Ricci’s attorney Karen Torre … appeared on Fox News’ Neil Cavuto with two of the cases other plaintiffs last Friday, but Ricci himself, who declined to comment for this story, was a no-show.

Prior to issuing the statement, Torre told POLITICO that both she and her client felt that print outlets had distorted the facts of the case — though she did not specify which outlets had done so, or when — and that Ricci would not answer questions related to Sotomayor’s nomination.

“We’re not giving interviews regarding anything other than our case, we’re not entertaining questions about anything my client thinks or I think about the nomination,” she said.

This story doesn’t matter quite as much if Torre and Ricci decline Charles Krauthammer’s advice and don’t testify in the Senate hearing against Sotomayor.

On day four of AIG bonus-gate, the message from Capitol Hill has emerged as clear as it is unanimous: The $165 million paid this week to executives of bailed-out American International Group is “appalling,” “outrageous” and “a breach of public trust.”

Yet as pitchfork populism continues to fuel the congressional castigation, a vital element of the debate has gone largely ignored: Congress, going back to September, has had numerous opportunities to limit executive pay for bailed-out banks, only to ignore or abandon those efforts in the face of opposition from the finance industry, the White House or both.

The result has been that hundreds of billions of dollars in bailout funds have left Washington with virtually no conditions on how the money would be spent. The banks have taken advantage of that freedom, collectively paying out billions in bonuses, retention salaries and other perks to the same employees who helped run the companies into the ground. [...]

When Henry Paulson, Treasury secretary under the Bush White House, first unveiled the Troubled Asset Relief Program in September, the public wailed about the absence of conditions on the money. Congress intervened to add some limits on executive pay — provisions that Senate Banking Committee Chairman Christopher Dodd (D-Conn.) labeled “anything but mild.” But liberal critics of those compensation limits, including a number of congressional Democrats, pointed out loopholes allowing the companies to pay their executives virtually any sum they wanted. Most provisions, for example, apply only to companies receiving more than $300 million in TARP funds. [...]

In January, the House passed legislation placing tighter restrictions on TARP spending, including tougher limits on executive pay. Senate Democrats, pressed by administration officials, never took up the bill.

A month later, after Congress released the second $350 billion in TARP funding, President Barack Obama tightened the restrictions on executive pay, but not without including a telling caveat: The rules wouldn’t be so strict that they would scare away the employees of recipient companies.

You can read Mike’s full story here.

The problem:  Banks frequently don’t make good landlords. Adding insult to injury, the federal Troubled Asset Relief Program, ostensibly created to help banks remove toxic assets from their books, may actually be making the problem worse.

The volume of bank-owned foreclosed homes — known as REOs, or real-estate owned properties — is growing at an alarming rate, compounding the foreclosure crisis by sticking hard-hit neighborhoods with vacant and often trashed homes that drive down property values even more. REOs are foreclosed homes that lenders take back after they don’t sell at foreclosure auctions or sheriff’s sales. They keep the homes in inventory until they can be sold again.

The foreclosure crisis, however, is changing the REO process, with some banks holding off on following though with foreclosures or letting empty houses sit in limbo — where they deteriorate further — instead of selling them. Some banks can’t keep up with the sheer volume of foreclosures. But others are waiting for a better deal from the government for their toxic mortgage assets, avoiding booking losses so they can qualify for more bailout funds, or neglecting homes with little value, some charge – leaving the properties vacant and vandalized. And neighborhoods pay the price for it.

Some 1.5 million foreclosed homes are expected to wind up as REOs this year, according to RealtyTrac , an online foreclosure database. Prior to the foreclosure crisis, bank REO volume totaled only about 160,000 in a normal year. In January, RealtyTrac already had 68,000 new REOs listed in its database, and the firm expects overall volume to double from last year, said RealtyTrac senior vice president Rick Sharga. REO inventory peaked last year at 900,000 properties in November. “The system is just overwhelmed,” Sharga said.

You can read Mary’s full story here.

Talking Points Memo’s Elana Schor picked up on the story and asked Rep. Barney Frank (D-Mass.), the chair of the House Banking Committee, if he would move to stop mortgage lenders from requiring borrowers to waive their legal rights in exchange for help restructuring their mortgages.

“I did not know until you just told me that Fannie and Freddie were [requiring mortgage holders to sign waivers],” Frank said during the interview. “And I can pretty much guarantee you that we will have put an end to that within a few days.”

Mary now reports that Fannie and Freddie have removed the waivers from their loan modification agreements. You can read her full story here.

Were these low-profile, federally chartered banks just doing their jobs, as their defenders argue — or did the massive loans deepen the credit crisis by allowing business-as-usual to continue at some of the nation’s riskiest lenders? TWI’s Mary Kane has the story.

“People should be looking at this, including Congress,” said Peter Wallison, an American Enterprise Institute fellow who studies financial deregulation and a former general counsel for the Treasury Department. “It’s a very serious problem. The home loan banks kept the Countrywides and the IndyMacs in business. And they were the lenders who were the source of some of the problems we’re having now. Of course taxpayer dollars are at risk.”

The Federal Housing Administration — which was relegated to the sidelines for the last eight years — has now been tasked with taking on 50 percent of the mortgage sector. Long neglected by the Bush administration, much of its top staff departed, leaving behind a demoralized, fraud-ridden agency. If the FHA is expected swoop in as the savior of homeowners, Mary reports that it has a tall order to fill:

Overall, the FHA needs to increase its staff, increase training for its staff, increase the the oversight of its appraisals and underwriting, and improve the way it vets lenders taking part in its programs, [HUD Assistant Inspector General James] Heist said. The number of FHA lenders approved for its programs jumped by 330 percent over the last year, as credit tightened. But the agency still has problems with continuing to allow lenders with past predatory abuses into its programs, he said.

Mary’s story helps explain the hurdles that the federal government must clear to minimize the damage from the mortgage fall-out — even if a program seems promising.

The piece is an example the kind of work we will be doing at TWI through the first 100 days of the Obama administration and beyond: What does change look like, and what forces stand in the way?

“It’s a great leap forward in terms of respect for human rights,” said John Kiriakou, the retired CIA official who supervised the interrogation of Al Qaeda detainee Abu Zubaydah in 2002. “From the very beginning, the CIA should not have been in the business of enhanced interrogation techniques and detentions.”

Check out Spencer’s full story here.

At a hearing this summer, House Financial Services Committee Chairman Barney Frank attacked private industry for putting such requirements in place. Housing advocates say they will bring this issue to Frank’s attention.

Great work, Mary!

I’m pleased to announce that David Weigel has joined our staff to cover the Republican Party and the remaking of the right.

David is formerly of the libertarian magazine Reason, where, as an associate editor, he covered national politics with an unbeatable tone. He made his mark during the 2008 campaign season, focusing on the impact libertarian candidates and voters had on the presidential race, and he unearthed fascinating stories about the conservative movement.

David’s work has appeared in many publications including Slate, Time.com, Economist.com, Campaigns & Elections (now Politics), The American Conservative, The American Spectator, The American Prospect, The Nation and The Guardian.

He’s an incisive reporter and blogger, and we’re very excited to have him on board.