accusing the current governor of “ranking with Al Capone in establishing a disgraceful image of Illinois,” as Daniel Walker did on Thursday in The Chicago Tribune.
“Some people say it’s in the water,” said Mike Lawrence, who was a spokesman for former Gov. Jim Edgar (one of the unindicted ones) and executive director of the Paul Simon Public Policy Institute at Southern Illinois University. “But Paul Simon drank the same water that Paul Powell drank, and there couldn’t have been two more dramatically different politicians when it came to ethics.”
The deep-seated corruption, Mr. Lawrence and others said, has its roots in the settlement of the state in the 19th century.
Irish immigrants, and later Italians and Poles, faced discrimination in getting jobs and organized themselves politically as a way to assimilate and gain strength. New immigrants would come to local bosses for housing, work and food, and public office became the marketplace for jobs, contracts, rewarding friends and punishing enemies.
“It isn’t that the Irish are inherently corrupt,” Mr. Mikva said. “It’s that that’s the way you got power.”
Politicians mocked “goo-goo groups” like the “Plague of Women Voters” — good government being for girls and babies. “Politics was for people who had skin in the game,” Professor Redfield said.
After the convictions of George Ryan, whom Mr. Blagojevich replaced in the governor’s office, and Dan Rostenkowski, whose seat in the House of Representatives Mr. Blagojevich once held, their allies complained that prosecutors had criminalized politics. (Mr. Blagojevich’s lawyer, too, insisted that anything he had done was “just politics.”)
“I think for a while Illinois was sort of proud of their scoundrels,” said Mr. Mikva, who appeared on Friday with the Illinois attorney general in calling upon the State Supreme Court to declare Mr. Blagojevich unfit to govern.
“We bragged about Hinky Dink Mike Kenna and Bathhouse John Coughlin,” he said, referring to the bosses who ruled the First Ward in Chicago from the late 19th century until World War II with a mix of extortion, favors and ballot-box stuffing.
“We’ve gotten over that,” Mr. Mikva said, “but we’ve never put in the defense mechanisms in terms of ethics laws and limited contributions.”
There are no limits on political contributions in Illinois. The law that is to take effect in January bans contributions only from those with state contracts larger than $50,000, and it was passed only under pressure (including from Mr. Obama, who called his former mentor in the State Senate, Emil Jones Jr., to encourage its passage.) Unlike the federal system, corporations can give directly to politicians.
“There is a bottomless thirst for cash, for campaign contributions, for personal enrichment,” Ms. Canary said. “There is no speed limit.”
Professor Redfield said, “The laws reflect the culture, and the culture is shaped by the lack of laws.”
Long after machine politics died elsewhere — Prendergast in Kansas City, Tammany Hall in New York — Mayor Richard J. Daley’s machine ruled Chicago. Mr. Powell was a product of the downstate machine, Mr. Ryan of the Kankakee County machine.
Under Mr. Daley’s son, Richard M., the current mayor, Chicago’s machine has simply adapted, many say, so that the building blocks of the power structure are interest groups, corporations and unions rather than the neighborhoods.
In parts of downstate, the collapse of the coal industry has left the state as the biggest source of jobs, in prisons, mental institutions and universities. That has bred corruption in places like East St. Louis, where several officials and precinct workers were convicted of vote fraud in 2005.
“Most Illinoisans put a higher priority on getting their streets shoveled than they do on scandal-free public servants,” Mr. Lawrence said.
Instances of revolt are rare.
In the late 1970s, Mr. Lawrence said, after the Legislature and the governor slipped in a pay increase in a lame-duck session, outraged voters sent envelopes full of tea bags and even human feces. Then in 1980, they voted to reduce the size of the House by a third, to 118 from 177.
Mr. Mikva, who with Mr. Simon fought in vain to get the Legislature to pass limits on political contributions 50 years ago, recalled going to Mr. Blagojevich to suggest that he include such limits in a reform package. But while Mr. Blagojevich agreed to establish inspectors general and a new ethics board, Mr. Mikva said, he resisted ending pay-to-play. by Kate Zernike
Senate roll call on $14B auto bailout -- By The Associated Press
The 52-35 roll call by which opponents on Thursday prevented the Senate from considering a $14 billion emergency bailout passed by the House for U.S. automakers.
On this vote, a "yes" vote was a vote to formally consider the House bill and a "no" vote was a vote to stop its progress. Supporters of the bailout needed 60 votes to advance it.
Voting "yes" were 40 Democrats, 10 Republicans and 2 independents.
Here's still more new info suggesting that the outcome of the Al Franken race is still impossible to predict.
It's looking like there could be even more wrongly-rejected absentee ballots from across the state than anyone had guessed, potentially even 2,000 of them, based on numbers from some key counties. It's the kind of big number that could increase the pressure on the state canvassing board to rule in favor of re-admitting those votes at tomorrow's much-anticipated meeting, rather than kick it to the courts.
If those votes were counted, it would probably provide a big boost to Franken in light of pre-election polls that showed him disproportionately winning the absentees overall. So tomorrow's state canvassing board hearing, which will determine that exact question, could very well decide the race.
The Franken campaign is upping the intensity of its PR campaign going into that meeting, announcing in a briefing just now with reporters that they're supplying to the board not only written affidavits of voters whose ballots were wrongly rejected, but also a copy of that new Web video featuring emotional on-camera testimonials. The drama just never stops with this one.
"I should say if anybody wants to tape my conversations, go right ahead, feel free to do it," said the Democratic Governor of Illinois, Rod Blagojevich, in a pres conference yesterday, the day before his arrest.
"I appreciate anybody who wants to tape me openly and notoriously, and those who feel like they want to sneakily and wear taping devices, I would remind them that it kind of smells like Nixon and Watergate...
"But I don't care whether you tape me privately or publicly," Blago went on, "I can tell you that whatever I say is always lawful and things I'm interested in doing are always lawful and if there are any things out there like that, what you'll hear is a governor who is tirelessly and endlessly figures out ways to help average, ordinary working people...
"You might hear a couple of words that you might not hear publicly, but those are only adjectives to describe maybe some of you... There are probably a lot of discussions about the Cubs, and some of my ideas on what they ought to do in the off season, but you know, this is America, you know, and I appreciate if you want to tae my conversations, give me a heads up and let me know...
"I don't believe there's any cloud that hangs over me, I think there's nothing but sunshine hanging over me," he said.
Gov. Blagojevich, wearing a black and blue jogging suit, appeared before a federal judge this afternoon on corruption charges.
U.S. Magistrate Judge Nan Nolan set a $4,500 personal-recognizance bond for the governor, who was arrested at his North Side home this morning.
After the hearing, Blagojevich walked to Assistant U.S. Attorney Carrie Hamilton, shook her hand and said something to her.
Blagojevich arrived at his Northwest side home at 2:30 p.m., blocked from the media by large umbrellas and shepherded through the back ally.
Blagojevich's chief of staff, John Harris, who is also charged with the governor, was given similar bond by Nolan. When the two saw each other, Blagojevich shook Harris' hand and greeted him.
The courtroom included a number of extra security, including Kim Widup, the current U.S. marshal in Chicago.
Nolan greeted Blagojevich, saying "Good afternoon, governor,'' to which Blagojevich replied, "Good afternoon.'' As the charges were being read, Blagojevich folded his arms in front of him.
Both Blagojevich and Harris agreed to surrender their passports under the judge's terms.
Blagojevich is being represented by Chicago attorney Sheldon Sorosky. Harris is being represented by Terry Ekl and James Sotos.
Blagojevich Harris were arrested at their homes this morning in a probe involving the governor's quest to fill Sen. Barack Obama's open Senate seat and focusing on wire fraud and bribery charges.
Meanwhile, President-elect Barack Obama said he never knew the governor was trying to shake him down.
"I had no contact with the governor or his office so I was not aware of what was happening and, as I said, it was a sad day for Illinois," Obama said.
"Like the rest of the people of Illinois, I am saddened and sobered by the news coming out of the U.S. Attorney's office. But as this is an ongoing investigation involving the governor's office, I don't think it would be appropriate for me to comment at this time."
Blagojevich and Harris were arrested at their homes this morning in a probe involving the governor’s quest to fill Sen. Barack Obama’s open Senate seat and focusing on wire fraud and bribery charges.
The charges also include alleged attempts by the governor to influence the Tribune editorial board, threatening, that if the Tribune didn’t support him, he wouldn’t approve the sale of Wrigley Field.
Gov. Blagojevich got the call at 6 a.m. It was the head of Chicago’s FBI office to tell him he was being arrested.
“Well, I woke him up,” Robert Grant said. “The first thing he asked was this a joke. He wanted to make sure this was an honest call.”
Grant said he told the governor two agents were standing outside his door, and asked him to open the door “so we can do this as quietly.”
“He was very cooperative,” Grant said, adding that the governor’s two young daughters were asleep but his wife Patti was awake.
The governor was led away in handcuffs, “as is usual protocol,” Grant said.
At a news conference hours later, U.S. Attorney Patrick Fitzgerald said the corruption charges against Blagojevich represent “a truly new low” and “would make Lincoln roll over in his grave.”
“This is a sad day for government,” he said at a news conference with federal prosecutors to discuss the arrest of Blagojevich. “Gov. Blagojevich has taken us to a truly new low."
Fitzgerald called Blagojevich's actions in the last several weeks as “a political corruption crime spree.”
The head of the FBI office in Chicago said if Illinois isn’t the most corrupt state in the United States, it’s a strong competitor.
The charges accuse Blagojevich of trying to benefit financially from his ability to appoint President-elect Barack Obama’s replacement in the U.S. Senate.
Fitzgerald says federal investigators bugged the Democrat’s campaign offices and placed a tap on his home phone. And Grant says even seasoned investigators were stunned by what they heard on those tapes.
Fitzgerald described the situation by saying: “We were in the middle of a corruption crime spree and we wanted to stop it.”
The complaint contends Blagojevich, a Democrat, threatened to withhold substantial state assistance to the Tribune Co. in connection with the sale of Wrigley to induce the firing of Chicago Tribune editorial board members critical of Blagojevich.
The governor is also accused of obtaining campaign contributions in exchange for official actions — in the past and recently in a push before a new state ethics law takes effect Jan. 1.
Blagojevich, 51, and Harris, 46, both of Chicago, are each charged with conspiracy to commit mail and wire fraud and solicitation of bribery. They were charged in a two-count criminal complaint that was sworn out on Sunday and unsealed today following their arrests, which occurred without incident, the feds said.
A 76-page FBI affidavit alleges that Blagojevich was intercepted on court-authorized wiretaps during the last month conspiring to sell or trade Illinois’ U.S. Senate seat vacated by Obama for financial and other personal benefits for himself and his wife.
At various times, in exchange for the Senate appointment, Blagojevich allegedly discussed obtaining:
• A substantial salary for himself at a either a non-profit foundation or an organization affiliated with labor unions.
• Placing his wife on corporate boards where he speculated she might garner as much as $150,000 a year.
• Promises of campaign funds — including cash up front.
• A cabinet post or ambassadorship for himself.
On Dec. 4, Blagojevich allegedly told an advisor that he might “get some (money) up front, maybe” from Senate Candidate 5, if he named Senate Candidate 5 to the Senate seat, to insure that Senate Candidate 5 kept a promise about raising money for Blagojevich if he ran for re-election.
In a recorded conversation on Oct. 31, Blagojevich claimed he was approached by an associate of Senate Candidate 5 as follows: “We were approached to ‘pay to play.’ That, you know, he’d raise 500 grand. An emissary came. Then the other guy would raise a million, if I made him (Senate Candidate 5) a Senator.”
On Nov. 7, while talking on the phone about the Senate seat with Harris and an advisor, Blagojevich said he needed to consider his family and that he is “financially” hurting, the complaint states.
Harris allegedly said that they were considering what would help the “financial security” of the Blagojevich family and what will keep Blagojevich “politically viable.”
Blagojevich stated, “I want to make money,” adding later that he is interested in making $250,000 to $300,000 a year, the complaint alleges.
On Nov. 10, in a lengthy telephone call with numerous advisors that included discussion about Blagojevich obtaining a lucrative job with a union-affiliated organization — in exchange for appointing a particular Senate candidate whom he believed was favored by the President-elect — Blagojevich and others discussed various ways Blagojevich could “monetize” the relationships he has made as governor to make money after leaving that office, the complain alleges.
“The breadth of corruption laid out in these charges is staggering,” U.S. Attorney Patrick Fitzgerald said. “They allege that Blagojevich put a ‘for sale’ sign on the naming of a United States Senator; involved himself personally in pay-to-play schemes with the urgency of a salesman meeting his annual sales target; and corruptly used his office in an effort to trample editorial voices of criticism.
“The citizens of Illinois deserve public officials who act solely in the public’s interest, without putting a price tag on government appointments, contracts and decisions,” he added.
Robert Grant, in charge of the FBI office in Chicago, added: “Many, including myself, thought that the recent conviction of a former governor would usher in a new era of honesty and reform in Illinois politics. Clearly, the charges announced today reveal that the office of the Governor has become nothing more than a vehicle for self-enrichment, unrestricted by party affiliation and taking Illinois politics to a new low.”
Federal agents today also executed search warrants at the offices of Friends of Blagojevich at 4147 N. Ravenswood.
The feds said the charges focus on events since October when they obtained information that Blagojevich and “Fundraiser A,” who is chairman of Friends of Blagojevich, were accelerating Blagojevich’s allegedly corrupt fund-raising activities. The goal was to accumulate as much money as possible this year before a new state ethics law would severely curtail Blagojevich’s ability to raise money from individuals and entities that have existing contracts worth more than $50,000 with the state of Illinois.
Agents said they learned that Blagojevich was seeking approximately $2.5 million in campaign contributions by the end of the year, principally from or through individuals or entities — many of whom have received state contacts or appointments — identified on a list maintained by Friends of Blagojevich, which the FBI has obtained.
The complaint details several incidents involving efforts by Blagojevich to obtain campaign contributions in connection with his official actions as governor, including three in early October:
• After an Oct. 6 meeting with Harris and Individuals A and B, during which Individual B sought state help with a business venture, Blagojevich told Individual A to approach Individual B about raising $100,000 for Friends of Blagojevich this year. Individual A said he later learned that Blagojevich reached out directly to Individual B to ask about holding a fund-raiser.
• Also on Oct. 6, Blagojevich told Individual A that he expected Highway Contractor 1 to raise $500,000 in contributions and that he was willing to commit additional state money to a Tollway project — beyond $1.8 billion that Blagojevich announced on Oct.15 — but was waiting to see how much money the contractor raised for Friends of Blagojevich.
• On Oct. 8, Blagojevich told Individual A that he wanted to obtain a $50,000 contribution from Hospital Executive 1, the chief executive officer of Children’s Memorial Hospital in Chicago, which had recently received a commitment of $8 million in state funds. When the contribution was not forthcoming, Blagojevich discussed with Deputy Governor A the feasibility of rescinding the funding.
On Oct. 21, the government obtained a court order authorizing the interception of conversations in both a personal office and a conference room used by Blagojevich at the offices of Friends of Blagojevich. The FBI began intercepting conversations in those rooms on the morning of Oct. 22.
A second court order was obtained last month allowing those interceptions to continue.
On Oct. 29, a court order was signed authorizing the interception of conversations on a hardline telephone used by Blagojevich at his home. That wiretap was extended for 30 days on Nov. 26, according to the affidavit.
Another alleged example of a pay-to-play scheme was captured in separate telephone conversations that Blagojevich had with Fundraiser A on November 13 and Lobbyist 1 on Dec. 3. Lobbyist 1 was reporting to Blagojevich about his efforts to collect a contribution from Contributor 1 and related that he “got in his face” to make it clear to Contributor 1 that a commitment to make a campaign contribution had to be done now, before there could be some skittishness over the timing of the contribution and Blagojevich signing a bill that would benefit Contributor 1.
Blagojevich commented to Lobbyist 1 “good” and “good job.” The bill in question, which is awaiting Blagojevich ’s signature, is believed to be legislation that directs a percentage of casino revenue to the horse racing industry.
Regarding the Senate seat, the charges allege that Blagojevich, Harris and others have engaged and are engaging in efforts to obtain personal gain, including financial gain, to benefit Blagojevich and his family through corruptly using Blagojevich’s sole authority to appoint a successor to the unexpired term of the President-elect’s former Senate seat, which he resigned effective Nov. 16.
The affidavit details numerous conversations about the Senate seat between Nov. 3 and Dec. 5. In these conversations, Blagojevich allegedly discussed the attributes of potential candidates, including their abilities to benefit the people of Illinois, and the financial and political benefits he and his wife could receive if he appointed various of the possible candidates.
Throughout the intercepted conversations, Blagojevich also allegedly spent significant time weighing the option of appointing himself to the open Senate seat and expressed a variety of reasons for doing so, according to the affidavit, including:
• Frustration at being “stuck” as governor;
• A belief that he will be able to obtain greater resources if he is indicted as a sitting Senator as opposed to a sitting governor;
• A desire to remake his image in consideration of a possible run for President in 2016;
• Avoiding impeachment by the Illinois legislature;
• Making corporate contacts that would be of value to him after leaving public office;
• Facilitating his wife’s employment as a lobbyist;
• And generating speaking fees should he decide to leave public office.
In the earliest intercepted conversation about the Senate seat described in the affidavit, Blagojevich told Deputy Governor A on Nov. 3 that if he is not going to get anything of value for the open seat, then he will take it for himself: “If . . . they’re not going to offer anything of any value, then I might just take it.”
Later that day, speaking to Advisor A, Blagojevich allegedly said: “I’m going to keep this Senate option for me a real possibility, you know, and therefore I can drive a hard bargain.” He added later that the seat “is a [expletive] valuable thing, you just don’t give it away for nothing.”
Over the next couple of days — Election Day and the day after — Blagojevich was allegedly captured discussing with Deputy Governor A whether he could obtain a cabinet position, such as Secretary of Health and Human Services or the Department of Energy or various ambassadorships.
In a conversation with Harris on Nov. 4, Blagojevich compared his situation to that of a sports agent shopping a potential free agent to the highest bidder. The day after the election, Harris allegedly suggested to Blagojevich that the President-elect could make him the head of a private foundation.
Later on Nov. 5, Blagojevich said to Advisor A, “I’ve got this thing and it’s [expletive] golden, and, uh, uh, I’m just not giving it up for [expletive] nothing. I’m not gonna do it. And, and I can always use it. I can parachute me there,” the affidavit states.
Two days later, in a three-way call with Harris and Advisor B, a consultant in Washington, Blagojevich and the others allegedly discussed the prospect of a three-way deal for the Senate appointment involving an organization called “Change to Win,” which is affiliated with various unions including the Service Employees International Union (SEIU).
On Nov. 10, Blagojevich, his wife, Harris, Governor General Counsel, Advisor B and other Washington-based advisors participated at different times in a two-hour phone call in which they allegedly discussed, among other things, a deal involving the SEIU.
Harris allegedly said they could work out a deal with the union and the President-elect where SEIU could help the President-elect with Blagojevich’s appointment of Senate Candidate 1, while Blagojevich would obtain a position as the national director of the Change to Win campaign and SEIU would get something favorable from the President-elect in the future.
Also during that call, Blagojevich agreed it was unlikely that Obama would name him Secretary of Health and Human Services or give him an ambassadorship because of all of the negative publicity surrounding him, according to the complaint.
In a conversation with Harris on Nov. 11, the charges state, Blagojevich said he knew Obama wanted Senate Candidate 1 for the open seat but “they’re not willing to give me anything except appreciation. [Expletive] them.”
Earlier in that conversation, Blagojevich suggested starting a 501(c)(4) non-profit organization, which he could head and engage in political activity and lobbying. In that conversation with Harris and other discussions with him and others over the next couple of days, Blagojevich suggested by name several well-known, wealthy individuals who could be prevailed upon to seed such an organization with $10 million to $15 million, and suggesting that he could take the organization’s reins when he is no longer governor, according to the affidavit.
On Nov. 12, Blagojevich spoke with SEIU Official who was in Washington. This conversation occurred about a week after Blagojevich had met with SEIU Official to discuss the Senate seat, with the understanding that the union official was an emissary to discuss Senate Candidate 1's interest in the Senate seat.
During the Nov. 12 conversation, Blagojevich allegedly explained the non-profit organization idea to SEIU Official and said that it could help Senate Candidate 1. The union official agreed to “put that flag up and see where it goes,” although the official also had said he wasn’t certain if Senate Candidate 1 wanted the official to keep pushing her candidacy. Senate Candidate 1 eventually removed herself from consideration for the open seat.
Also on Nov. 12, in a conversation with Harris, the complaint affidavit states that Blagojevich said his decision about the open Senate seat will be based on three criteria in the following order of importance: “Our legal situation, our personal situation, my political situation. This decision, like every other one, needs to be based upon that. Legal. Personal. Political.”
Harris said: “Legal is the hardest one to satisfy.”
Blagojevich said that his legal problems could be solved by naming himself to the Senate seat.
As recently as Dec. 4, in separate conversations with Advisor B and Fundraiser A, Blagojevich said that he was “elevating” Senate Candidate 5 on the list of candidates because, among other reasons, if Blagojevich ran for re-election, Senate Candidate 5 would “raise money” for him.
Blagojevich said that he might be able to cut a deal with Senate Candidate 5 that provided Blagojevich with something “tangible up front.”
Noting that he was going to meet with Senate Candidate 5 in the next few days, Blagojevich told Fundraiser A to reach out to an intermediary (Individual D), from whom Blagojevich is attempting to obtain campaign contributions and who Blagojevich believes is close to Senate Candidate 5.
Blagojevich told Fundraiser A to tell Individual D that Senate Candidate 5 was a very realistic candidate but Blagojevich was getting a lot of pressure not to appoint Senate Candidate 5, according to the affidavit.
Blagojevich allegedly told Fundraiser A to tell Individual D that if Senate Candidate 5 is going to be chosen, “some of this stuff’s gotta start happening now . . . right now . . . and we gotta see it.”
Blagojevich continued, “You gotta be careful how you express that and assume everybody’s listening, the whole world is listening. You hear me?”
Blagojevich further directed Fundraiser A to talk to Individual D in person, not by phone, and to communicate the “urgency” of the situation.
Blagojevich spoke to Fundraiser A again the next day, Dec. 5, and discussed that day’s Chicago Tribune front page article stating that Blagojevich had recently been surreptitiously recorded as part of the ongoing criminal investigation.
Blagojevich instructed Fundraiser A to “undo your [Individual D] thing,” and Fundraiser A confirmed it would be undone, the complaint alleges.
Also on Dec. 5, Blagojevich and three others allegedly discussed whether to move money out of the Friends of Blagojevich campaign fund to avoid having the money frozen by federal authorities and also considered the possibility of prepaying the money to Blagojevich’s criminal defense attorney with an understanding that the attorney would donate the money back at a later time if it was not needed. They also discussed opening a new fund raising account named Citizens for Blagojevich with new contributions.
According to the affidavit, intercepted phone calls revealed that the Tribune Company, which owns the Chicago Tribune and the Chicago Cubs, has explored the possibility of obtaining assistance from the Illinois Finance Authority relating to the Tribune Company’s efforts to sell the Cubs and the financing or sale of Wrigley Field.
In a Nov. 6 phone call, Harris explained to Blagojevich that the deal the Tribune Company was trying to get through the IFA was basically a tax mitigation scheme in which the IFA would own title to Wrigley Field and the Tribune would not have to pay capital gains tax, which Harris estimated would save the company approximately $100 million.
Intercepted calls allegedly show that Blagojevich directed Harris to inform the Tribune and an associate, identified as Tribune Financial Advisor, that state financial assistance would be withheld unless members of the Chicago Tribune’s editorial board were fired, primarily because Blagojevich viewed them as driving discussion of his possible impeachment.
In a Nov. 4 phone call, Blagojevich allegedly told Harris that he should say to Tribune Financial Advisor, the Cubs chairman and the Tribune owner, “our recommendation is fire all those [expletive] people, get ‘em the [expletive] out of there and get us some editorial support.”
On Nov. 6, the day of a Tribune editorial critical of Blagojevich , Harris told Blagojevich that he told Tribune Financial Advisor the previous day that things “look like they could move ahead fine but, you know, there is a risk that all of this is going to get derailed by your own editorial page.”
Harris also told Blagojevich that he was meeting with Tribune Financial Advisor on Nov. 10.
In a Nov. 11 intercepted call, Harris allegedly told Blagojevich that Tribune Financial Advisor talked to Tribune Owner and Tribune Owner “got the message and is very sensitive to the issue.”
Harris told Blagojevich that according to Tribune Financial Advisor, there would be “certain corporate reorganizations and budget cuts coming and, reading between the lines, he’s going after that section.”
CHICAGO (AP) — Representatives of the company whose laid-off employees are staging a sit-in at the shuttered factory where they worked will meet Monday with union and bank officials, a congressman said.
Some 200 workers who abruptly lost their jobs last week have said they won't leave the Republic Windows and Doors plant until they get assurances they will receive their severance and vacation pay. Their demonstration has drawn support from President-elect Barack Obama and others.
Rep. Luis Gutierrez said early Monday that a meeting arranged for late afternoon would address the workers' concerns.
The Chicago Democrat said officials of the now-closed Republic Windows and Doors would meet with representatives of the workers' union, the United Electrical Workers, and of the bank that has canceled its financing of the company.
Company representatives have not commented since the sit-in began on Friday, and have not responded to calls and e-mails.
Gutierrez said Republic officials had signed a waiver permitting the opening of its financial records at the meeting.
Republic Windows and Doors told the workers on Dec. 2 that they would be out of work by the end of the week.
Leah Fried, an organizer for the United Electrical Workers, said the company told the union that Bank of America had canceled its financing. The bank had said in a statement that it wasn't responsible for Republic's financial obligations to its employees.
The announcement of the meeting comes after a wave of publicity about the sit-in and appearances by the Rev. Jesse Jackson and Obama, who said Sunday that the company should honor its commitments to the 200 workers.
"The workers who are asking for the benefits and payments that they have earned, I think they're absolutely right and understand that what's happening to them is reflective of what's happening across this economy," Obama said at a news conference Sunday.
To their amazement, the workers have become a national symbol for thousands of employees laid off nationwide as the economy sours.
"We never expected this," said factory employee Melvin Maclin, vice president of the union local that represents the workers. "We expected to go to jail."
One of the factory's workers, Silvia Mazon, said in Spanish that she needs the money owed to her for an $1,800 monthly house payment. The 40-year-old Cicero resident said she has enough money saved to survive for one month.
masters move-on employees remain Republic Windows & Doors will shut its doors Friday, causing about 300 workers to lose their jobs at the North Side manufacturer.
The company, which has been in business since 1965, told employees Wednesday that its main lender, Bank of America, had canceled its line of credit due to a severe downturn in business at the plant.
At the high point of the residential construction market, product sales to home builders totaled $30 million at the company. This year, those sales will total $6 million, said Amy Zimmerman, vice president of sales and marketing. Sales of replacement windows will total $38 million this year, down from $40 million.
"Banks are in the business to make money and at some point they have to make a business decision and that's what this is," Zimmerman said. "Certainly the new construction segment didn't help. If the bank saw some type of light at the end of the tunnel, maybe the bank would have extended a line of credit to Republic."
The United Electrical, Radio and Machine Workers, which represents 260 workers at the factory, is protesting the closing, saying workers were not given the 60 days' notice of a mass layoff as required by federal law, and has been told workers will not receive their vacation pay. The union is directing its ire at Bank of America, not Republic.
A spokesman for Bank of America declined to comment.
Republic sold its massive 348,000-square-foot Goose Island plant to Wm. Wrigley Jr. Co. in 2006 for $31 million.
The chairman of the Senate committee deciding whether to rescue the Detroit Three carmakers has said the health of the entire US economy is at stake.
GM year-on-year sales fell 41% in November
Democrat Christopher Dodd said that letting Chrysler, General Motors or Ford fail would be playing "Russian roulette with the entire economy".
Failure would affect "almost every sector of the economy", he said.
He also severely criticised the US Treasury and financial institutions for their handling of the credit crisis.
"This is not about acting to save individual companies. If it were, I would let them fail," said Sen Dodd, who chairs the Senate Banking Committee.
With "hundreds of billions in outstanding debt obligations", he said the credit crisis would get a lot worse if the carmakers were not able to repay their debts.
Inaction, he said, "is simply not a solution."
Rounding off his opening salvo, the senator said the US was mired in a deep recession caused by "irresponsible actions in the financial sector", before criticising the Treasury Department for "misusing" its authority by spending the $700bn bail-out package agreed by Congress in an "ad hoc manner".
The authorities had not, he said, attached stringent enough conditions to the package.
Loan proposals
Earlier this week, Chrysler, Ford and General Motors submitted their proposals to Congress for multi-billion-dollar loans upon which their survival could depend.
The so-called Detroit Three of troubled US carmakers have asked for a combined total of $34bn (£22.8bn; 26.8bn euros).
Slashing costs, reducing levels of debt and investing in greener technologies form the centre-piece of each proposal.
The chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid.
General Motors asked Congress for a loan of $12bn, with an additional $6bn if necessary, to help it survive.
Ford requested a $9bn bridging loan, which it hopes it will not need.
Chrysler sought $7bn to survive the dramatic slump in sales that has decimated its cash reserves.
Avoiding criticism
The heads of all three companies decided not to use private jets to travel to Washington for their presentations to avoid public criticism.
GM chief executive Rick Wagoner and his counterpart at Ford, Alan Mulally, drove to Detroit in hybrid cars produced by their own respective firms.
GM has warned it could run out of cash in a matter of weeks and cannot wait until President-elect Barack Obama - who may be more sympathetic to industry pleas - takes office in in January.
But Republican critics and some Democrats say the financial crisis is not the only reason why the biggest US carmakers are in trouble.
They say that Ford, GM and Chrysler's production is inefficient, and that their labour costs are higher than many of their foreign rivals.
The Bush administration has offered to accelerate the payment of some $25bn in green investment credits already allocated to the car industry, but this has been opposed by Democrats in the House of Representatives.
WASHINGTON (Reuters) - Senate Majority leader Harry Reid wants to try to find a way to avert threatened bankruptcies in the U.S. auto industry with Detroit Three chief executives readying for a make-or-break hearing on Thursday on a $34 billion bailout request.
With House Speaker Nancy Pelosi saying a day earlier that auto bankruptcies were not an option and some government aid for industry was likely, Democratic leaders in both houses positioned themselves to at least support the urgent cash needs of gasping General Motors and Chrysler, which amount to less than a third of the rescue proposal.
There appears initially to be little appetite in Congress to provide a $34 billion package during a short session planned for next week, especially among Republicans, according to a snapshot of sentiment provided by lawmakers, aides and lobbyists on a day when neither house was in session.
Despite pledges from Reid and Pelosi to help, House and Senate aides said there was no clear legislative path yet to how a major aid package -- which would likely include requirements for broad restructuring -- could be arranged so quickly.
The White House did not dismiss the industry's $34 billion figure on Wednesday but said it was too early to say what it might support on an emergency basis.
Both Congress and the administration insist that any assistance be conditioned on the industry's commercial viability, which the companies outlined in plans submitted to Congress on Tuesday along with their funding proposals.
Some Republicans flatly oppose a bailout but aides said most lawmakers agree automakers need help and that a collapse of one or more of them would devastate an economy already a year into recession.
Industry says 1-in-10 U.S. jobs are directly or related to the auto manufacturers.
General Motors Corp and Chrysler LLC told Congress on Tuesday they face possible failure if they do not receive government loans. GM wants $4 billion and Chrysler $7 billion by year's end. GM also wants another $8 billion in early 2009 and a $6 billion line of credit if its cash position deteriorates further.
A spokesman for Reid said the Nevada Democrat was "committed" to finding a way to helping avert any bankruptcies, but aides to other lawmakers and industry insiders say the degree to which Congress may be willing to help will be clearer after upcoming Senate and House hearings.
How chief executives Rick Wagoner of GM, Alan Mulally of Ford and Bob Nardelli of Chrysler respond to lawmaker questions and proposals in the Senate Banking Committee on Thursday and the House Financial Services Committee on Friday could determine the fate of the aid proposal.
"All options are on the table," Banking Committee member Robert Menendez, a New Jersey Democrat, told CNBC television.
Congressional leaders said the executives' unconvincing testimony two weeks ago coupled with partisan political wrangling over the issue torpedoed Detroit's initial attempt to win $25 billion in bailout funds. They were given a second chance by Reid and Pelosi.
Most of the pressure will be on Wagoner and Nardelli as Ford Motor Co says it has sufficient funds for the moment and has limited its request to a $9 billion line of credit. The money would be tapped only if recession worsens and pushes already depressed auto sales to severe new lows.
One issue expected to come up on Thursday is the option of pre-packaged bankruptcies. Under that scenario, rejected by the companies, agreements to cut labor and other costs and renegotiate supplier and lender terms are arranged ahead of a Chapter 11 filing. Restructuring would be faster than normal.
Democratic leaders, the companies and the United Auto Workers have sought to dampen any discussion of Congress possibly facilitating a bankruptcy. They say Chapter 11 would kill the industry.
UAW President Ron Gettelfinger said on Wednesday the union would surrender job security protections and delay payments to a retiree healthcare trust to help clinch government help. He said the UAW would consider other changes to contracts.
(Reporting by John Crawley and Kevin Drawbaugh; Additional reporting by John Poirier in Washington and David Bailey in Detroit; Editing by Maureen Bavdek, Toni Reinhold, Gary Hill)
Josh Kraushaar | Dec. 2nd, 2008Republican Senator Saxby Chambliss won a resounding victory over Democrat Jim Martin in the Georgia Senate runoff Tuesday, capturing a second term and ending Democratic hopes of gaining a 60-seat filibuster-proof Senate majority.
Chambliss defeated Martin by 16 percentage points, 58 to 42 percent, with 93 percent of precincts reporting. Turnout was moderate across the state– estimated to be around 30-35 percent – a development that unexpectedly played to Chambliss’ advantage.
In the battle to get out the vote, Republicans won decisively. GOP turnout in the party's metropolitan Atlanta suburban strongholds surged for Chambliss, while African-American turnout dropped off significantly from the levels attained in the November election.
The runoff was necessitated after Chambliss came up about 9,000 votes short of the 50 percent threshold necessary to win the seat outright on Election Night.
In his victory speech, Chambliss said his re-election was a triumph of conservative principles.
By John Reed in London and Bernard Simon in Toronto
Published: December 1 2008
Ford Motor on Monday said it was re-evaluating its options for its Volvo subsidiary, including “the possible sale” of its lossmaking Swedish premium brand.
The announcement came ahead of Ford’s presentation to Congress on Tuesday alongside General Motors and Chrysler as the three companies make their case for $25bn in federal emergency aid.
Ford said the options for Volvo were in line with “actions Ford is taking to strengthen its balance sheet and ensure it has the resources to implement its product-led transformation plan.”
Volvo reported a third-quarter loss of $458m and is in the process of laying off about 6,000 workers, or about one-quarter of its staff.
Ford has held talks with Sweden’s government about loan guarantees and other aid for Volvo. GM is seeking government aid for Saab, its own lossmaking Swedish premium marque.
Ford made no immediate comment on whether it was in contact with possible buyers of Volvo, whose largest market is the US, and which has been hit by declining demand for larger vehicles.
The US automaker said that the review would probably “take several months to complete”.
“As we conduct this review, we are committed to making the best decision for both Ford and Volvo going forward,” Alan Mulally, Ford’s chief executive, said in a statement.
Selling a car brand, especially a lossmaking one, could prove challenging as global carmakers contend with depressed markets and a contraction of credit.
GM has not yet sent out a sale memorandum for its Hummer brand, which it is seeking to sell, despite plans to do so in October. Several overseas carmakers have said they are not interested in buying it.
Ford, GM and Chrysler have warned that they could run out of cash early next year. Ford’s needs for fresh capital are less urgent than its two Detroit rivals’, but it has still asked for access to the emergency funding facility.
The three companies’ chief executives are due to make their case before a Senate committee on Thursday and a House of Representatives committee on Friday.
They were excoriated by lawmakers at their last appearance 10 days ago for bringing their begging bowls to Washington in their corporate jets.
Lawmakers are likely to seek assurances from Ford and GM that they are building leaner operations, and that US taxpayer-funded aid will not go to subsidise lossmaking operations.
GM is expected to announce that it has plans to dispose of Saab in the long term as part of the business and financial plan it presents to Congress.
The carmakers and their supporters have grown increasingly angry that, as they see it, their industry is being harshly criticised and scrutinised even as the Bush administration and Congress shower hundreds of billions of dollars onto banks and other financial institutions.
Andrew Clark --
