“Incontrovertible Evidence” Of A Securities Earthquake [INTERVIEW] · Economist Roger Kubarych and author Richard Whalen discuss the warning signs missed (and dismissed) by Wall Street and Washington in the months leading to the credit crisis, beginning with the February 2007 collapse of New Century Financial. (Institutional Risk Analytics)

Geanakoplos/Koniak: Mortgage Justice Is Blind [OPINION] · Yale economist John Geanakoplos and lawyer Susan Koniak suggest that if the U.S. wants to avoid a tsunami of home foreclosures, then Congress must transfer the rights to restructure mortgages from security holders back to community-based, government-appointed trustees. (NYT)

Senate Dems Eye Committee Chairs, Lieberman Likely Loser · Banking on victories this election and other changes, top Senate Democrats are already sizing up which plum committees they want to chair. (The Hill) Joe Lieberman is likely to be stripped of his Homeland Security assignment, though not expunged from the party for supporting John McCain.

Paterson: States Need Financial Rescue Package, Too · New York Governor David Paterson asked Congress Wednesday to provide state governments with a financial rescue package similar to the one it approved for the banking industry, arguing that the financial turmoil is threatening New York’s economy in ways far more severe than the 9/11 attacks. (NYT)

Glaeser: There Will Be Blood [OPINION] · Harvard economist Edward Glaeser argues that while private actors overwhelmingly contributed to the financial crisis, some government interventions such as home mortgage interest deduction helped to make the crisis worse.  Going forward, he cautions against putting the entire financial system in a regulatory straightjacket. (Economix)

Congress Asks Banks To Justify $108B In Pay, Bonuses · The House Committee on Oversight and Government Reform sent a letter Tuesday to nine top Wall Street banks demanding justification for the estimated $108 billion in employee compensation and bonuses they have doled out since the start of 2008. (Bloomberg)

Congress Mulls Special Panel For Financial Regulations · Congressional leaders are considering setting up a special bipartisan panel to overhaul the financial-services regulations next year. They hope  that a single panel will cut through the turf wars that often come with industry overhauls. (WSJ)

Chrysler, GM Explore TARP Aid For Merger · U.S. lawmakers are considering using the $700 billion Troubled Asset Relief Program to buy troubled auto loans from General Motors and Chrysler's financing arms, GMAC and Chrysler Financial, so that Chrysler's owner Cerberus can redirect capital towards a potential cost-saving merger. (WSJ)

Dinallo Calls CDS Bets “Legalized Gambling” [VIDEO] · New York Insurance Superintendent Eric Dinallo said Sunday that the multi-trillion credit default swap market at the heart of the financial meltdown is "legalized gambling," condoned unanimously by Congress in an obscure 2000 bill that overturned state "bucket shop" laws and removed derivatives from the purview of federal oversight. (60 Minutes)

Dodd: Bush Should Nominate His Successor’s Treasury Chief · Senate Banking Committee Chair Christopher Dodd (D-Conn.) said President George W. Bush should nominate his successor's Treasury secretary in order to facilitate a "seamless transition" during the financial crisis. (Bloomberg)

FDIC’s Bair Suggests Guarantees for Loans · Federal Deposit Insurance Corp. Chairman Sheila Bair told the Senate Banking Committee Thursday that the government should provide loan guarantees and other financial incentives for banks that are willing to restructure troubled loans into more-affordable mortgages. (WSJ)

In Reversal, Greenspan Advocates Tighter Regulation · Former Federal Reserve Chairman Alan Greenspan conceded Thursday in remarks to Congress that tighter regulation of financial firms is necessary amid the current crisis.  In recent weeks, he has received criticism for opposing regulation during his tenure at the central bank. (Bloomberg)

Senate Dems Subpoena AG Mukasey · Senate Democrats subpoenaed Attorney General Michael Mukasey to testify about the legal advice provided by the Justice Department to the White House on detention and interrogation policies since the 9/11 attacks. (CQ)

AIG Halts Lobbying Under Congressional Pressure · American International Group said Monday it will suspend its lobbying activities while it conducts an overall expense review. The decision comes days after lawmakers warned the insurer not to use its $85 billion government loan to fight tougher mortgage-industry regulations. (WSJ)

Lawmakers Choose To Let Deficit Rise · A consensus has emerged among Congressional lawmakers to pay for the cost of repairing the financial system by borrowing money rather than increasing taxes or cutting spending. (NYT) The head of the bipartisan, fiscally-responsible Committee for a Responsible Federal Budget, acknowledges: “Right now would not be the time to balance the budget."