It gets better.

Over the weekend, The New York Times’ Gretchen Morgenson dug deeper to discover that some of the businesses poised to benefit most from the tax rebates are home builders who are not only flush with cash, but also represent “some of the very companies that contributed mightily to the credit crisis by building and financing too many homes.”

[D]ropping helicopter money on the home builders — the folks who massively overbuilt in community after community — seems decidedly less urgent (unless you are one of these companies, of course). Given that the supply of housing far outstrips demand, it is unlikely that these companies will use these tax breaks to hire workers (unless they go into a completely new line of business).

“I AM surprised that home builders are getting hundreds of millions of dollars given that many have very strong balance sheets,” said Ivy Zelman, chief executive at Zelman & Associates, a research firm. “We question the public policy decision to gift home builders with capital that many will not use to create jobs, since they admit that job growth will be dependent not on capital, but on improving demand.”

Among the beneficiaries of the taxpayers’ largesse, Morgenson points out, will be Pulte Homes, “which will receive refunds exceeding $450 million under the new law, [and] has $1.5 billion in cash and cash equivalents on its balance sheet, according to its most recent financial statement.”

Standard Pacific, another recipient, “is poised to reap cash refunds of $80 million under the new tax break,” Morgenson writes. “According to its most recent financial filing, Standard Pacific held $523 million in cash and cash equivalents.”

Ken Campbell, the chief executive of Standard Pacific, said the money would allow his company to continue buying land. “Will we build more houses or will there be more people employed in the first quarter? Probably not,” he said. “Will employment accelerate when the market starts to grow? It will.”

Translation: The builders will sit on their new land acquisitions in hopes that the housing bubble at the root of the economic turmoil re-inflates. Meanwhile, they won’t be hiring.

So why shower these businesses with millions of dollars in the name of creating jobs if the money won’t really create jobs? Morgenson has a pretty sound theory.

Securing this tax break was a top priority for home builders, lobbying records show. The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. Last year, the industry spent $8.2 million lobbying.

Some Democrats readily conceded that they could have passed the unemployment benefits, which totaled $2.4 billion, without the business-friendly sweetener, but nonetheless agreed to the tax rebates “as a means of greasing the skids,” as Sen. Tom Harkin (D-Iowa) said at the time.

There’s some evidence that Democratic leaders aren’t exactly proud of their accomplishment. Although Senate Majority Leader Harry Reid (D-Nev.) hailed the bill as a necessary stimulus, his statement released after the bill’s passage avoided any mention of the business tax rebates.

Under the proposed 50/50 formula, utilities that are more coal dependent will need to purchase even more allowances than they would have if all allowances were allocated based on emissions.

Well, yeah. And under the current proposed 50/50 formula, the coal burners would also have to purchase more allowances than if Congress did nothing at all. But the whole point of the bill is to discourage the use of high-emission energies like coal by making them less affordable than cleaner alternatives. Sheppard explains further why the lawmakers’ argument makes little sense in the context of the global warming debate:

Of course, this would work against the entire logic of the proposed scheme, which is to offer utilities financial incentives to switch to lower-carbon fuel sources. [...]

Right now, the climate bill needs all the votes it can get from Democrats. So enviros worry that concessions to this bloc could ultimately result in a deal in which coal plants suffer no real penalties for the carbon they pump into the atmosphere. “Dirty coal polluters know their days are numbered and are lobbying for the largest piece of the pie they can get,” said Jason Kowalski, policy coordinator at 1Sky. “It goes against the spirit of this legislation to reward the polluters that caused this problem in the first place.”

Signing on to the letter were Democratic Sens. Carl Levin (Mich.), Debbie Stabenow (Mich.), Russ Feingold (Wis.), Herb Kohl (Wis.), Tom Harkin (Iowa), Al Franken (Minn.), Amy Klobuchar (Minn.), Byron Dorgan (N.D.), Kent Conrad (N.D.), Roland Burris (Ill.), Sherrod Brown (Ohio), Michael Bennet (Colo.), Mark Udall (Colo.) and Robert Byrd (W.Va.).

Twenty-two months later, the ethics panel returned its verdict: nothing wrong with that. “After considering all the information before it, the Committee considers the matter to be resolved and intends no further action,” the panel wrote.

CREW executive director Melanie Sloan issued a statement of her own expressing mock disbelief. “We are shocked, shocked to see Sen. Landrieu absolved of wrongdoing,” Sloan said.

After nearly two years, the only real shock was that the ethics panel had bothered to respond at all.

From a regional perspective this makes sense. Like Connecticut, Nebraska is home to a high concentration of insurance companies, boasting the headquarters of Mutual of Omaha Health Plans, Physicians Mutual and Continental General, to name a few. Before entering politics, Nelson himself was the president of the Central National Insurance Company of Omaha.

So in the face of a public-plan proposal that would threaten the profits of private insurers, he’s protecting the industry that made him wealthy and showers him with tons of campaign cash. Easy enough, right?

If only it were so neat and clean.

Nelson’s decision to protect one of Nebraska’s largest economic engines is neither surprising nor uncommon, and lawmakers much more liberal than Nelson have built entire careers on that strategy. Sometimes the regional protectionism is a boon to local industry; sometimes it results in a bust. But whichever direction the insurance industry is headed, you can bet that a vote for a proposal harming local companies would do little to win Nelson support at the ballot box when he’s up for reelection in 2012.

The dilemma facing Democratic leaders — on health care, climate change, finance regulation, everything — is how to pass the strong industry reforms they prefer and still keep congressional seats in the districts where those industries are most entrenched.

The charge against Nelson will be that he’s putting corporations above the people. The deeper problem, though, is that in Nebraska — as in in many other parts of the country — they’re largely one in the same.

So why did Baucus oppose the EPW bill, and why does he want to tinker with the legislation in Finance so much? According to the Sunlight Foundation, part of the answer could lie in the company he keeps:

Baucus will likely have a lot of input coming in from outside his office as twelve of his former staffers, including four former chiefs of staff, work as lobbyists for organizations with an explicit interest in climate legislation. [...]

Many of the organizations represented by former staffers of Baucus are generally supportive of a climate bill, but are seeking certain provisions to be included or not removed during the committee process. Others are engaged in outward opposition.

To be sure, this is far from scandalous: many former Hill staffers move on to lucrative positions on K Street. But given Baucus’ somewhat recalcitrant stand on health care in the context of heavy donations from the insurance industry, it’s reasonable to suspect that the energy industry — chock-full of old Baucus buddies — will have at least some sway as Baucus takes up climate legislation.

Sunlight has a full chart of the twelve lobbyists, along with a relationship map, here.

By the way, the Finance Committee will hold its first hearing on climate legislation tomorrow, and the witness list isn’t exactly a who’s who of environmentalists:

Mr. Abraham Breehey, Director, Legislative Affairs, International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers, Department of Government Affairs, Fairfax, VA

Ms. Carol Berrigan, Director, Industry Infrastructure, Nuclear Energy Institute, Washington, DC

Dr. Kenneth P. Green, Resident Scholar, American Enterprise Institute for Public Policy Research, Washington, DC

Dr. Margo Thorning, Senior Vice President and Chief Economist, American Council for Capital Formation, Washington, DC

Ms. Van Ton-Quinlivan, Director,Workforce Development and Strategic Programs, Pacific Gas and Electric Company, San Francisco, CA

Yet few details contained in the leaked document are new (which makes some sense because it was prepared in July). There’s the investigation, for example, of lawmakers tied to PMA Group, the now-defunct lobbying shop that funneled millions of dollars of campaign contributions to members of the House Appropriations Subcommittee on Defense, which in turn directed more than $200 million to PMA clients. There’s the ongoing look at the personal finances of Rep. Charles Rangel (D-N.Y.), the Ways and Means Chairman whose failure to include hundreds of thousands of dollars on financial disclosure forms has led to calls for his removal atop the committee. And there’s the case of Rep. Maxine Waters (D-Calif.), the House Financial Services member who organized a meeting between Treasury officials and the head of a bank in which her husband was heavily invested.

Yet these cases are all at least six months old. The fact that the ethics panel hasn’t reached any conclusions seems to reveal what many already suspect: that a system of having Congress investigate Congress is, at best, a conflict of interest, and, at worst, a stage show run by folks with no real appetite to punish colleagues.

The Post is quick to point out that the ethics panel isn’t exactly aggressive when it comes to discipline.

Ethics committee investigations are not uncommon. Most result in private letters that either exonerate or reprimand a member. In some rare instances, the censure is more severe.

No one knows this better than Citizens for Responsibility and Ethics in Washington, the tireless watchdog group that keeps an eye on ethics cases in Congress. Reacting to the Post story, CREW shot out a statement this morning, effectively accusing the ethics panel of being a paper tiger.

Starting an investigation isn’t enough.  The real question is whether any of the members under investigation will ever be held accountable for their conduct.  The committee’s record on such matters is dismal.  You have only to look back at the Mark Foley investigation — where all of America knew there was wrongdoing yet the committee found none — to be skeptical of the House ethics process.  There’s not much reason to think anything has changed, but one can always hope.

For its part, the ethics panel shot out a statement that seems intended more to ease the concerns of lawmakers listed in the leaked document than it does to convince the public that investigators are serious about punishing congressional wrongdoing.

At any one time, the Committee has dozens of matters regarding Members, Officers, and employees before it, including both investigations and requests for advice regarding House rules, financial disclosure, and travel, among other issues. No inference to any misconduct can be made from the fact that a matter is simply before the Committee.

Replace “misconduct” with “looming punishment” and this statement would probably be closer to the truth.

Senate Majority Leader Harry Reid (D-Nev.) (WDCpix)

Health insurance companies, for decades exempt from federal anti-trust laws, are exploiting that privilege to churn profits at the expense of patients, a number of Senate Democrats charged Wednesday. The lawmakers — including Senate Majority Leader Harry Reid (D-Nev.) — want to repeal the exemption as part of broader efforts this year to overhaul the nation’s dysfunctional health care system.

“There is no reason why insurance companies should be allowed to form monopolies and dictate health choices,” Reid told the Senate Judiciary Committee.

Illustration by: Matt Mahurin

The comments arrive during a week when the insurance industry and Democrats have been at each other’s throats over health reform — a quarrel that threatens to endure through the debate. The flames were ignited late Sunday after the health insurance lobby issued a controversial report charging that legislation passed this week by the Senate Finance Committee would hike Americans’ insurance premiums by thousands of dollars each year. PricewaterhouseCoopers, the consulting firm that conducted the study, later conceded that it had considered only a small portion of the Democrats’ strategy, ignoring, among other things, the hundreds of billions of dollars in federal subsidies designed to keep premium costs affordable.

Democrats have pounced on the report as an indication that the insurance industry, despite claims of support for the general concept of health reform, never intended to cooperate with efforts to make coverage affordable to millions of uninsured Americans. The report is further evidence, many lawmakers maintain, that Congress should create a public insurance option to compete with private companies. Repeal of the anti-trust exemption, those same voices are arguing, would be another step toward keeping the industry honest and coverage costs affordable.

“While the insurance industry hides behind its exemption, patients and doctors have continued paying artificially inflated prices, as costs continue to rise at an alarming rate,” said Sen. Patrick Leahy (D-Vt.), chairman of the Judiciary Committee. “The cost spiral is just fine for insurance companies, but it punishes patients, American businesses large and small, and taxpayers.”

Under current law, most businesses are subject to federal anti-trust rules designed to foster competition, keep costs low and preclude the rise of monopolies. But a 1945 law, called the McCarran-Ferguson Act, carves out an exception for health and medical malpractice insurers, which instead are regulated by states.

The industry argues that the exclusion bolsters competition by allowing smaller companies to obtain otherwise unknowable pricing data as they seek to enter new markets. But a growing number of Democrats and consumer groups maintain that the exception simply allows companies to feign competition while they’re really at work colluding on profit-enhancing schemes.

Separate from the broader reform legislation, Leahy has sponsored a bill that would eliminate the exemption for the most egregious anti-trust practices – those involving price fixing, bid rigging and market allocations, where “competitors” divide geographic markets among themselves in order to avoid competition. In all other cases, under Leahy’s proposal, the McCarran-Ferguson Act exemptions would remain in place.

The insurance industry argues that, not only is the Leahy bill unnecessary, but it would lead to increased costs by stifling competition. Lawrence Powell, a finance professor at the University of Arkansas who testified Wednesday on behalf of the Physician Insurers Association of America, maintained that he’s “never observed” any price-setting collusions between competing companies, “because it’s illegal.”

“All of the behaviors this bill seeks to curtail,” Powell said,” are neither apparent in the market, nor permitted by current law.”

But consumer advocates aren’t convinced. J. Robert Hunter, director of insurance at the Consumer Federation of America, told lawmakers that the exemptions simply shield the industry from the types of practices that ultimately limit competition at the expense of patients.

“They get together on claims. They get together on pricing,” Hunter said. “They do many, many things that would violate the anti-trust laws if those laws applied to them.”

Hunter urged the creation of a public option “to test the market” in order to learn the extent of the private-insurer manipulations. Today, Hunter said, there’s no indication to what extent companies are passing on to consumers the costs of, for example, advertisements opposing health care reform.

“We’ll be paying the bill,” Hunter said.

Reid agreed, testifying that the insurers’ exemption “has been anticompetitive and damaging to the American economy.”

“Insurance companies have become so large they dominate entire regions of the country,” Reid said. “What a sweet deal they have.”

Reid is responsible for weaving together the Finance proposal and another sweeping health reform bill passed in July by the Senate Health, Education, Labor and Pensions Committee. That the Senate majority leader came out so vocally in support of the Leahy bill has left supporters optimistic that the proposal could work its way into the final package.

A 2007 study lends credence to the Democrats’ concerns about the consolidation of the insurance industry. Conducted by the American Medical Association, the nation’s largest physician lobby, the survey found that, in most states, the top two carriers consume an overwhelming majority of the private insurance marketplace. In Maine, for example, the top two companies control 88 percent of the insurance market. In both Montana and Wyoming, the number is 85 percent. The lowest market concentration, AMA found, was in Florida, where the top two insurers still represent 45 percent of the market.

More recently, the non-partisan Government Accountability Office found that the top five insurers represent more than 90 percent of the market in no fewer than 23 states.

Numbers like those provide some evidence of what’s at stake for the insurance industry, which is among the most powerful lobbies on Capitol Hill year after year. Indeed, the insurance industry has contributed more than $8.4 million to lawmakers this year alone, according to the Center for Responsive Politics.

But preserving the status quo would come at a cost, according to some Justice Department officials. Christine Varney, assistant attorney general in DOJ’s antitrust division, told lawmakers Wednesday that she’s “very skeptical” that such high market concentrations don’t lead to both a reduction in competition and an increase in consumer costs.

“There is real cause for concern, when you’re reducing competition in those markets,” Varney said. “When you don’t have to compete, you can get pretty big profit margins.”

House Financial Services Committee Chairman Barney Frank (D-Mass.) (WDCpix)

As a House committee begins tackling major financial regulatory reform, consumer advocates find themselves shaking their heads over why something that should have been a slam dunk — reining in the financial industry in the wake of the subprime crisis — has turned into a hard-fought battle instead.

Proposals for a Consumer Financial Protection Agency, a new federal authority to regulate mortgages and other financial products, and for oversight of the private and unregulated market for derivatives, risky financial instruments cited in the subprime collapse, are under debate by the House Financial Services Committee this week. In the immediate aftermath of the financial crisis, it seemed to many consumer advocates that those proposals, and other efforts at financial regulatory reform, would have been already been in place by now.

Illustration by: Matt Mahurin

But what seemed back in 2007 like a clear path ahead was upstaged by the health care battle, which stalled momentum on the biggest overhaul of financial regulations since the Great Depression. Yet there’s even more to the reform slowdown, noted Kathleen Engel, a Suffolk University law professor who specializes in predatory lending and subprime securitization.

A weakening economy has left homeowners worried about paying their mortgages and keeping their jobs, leaving less time and attention for larger problems in the banking system. Regulating mortgages and securitization are complex issues that are difficult to translate, making it hard to get the public engaged in the debate.  And banks are in a better position to fend off regulation, now that their bottom lines are stronger and the government needs them to modify as many mortgages as possible to bolster the economy, she said. “They really have the federal government over a barrel right now,” Engel said.

She added that people feel “relieved” that banks are stable these days, which contrasts with their emotions when the subprime collapse first hit. “I was really hopeful at the beginning that the rage that people felt about the banks getting us into this mess would lead to needed regulation,” she said. “But people are so strapped right now, they’re stressed out how to get a loan mod, or how to get a job, that they’re not able to focus on what the government should be doing.”

Banks, for their part, continue to argue that new regulations aren’t needed, and will only choke off financial innovation. The American Bankers Association, the Financial Services Roundtable, and even small and community bankers are opposing the agency, saying it presents a new and unnecessary layer of regulation. Those arguments have gained a foothold because of a long-held distrust of any new rules coming from Washington, noted Cathy Lesser Mansfield, a Drake University law professor and consumer law expert.

“For the last 20 or 30 years, we’ve kind of bought this notion that all regulation is bad regulation,” said Mansfield, who also chairs Americans for Fairness in Lending, a nonprofit consumer advocacy coalition that supports reforms. “The reason the banks are getting away with this is they’re saying, ‘We’re already regulated. We already have a regulator.’”

Lax regulation, however, is often cited as one of the contributors to the financial crisis. And the nation’s top banking regulator, John Dugan, the Comptroller of the Currency, recently gave a speech arguing that banks weren’t responsible for the financial crisis.

As overhaul begins to move forward, the financial industry remains an enormous influence on Capitol Hill, causing committee chairman Barney Frank (D-Mass.), to dilute his proposal to get industry defenders on board.

In order to win wider support from conservative Democrats and others for the consumer agency, Frank already has dropped from the proposal a “vanilla” option which would have required mortgage brokers and banks to offer consumers a plain, 30-year fixed mortgage, along with more exotic mortgage products. Frank also eliminated a reasonableness standard, which would have required bankers to ensure consumers understood their products, and could afford them. He proposed that an oversight panel for the agency be staffed by top bank regulators, and said he would exempt most non-financial businesses, including retailers, merchants, and real estate agents and brokers, from oversight.

The committee is likely to end up approving some sort of consumer financial agency, “but we’re worried about how watered down it will be,” said Lauren Saunders, a lobbyist with the National Consumer Law Center. She also said it’s hard to believe that the banking and financial industry has any credibility regarding its arguments against regulation, given its role in the financial crisis. But the sector has managed to mount an aggressive opposition effort, with the U.S. Chamber of Commerce in particular putting its clout into fighting the proposal with a multi-million dollar ad campaign.

“The banking industry is highly profitable,” Saunders said. “They’ve put a lot of money into this, both through lobbying and campaigning. We can’t even come close to them.” For the 2010 election cycle alone, commercial banks already have contributed $3.7 million to members of Congress, according to the Center for Responsive Politics.

Said Alan White, a Valparaiso University law professor who studies subprime loan modifications: “What saddens me the most is the extent to which Congress still allows the bank lobby to veto legislation it doesn’t like, and this includes the Democrats. You would think banks would have lost some credibility on Capitol Hill, but money still talks.”

For White and others, the ability of the finance industry to benefit from loopholes in the current regulatory system adds to the frustration. Goldman Sachs managed to refinance some of the toxic mortgages it controlled into Federal Housing Administration-backed loans, shifting the risk to the government. Former top executives of failed subprime lender Countrywide Financial, whose toxic loans were a major contributor to the subprime collapse, stand to earn millions of dollars by buying delinquent home mortgages that the U.S. government took over from other failed banks, sometimes for pennies on the dollar, and reselling them. Bailed-out insurance giant AIG is once again under fire, after a government report on Wednesday found that controversial retention bonuses intended to retain key employees went instead to workers in the firm’s troubled financial products unit, with even a kitchen assistant receiving a $7,700 bonus. “They’re totally taking advantage of the system,” Saunders said.

Advocates aren’t giving up. They noted that both the Federal Reserve and the Federal Trade Commission have been more aggressive regarding consumer protection lately, although they pointed out their actions may be due to fear of giving up power to a new agency. Congress also approved credit card reform, and some Democrats want to move up the timetable for putting new rules in place.

Frank has vowed to bring a reform package to a floor vote in the House by November. In the Senate, Banking Committee Chairman Christopher Dodd (D-Conn.), also strongly supports the creation of consumer agency, but there is significant Republican opposition to the idea. Dodd also has proposed merging four bank agencies into one super-regulator, an idea that goes beyond the scope of the Obama administration’s proposals. Dodd has said he hopes the Senate will act on some kind of financial reform before the end of the year.

Unless there is substantial financial regulatory overhaul, however, the opportunity for reform presented by the financial crisis will have been lost for good. “We would never have gotten into this financial crisis if the financial industry and these products had been regulated in the first place,” Engel said. “If we don’t manage to get reform done now, then we haven’t learned any lessons here.”

Immigrants, including veterans fighting deportation, will speak at the event, as will Rep. Luis Gutierrez (D-Ill.), who, with House and Senate allies, will set out key principles of a comprehensive immigration reform bill he plans to introduce later this fall. Sen. Robert Menendez (D-N.J.), Congressional Hispanic Caucus Chair Rep. Nydia Velazquez (D-N.Y.) and Congressional Asian Pacific Caucus Member Rep. Mike Honda (D-Calif.) are also expected to speak at the event.

The rally is being organized by an immigrants’ advocacy coalition called Reform Immigration for America.

As the nation remains mired in a debate over health care reform and how to keep down the costs of expanding coverage, AAJ is trying to point out that Republicans claims that medical malpractice lawsuits are one of the big cost drivers is completely misleading. In fact, though malpractice claims and so-called “defensive medicine” does account for a small percentage of unnecessary costs, medical errors and the astronomical profits of malpractice insurers appear to be a bigger part of the problem.

AAJ’s report released today finds that the average profit of medical malpractice insurance companies is higher than 99 percent of all Fortune 500 companies and 35 times higher than the Fortune 500 average for the same time period; and malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent. The report also finds that malpractice insurers have publicly overestimated their losses and underestimated their profits in an attempt to suggest the insurance business and medical practice in general faces a crisis that must be resolved by so-called “tort reform” — i.e., making it harder for patients to sue and to collect damages for their injuries.

“Insurance companies are gouging doctors on their premiums to mislead lawmakers,” said American Association for Justice President Anthony Tarricone, managing partner at Kreindler & Kreindler LLP, in a statement released with the report. “And today, injured patients are often left with no avenue to pursue justice, while health care costs continue to skyrocket.”