Also: Post-Ike Recovery Efforts Underway, Energy Debate Update, NY Times Calls for Rangel to Relinquish Gavel

ECONOMY. The Wall Street Journal reports this morning that America’s financial system was “shaken to its core” overnight as Lehman Brothers announced it would file for bankruptcy and Merrill Lynch was acquired by the Bank of America. Lehman was forced to file for Chapter 11 after the federal government refused to “provide a financial backstop” to potential buyers, including Barclays and Bank of America. As for Merrill Lynch, Bank of America has agreed to an all-stock deal for $29 a share, or $50 billion.

In a separate article, the paper says that Lehman’s fate was sealed on Friday evening at a meeting between Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, and 30 Wall Street executives. After the executives were told there was “no political will for a federal bailout,” a “frantic” 48-hour period during which “the ability of the U.S. financial system to hold itself together” was tested ensued. A person involved in the talks said of the government’s decision not to intervene: "We've re-established 'moral hazard.’ Is that a good thing or a bad thing? We're about to find out."

Today’s New York Times notes that even now, after what it calls “one of the most dramatic days in Wall Street’s history another crisis loomed as the insurance giant American International Group appeared to teeter.” A.I.G. is seeking a $40 billion lifeline from the Fed, “without which the company may have only days to survive.”

To deal with all this, the Fed has “broadened the terms of its emergency loan program for Wall Street banks, a move that could ultimately put taxpayers’ money at risk.” The Journal notes that these temporary steps “would make it easier for banks and securities firms to borrow from the central bank by using a wider range of collateral. Bankers say these financial institutions might need short-term funds as they unwind their many trading positions with Lehman.”
The Independent (UK) goes to the 30,000-ft. level and notes that in less than six months time, the Big Five investment banks have been reduced to just two.

HURRICANE IKE. Today’s Houston Chronicle reports that a “day after Hurricane Ike humbled America's high-flying energy capital, millions of people across Southeast Texas wearily confronted a stunning reality Sunday: Millions of lives have been dismantled indefinitely by the loss of everything from power and water, to property and even people.” So far, at least seven fatalities have been reported, with authorities estimating $16B in property damage. All told, roughly 1.2 million people evacuated the coast – about 140,000 remained behind, nearly 2,000 of whom were lifted out of flood-ravaged by towns in what The New York Times calls “the largest rescue operation in Texas history.” President Bush is planning to visit the region tomorrow – FEMA has “activated some 700 urban search and rescue crews and an unknown number of medical personnel to work in Galveston and Orange counties.

According to the Chronicle, “federal lawmakers announced a bipartisian effort to assemble an aid package for the region. In the House, Rep. Gene Green, D-Houston, said he would team with Rep. Kevin Brady, R-The Woodlands, to attach such a proposal to a government funding bill that must pass Congress by Sept. 30. A spokesman for Sen. Kay Bailey Hutchison, R-Texas, said she would lead the effort in the Senate.”

ENERGY. Today’s Roll Call has a curtain-raiser on this week’s energy debate, reporting that “the biggest question remaining this Congress is whether Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) really want to cut a deal with the White House before the elections to allow more offshore oil drilling — or whether they are going through an elaborate exercise to give their Members a heaping dose of political cover.” Noting that Republicans believe the Speaker “has no interest in cutting a deal,” the paper points out that among the several Republican objections to the proposal is the fact that the “package includes no revenue sharing for states that choose to allow drilling.”

This argument against the Democrat bill was featured in several regional stories over the weekend. Under the headline “Democrats' offshore drilling plan would give states nothing,” The Virginian-Pilot reports that “even as House Democratic leaders handed Republicans a symbolic victory this week in their long fight for new offshore oil development, critics charged that the fine print in the plan probably will continue to keep drillers out of the Atlantic.” The legislation “would block Virginia and other coastal states from sharing in a $2.6 trillion bonanza of tax revenue expected to flow from offshore fields. A Senate bill still in the works would give states part of the money.”  The Associated Press has a similar dispatch – headline: “GOP: Democrats' plan leaves most oil off limits.”

It isn’t only House Republicans raising objections to the Democrat energy package – the New Orleans Times-Picayune reported over the weekend that Sen. Mary Landrieu (D-LA) urged House Democrats to “oppose a House Democratic leadership bill because it does not include revenue-sharing provisions for states that accept drilling off their coasts.” Landrieu says that because the bill lacks revenue sharing, “it will be very difficult to pass it in the House and it most certainly won't see the light of day in the Senate." CongressDaily quotes Sen. Landrieu saying the lack of revenue sharing makes the bill “dead on arrival” in the Senate.

The CongressDaily story sheds some light on where things may go in the Senate this week. Sen. Reid “indicated Friday he might want to bring up a package of renewable energy tax incentives before moving to competing non-tax energy proposals.” Then, they would use a pending speculation bill as the vehicle for a broader package, at which point “Reid plans to allow the ‘Gang of 20’ and Republicans the chance to offer their plans as amendments to the speculation bill as well. But it is unclear if any of those proposals will obtain the necessary 60 votes.”

CHAIRMAN RANGEL. A fresh round of bookkeeping errors has Ways and Means Chairman Charlie Rangel (D-NY) hiring a new accountant as The New York Times calls for the Harlem Democrat to relinquish his gavel.

The Associated Press reports that Rangel’s lawyers and accountants have “uncovered new discrepancies” in his personal financial disclosures. In a statement released over the weekend, the 19-term Democrat said, “while over the years I delegated to my staff the completion of my annual House financial disclosure statements, I had the ultimate responsibility.”

Among the new discrepancies, according to the AP:

·         “Rangel's papers over the past 10 years show no reference to the sale of a home he once owned on Colorado Avenue in Washington.”

·         “The details of a property bought in Sunny Isles, Fla., are bewildering at best. The stated value changes significantly from year to year, and even page to page, from $50,000 to $100,000 all the way up to $500,000.”

·         “Some of the entries for investment funds fluctuate strangely, suggesting that the person either didn't have accurate information or didn't fill out the paperwork correctly.”

In its lead editorial, the Times says, “Mounting embarrassment for taxpayers and Congress makes it imperative that Representative Charles Rangel step aside as chairman of the Ways and Means Committee while his ethical problems are investigated.” After revisiting the particulars, the Times says, “As a new Congress approaches with a thick docket of fiscal and tax measures, House Speaker Nancy Pelosi must see that no cloud hangs over Ways and Means while the chairman is under investigation. … If Mr. Rangel refuses a temporary hiatus from his chairmanship, Ms. Pelosi should remove him permanently.”

The Times is not the only home-state paper to call for Rangel’s ouster: the Albany Times-Union says that Rangel “should resign his top committee spot and reconsider his oath of office.” The Philadelphia Inquirer also has an editorial calling on Rangel to step aside.  

IRAQ. Defense Secretary Robert Gates is in Iraq today “preparing to transfer command of the war” from General David Petraeus to Lieutenant-General Ray Odierno, according to Reuters. En route, Sec. Gates told reporters, "The challenge, I think, for General Odierno is: How do we work with the Iraqis to preserve the gains that have already been achieved, expand upon them, even as the numbers of U.S. forces are shrinking?" Odierno, who served as the #2 commander in Iraq for 15 months until February, will be promoted to full general tomorrow.

For his part, General Petraeus, who will soon take over as head of U.S. Central Command, wrote a thank-you letter to the troops who served under his command. The letter can be read in .pdf format by clicking here. It reads in part, “Your great work, sacrifice, courage, and skill have helped to reverse a downward spiral toward civil war and to wrest the initiative from the enemies of the new Iraq.”

HOUSE GOP WOMEN. Today’s Roll Call reports that “the pick of Alaska Gov. Sarah Palin to be the Republican vice presidential nominee has put a new spotlight on the party’s female House Members, who are stepping into a more prominent role in the 2008 campaign.” The paper notes that with women in Congress accounting for 12 of the 19 “national members” of the McCain campaign’s “Palin Truth Squad,” “these female Members will be higher profile surrogates for the ticket this fall than even they were expecting.”

WHERE THE CANDIDATES ARE. McCain: Jacksonville, FL; Palin: Golden, CO; Obama: Grand Junction and Pueblo, CO; Biden: St. Clair Shores and Flat Rock, MI. POLLING ROUNDUP. A national Newsweek poll released over the weekend shows a dead heat in the race for president – 46% for Sen. McCain and 46% for Sen. Obama. The survey of 1,038 registered voters was taken Sept. 10-11. As for the latest daily tracking polls, the latest Gallup survey shows McCain leading Obama 47%-45%, while the latest Rasmussen Reports numbers have McCain leading Obama 50%-47%.

NEWS AND NOTES

·        The Washington Post: “Democrat Barack Obama again set a monthly record for presidential fundraising, bringing in $66 million in August that included donations from half a million new people, according to his campaign. Obama's August total easily outpaced Republican John McCain, who raised $47 million during that month, a personal best.”

·        The Politico: “Joe Biden will deliver a high-profile first attack in a sustained anti-McCain offensive in a speech called ‘Bush 44’ Monday in the key battleground state of Michigan. While the lines of attack have long been drawn, Biden will assert — as the title indicates — that a McCain presidency would amount to a third Bush term and will focus, in a detailed, comprehensive and aggressive way, on John McCain's domestic policies and harsh campaign tactics.”

·        AP: “President Robert Mugabe and opposition leaders signed a deal Monday under which Zimbabwe's president of nearly three decades will cede some power, and both sides expressed hope for the country's future. South African President Thabo Mbeki said Mugabe will be president in the new government, while main opposition leader Morgan Tsvangirai is prime minister. A smaller opposition group's leader Arthur Mutambara is deputy prime minister.”