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DOJ Cites Terror Watch List Lapses » The FBI has retained almost 24,000 names on the nation's terrorist watch list without current or proper justification, while failing to include people who are subjects of terrorist investigations, according to a Justice Department report (pdf) issued yesterday. — Washington Post

Bush Lawyers May Avoid Sanctions » Efforts to impose professional sanctions on Bush administration lawyers who drafted memos supporting harsh interrogations of terrorism suspects face steep hurdles, legal experts say, despite a draft report by Justice Department investigators recommending such sanctions. — Washington Post, Associated Press

House Panel Probes BofA-Merrill Deal » Bank of America CEO Kenneth Lewis and top federal officials will be asked to testify under oath by a U.S. House panel next month, as congressional investigators probe claims the bank was pressured by the government into completing its deal with Merrill Lynch, a person familiar with the investigation said Wednesday. — Wall Street Journal ($)

Stimulus Details Thin » Although President Obama has vowed that citizens will be able to track "every dime" of the $787 billion stimulus bill, a government website dedicated to the spending won't have details on contracts and grants until October and may not be complete until next spring, administration officials said. — USA Today

Contractors Using Military Clinics » Military clinics and field hospitals in Iraq and Afghanistan have supplied more than $1 million a month in health-care services to civilian contractors during the past two years without seeking reimbursement from their employers, as provided by law, according to a new audit by the Defense Department inspector general. — Washington Post

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Ex-Officials Seek to Sway Ethics Probe » Former Bush administration officials have launched a behind-the-scenes campaign to urge Justice Department leaders to soften an ethics report criticizing lawyers who blessed harsh detainee interrogation tactics, according to two sources familiar with the efforts. Meanwhile, sources suggest Justice Department investigators will not seek criminal charges against the lawyers. — Washington Post, Associated Press

Pentagon IG Withdraws Report » In a highly unusual reversal, the Defense Department's inspector general's office has withdrawn a report it issued in January exonerating a Pentagon public relations program that made extensive use of retired officers who worked as military analysts for television and radio networks. — New York Times

SEC Sues First Fund to 'Break the Buck' » The Securities and Exchange Commission yesterday filed civil fraud charges against a large money market fund and two of its executives, alleging that the Reserve Primary Fund misled investors about potential losses connected to the bankruptcy of Lehman Brothers. — Washington Post

Despite Shortfall, Teachers Paid Not to Teach » About 160 Los Angeles teachers and other staff are being paid to do nothing, awaiting allegations of misconduct to be resolved. All told, they collect about $10 million in salaries per year -- even as the district is contemplating widespread layoffs of teachers because of a financial shortfall. — Los Angeles Times

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Quotable

I do not anticipate that another Charles Ponzi will ever appear in the financial world."
— Boston publicist William H. McMasters, Lost Manuscript Details Original Ponzi (NYT)

Murtha's Nephew Got Defense Contracts » The most striking feature about the quiet Glen Burnie, Md., headquarters of Murtech Inc. is its owner -- Robert C. Murtha Jr., nephew of Rep. John P. Murtha. Last year, Murtech received $4 million in Pentagon work, all of it without competition, for a variety of warehousing and engineering services. — Washington Post

Obama Targets Tax Evaders » President Obama yesterday announced a major offensive against businesses and wealthy individuals who avoid U.S. taxes by parking cash overseas, a battle he said would be fought with new tax laws, new reporting requirements and an army of 800 new IRS agents. — Washington Post

DOJ on Defensive in Renzi Case » After privately listening to several wiretapped phone calls between former Rep. Rick Renzi (R-Ariz.) and his lawyers, the judge considering the pre-trial motions in the case on Friday determined there was enough evidence to call a special hearing to decide whether government prosecutors and the FBI abused their power in recording the conversations. — The Hill

KBR Connected to Alleged Fraud » KBR, the Army's largest contractor in Iraq and Afghanistan, is linked to "the vast majority" of suspected combat-zone fraud cases that have been referred to investigators, according to the Pentagon's top auditor. — Washington Post

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Quotable

Ma'am, we're going to do this one more time, and then I'm going to treat you as though you were not here."
— Immigration judge Rex J. Ford, Mentally Ill and in Immigration Limbo (NYT)

NY Fed's Goldman Ties at Issue » New York Fed chairman Stephen Friedman's Goldman Sachs connections illustrate what a tangle of overlapping interests can arise at a hybrid institution, especially as the U.S. government grows more deeply enmeshed in American business and banking. — Wall Street Journal ($)

Firms Face New Tax Curbs » The Obama administration is expected to unveil details of what aides are calling a far-reaching crackdown on offshore tax avoidance, targeting many U.S.-based multinational corporations and wealthy individuals. — Wall Street Journal ($)

Edwards Admits Inquiry » Two-time Democratic presidential candidate John Edwards has acknowledged that investigators are assessing how he spent his campaign funds -- a subject that could carry his extramarital affair from the tabloids to the courtroom. — New York Times

Two Deaths, Two Very Different Probes » When a USC student died in a hit-and-run collision, Los Angeles police and the media jumped on the case and officials rushed out a $235,000 reward. A nearly identical accident across town received no attention and few resources. — Los Angeles Times

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The Scapegoats of Abu Ghraib? » When the photos of detainee abuse at the Abu Ghraib prison in Iraq surfaced in 2004, U.S. officials portrayed Army Pvt. Charles A. Graner Jr. as the ringleader of a few low-ranking "bad apples." But Graner's lawyer contends that recently-released Justice Department memos show how guards were made scapegoats for policies approved at high levels. — Washington Post

Report: Contractors Behind Waterboarding Program » According to current and former government officials, the CIA's secret waterboarding program was designed and assured to be safe by two well-paid psychologists now working out of an unmarked office building in Spokane, Washington. — ABC News

Hearings Sought in Merill Deal » House Financial Services Committee Chairman Barney Frank (D-Mass.) took a new stance on investigating the involvement of the Treasury and the Federal Reserve in Bank of America Corp.'s purchase of Merrill Lynch & Co. Thursday, saying there "probably should be hearings." — Wall Street Journal ($)

One Town's Take on Big Banks » Last year, Indio, Calif., passed a law that allowed it to charge banks with a criminal misdemeanor if they allowed a home to fall into disrepair. "If I need to do it, I'll say, 'Mr. Bank President, if you don't come and take care of your property, we're going to come arrest you,'" says Brad Ramos, Indio's long-serving police chief. — Wall Street Journal ($)

Flu Readiness Varies » More than two dozen states, including Maryland, as well as the District, have not stocked enough of the emergency supplies of antiviral medications considered necessary to treat victims of swine flu should the outbreak become a full-blown crisis, according to federal records. — Washington Post

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The 'Fort Murtha' Debate » The Pentagon has spent about $30 million on upgrades at a little-used airport named for Rep. John P. Murtha (D), though most of the improvements have not been used for their intended military purpose. Critics complain that the projects, funded through appropriations approved by Murtha's panel, are a waste of taxpayer dollars. — Washington Post

Kennedy Is Key in Voting Rights Ruling » The Supreme Court yesterday split along a familiar ideological battle line in its consideration of the Voting Rights Act, apparently leaving Justice Anthony M. Kennedy in the pivotal position of deciding the fate of what a government lawyer called "one of the most transformative acts in American history." — Washington Post

Immigration Focus Shifts to Employers » In an effort to crack down on illegal labor, the Department of Homeland Security intends to step up enforcement efforts against employers who knowingly hire such workers. — New York Times

Tracking the Stimulus Trackers » A vocal cross section of technology experts, academics, good-government groups and federal employees weighed in this week on the future of Recovery.gov, the Obama administration's Web site that officials promise will eventually track every single dollar of the federal stimulus. — Washington Post

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Quotable

The louder he yells at me, the calmer I will be."
— Neel Kashkari, outgoing bailout director's note-to-self while testifying on Capitol Hill about TARP oversight

NYC Flyover Fallout » White House press secretary Robert Gibbs yesterday said the administration is conducting an internal review of the Air Force One flyover that caused panic Monday in New York City. "It was a mistake," Obama said of the photo-op flight, which reportedly cost taxpayers $328,835. Meanwhile, documents suggest federal officials knew the Air Force mission would cause alarm, but proceeded anyway. — Washington Post, Bloomberg, WCBS-TV

Surveillance Effort Draws Concerns » A growing number of big-city police departments and other law enforcement agencies across the country are embracing a new system to report suspicious activities that officials say could uncover terrorism plots but that civil liberties groups contend might violate individual rights. — New York Times

'State Secrets' Claim Rejected » A federal appeals court yesterday reinstated a lawsuit by five former detainees who sued a Boeing subsidiary over its alleged role in transporting them to foreign countries, where they say they suffered brutal interrogation under the CIA's "black site" prison system. — Washington Post

Citi Seeks Bonus Approvals » Citigroup Inc., soon to be one-third owned by the U.S. government, is asking the Treasury for permission to pay special bonuses to many key employees, according to people familiar with the matter. — Wall Street Journal ($)

DOJ Probes Google Book Deal »The Justice Department is looking into whether a 2008 settlement between Google and authors and publishers over the search giant's Book Search service could be anticompetitive. — BusinessWeek

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