AIG CEO Edward Liddy is appearing this morning before a House Banking subcommittee. CNN has a live feed.

Here is Liddy's op ed in today's Washington Post. Here is the part of it that really bothered me:

Although we have wound down more than $1 trillion in the portfolio of the AIG Financial Products unit that is at the root of the company's troubles, there remains substantial risk in that portfolio. The financial downside for taxpayers is potentially very large, and that's why we're winding down this business.

(Emphasis supplied.) "Taxpayers" could walk away from AIG right now and avoid any further direct "downside." The government bailout is not premised on the idea that "taxpayers" needed to protect their "investment" in AIG. AIG has become nothing more than a "backdoor bailout" for other financial institutions. This is unacceptable. That is what I would ask Liddy about.

Speaking for me only

Tom Friedman writes:

If you didn’t like reading about A.I.G. brokers getting millions in bonuses after their company — 80 percent of which is owned by U.S. taxpayers — racked up the biggest quarterly loss in the history of the Milky Way Galaxy, you’re really not going to like the bank bailout plan to be rolled out soon by the Obama team. That plan will begin by using up the $250 billion or so left in TARP funds to start removing the toxic assets from the banks. But ultimately, to get the scale of bank repair we need, it will likely require some $750 billion more. The plan makes sense, and, if done right, it might even make profits for U.S. taxpayers. But in this climate of anger, it will take every bit of political capital in Barack Obama’s piggy bank — as well as Michelle’s, Sasha’s and Malia’s — to sell it to Congress and the public.

Forget for a moment that Friedman actually has no idea whether "the plan makes sense." Let's deal with the fact that there is no one who has enough "political capital" to sell the idea described by Friedman. At this point, only a temporary takeover of major bailout recipients will work politically. More.

Our condolences go out to the family of actress Natasha Richardson who fell during a ski lesson in Canada.

Sources close to the Tony award-winning actress say she is brain dead and being flown back to New York, where she will be taken off life support.

Ms. Richardson initially seemed okay after the fall. So what happened? One doctor calls it "talk and die" syndrome:

I can only speculate, but it sounds like something we call the ‘talk and die’ syndrome,” said Dr. Steven Flanagan, director of Rusk Institute of Rehabilitation Medicine at New York University’s Langone Medical Center.

What this implies is that someone hits their head and they are seemingly OK initially," he told FOXNews.com. "But then they get a rapid collection of blood — usually called epidural hemorrhage — and that means bleeding between the skull and the brain.”

So sad.

The 7th Circuit Court of Appeals has reversed the conviction of a man convicted of violating food-labeling laws and wire fraud for allegedly relabeling bottles of salad dressing. (Opinion here (pdf)).

The appeals court found the evidence at trial insufficient but in addition, called out AUSA Juliet Sorensen by name for improper conduct during the trial.

It's not unusual for judges to be critical of prosecutorial tactics. But Posner's rebuke is drawing attention because he identified the prosecutor by name and called for sanctions.

"The government's appellate lawyer told us that the prosecutor's superior would give her a talking-to," Posner wrote in the opinion that was joined by two other judges on the 7th U.S. Circuit Court of Appeals. "We are not impressed by the suggestion."

Here are a couple of Ms. Sorensen's egregious statements to the jury. [More...]

Jurors doing research on their iPhones and live-reporting their trials on Twitter are causing big headaches to the judicial system. After 8 weeks of trial in a federal drug trial in Florida, the Judge declared a mistrial.

Last week, a juror in a big federal drug trial in Florida admitted to the judge that he had been doing research on the case on the Internet, directly violating the judge’s instructions and centuries of legal rules. But when the judge questioned the rest of the jury, he got an even bigger shock. Eight other jurors had been doing the same thing.

Sadly, "... the defense lawyer, Peter Raben, ... was told by the jury that he was on the verge of winning the case."

Why is a twittering juror any different? [More...]

The judge in the Joe Nacchio case has unsealed his request to delay the March 23 start of his prison term.

Here's the doctor's letter (pdf) stating Nacchio has been undergoing treatment for several months for a suspicious growth on his leg. He had an appointment yesterday to see if a biopsy is needed to determine if it is malignant.

A hearing is scheduled Thursday on the request. The Judge denied Nacchio's sealing request even though no objections were lodged. From the court order: [More...]

A person knowledgeable about the inner workings of AIG over the last decade sends me this e-mail:

They guy who deserves 95% of the responsibility for doing subprime with FP [Financial Products] which caused the disaster was the CEO [of FP] Cassano who is long gone. FP (Financial products division) had at its peak maybe a trillon dollar notional of derivatives many of which were unique, complex transactions. Only a small portion of the work to unwind is dealing with toxic stuff. How you unwind the rest could affect the company (taxpayers) by billions of dollars if you are not smart. (compared to 160mm [in bonuses])

[MORE . . .]

President Barack Obama has made his first judicial nomination:

Announcing his first federal appeals court pick, President Obama today reached for a moderate who already has the bipartisan support of both of his home state's senators. If confirmed, federal Chief District Judge David Hamilton of Indiana will get a seat on the US 7th Circuit Court of Appeals in Chicago.

But, is he really a moderate? The radical right objects to him on grounds he has issued pro-choice rulings and was a board member of the Indiana ACLU prior to becoming a federal judge.

The National Review complains: [More...]

Via Atrios, Senate leader Reid proposes taxing the AIG bonuses:

Senate Democrats want to tax the controversial bonuses doled out to AIG employees who work for the division that led to the company's downfall. Senate Majority Leader Harry Reid announced on the Senate floor Tuesday that the tax-writing Senate Finance Committee will pursue a legislative fix in such a way that the "recipients of those bonuses will not be able to keep all their money — and that's an understatement."

[More...]

Politico is reporting that Republicans are pushing Norm Coleman to go to the Supreme Court with his Bush v. Gore argument:

Top Republicans are encouraging Coleman to be as litigious as possible and take his fight all the way to the U.S. Supreme Court if he loses this round, believing that an elongated court fight is worth it if they can continue to deny Democrats the 59th Senate seat that Franken would represent. And in pushing a possible Supreme Court conclusion, Republicans are raising case history that makes Democrats shudder: Bush v. Gore.

I shudder at the mention of Bush v. Gore, but not because I fear its impact in this case. I shudder because it was the most blatant example of a lack of judicial honesty that I have seen. More . . .

The I.R.S. announced today that victims of Bernie Madoff's ponzi scheme will be entitled to tax refunds if they paid taxes on phantom profits.

Madoff investors should have been reporting earnings from their investments with him through the years and thus paid taxes on those earnings. Given that some of those were "phantom" profits, investors have said they should be entitled to refunds of the taxes they paid.

....By some estimates, the IRS could be out as much as $17 billion in lost tax revenue from refunds to investors who earned fictitious profits in the Madoff scheme.

IRS Commmission Douglas Shulman told Congress today the IRS will be issuing guidelines to Madoff's bilked investors: [More...]

With defenders like Richard Cohen, the Media hardly needs critics. Cohen's defense of CNBC:

They didn't cover up the story of financial shenanigans. They didn't even know it existed.

That can be CNBC's (and the Media's) new slogan - "They don't know anything." I think that resolves all the arguments about the Media.

Speaking for me only