A SUMMARY OF WHAT’S IN THE MAJOR U.S. NEWSPAPERS / A Tale of Two Citis

By Daniel Politi

 The Washington Post leads with the Bush administration official in charge of deciding which detainees at Guantanamo Bay will go to trial declaring that the U.S. military tortured Mohammed al-Qahtani, a Saudi who allegedly intended to be a part of the Sept. 11 attacks. “We tortured Qahtani,” Susan Crawford, the convening authority of military commissions, said. Crawford has now become “the first senior Bush administration official responsible for reviewing practices at Guantanamo to publicly state that a detainee was tortured,” declares the WP’s Bob Woodward. The Wall Street Journal banners word that Citigroup will soon announce a plan to get rid of several of its businesses and shrink the giant company by one-third. Executives say the move “will essentially dismantle the financial colossus built by legendary deal maker Sanford Weill,” reports the WSJ.

 The New York Times leads with Sen. Hillary Clinton’s confirmation hearing, where she vowed that the new administration would put diplomacy front and center and hinted there would be a tougher stance on Israel. Although the former first lady faced some tough questions over her husband’s fundraising, she received lots of praise from lawmakers, and no one doubts that she will be confirmed as the next secretary of state. The Los Angeles Times leads with a look at how hospitals are feeling the effects of the economic downturn as more patients are choosing to postpone medical care and are forgoing elective procedures. The story focuses on California but points out hospitals across the country are hurting due to the “the financial, economic and government crises” that are “hitting at once.” USA Today leads with an interview with President Bush, who said President-elect Barack Obama’s biggest challenge will be to “protect the American people” from “an enemy attack.”

In her first interview since becoming the point person in the military commissions, Crawford stated that she refused to allow Qahtani to be prosecuted because the treatment he received while in custody “met the legal definition of torture.” Crawford was careful to emphasize that all the interrogation techniques used with Qahtani were authorized at the time, but it was the way the different methods were combined, as well as their duration, that had an adverse impact on the detainee’s health. “It was abusive and uncalled for,” she said. “And coercive. Clearly coercive.”

 Although military prosecutors have said they would refile charges against the alleged 20th hijacker based on information gleaned from later interrogations that didn’t use harsh techniques, Crawford emphasized that she wouldn’t allow it to move forward. Crawford recognized that her unwillingness to let the prosecution go forward means that Obama faces a tough choice. “He’s a very dangerous man,” she said. “I would be hesitant to say, ‘Let him go.’ “

In a related story, the WP goes inside with a former Guantanamo prosecutor saying in a declaration filed in federal court that the evidence against detainees at the prison in Cuba is such a mess that it is impossible to carry out a proper prosecution. Darrel Vandeveld was the lead prosecutor against an Afghan who has been held in Guantanamo for six years but left his post last year due to what he described as a crisis of conscience. Vandeveld affirms that most of the important evidence was missing or suffered from a “complete lack of organization.” The chief military prosecutor isn’t buying it and says Vandeveld is just bitter because he wasn’t chosen to be a team leader.

As expected, Citigroup announced yesterday that its Smith Barney brokerage unit will be split off into a joint venture with Morgan Stanley. But the company will also announce that it is getting rid of two consumer-finance units as well as getting out of the private-label credit card business. The WSJ says that after all the restructuring is finished, Citigroup will look much like Citicorp did before it went through the landmark merger with Travelers Group a decade ago, which created one of the world’s largest financial institutions that operates in more than 100 countries. If all goes according to plan, one part of Citigroup would become “an all-purpose corporate and investment bank” while another would deal with wealthy individuals around the world.

 The NYT also hears word of the plans and says that the move to “split itself in two” came after the Federal Deposit Insurance Corp. warned Citigroup that if it asked for more cash infusions from the government, regulators would forcibly break up the financial behemoth’s operations.

In her confirmation hearing, Clinton said the Obama administration would seek to have direct diplomatic contact with Iran and Syria as part of its general effort to bring back an emphasis on diplomacy. “I believe that American leadership has been wanting but is still wanted,” she said. Lest anyone think that Clinton had somehow transformed into a dove, she emphasized that “military force will sometimes be needed.” Clinton once again emphasized that she’s against direct negotiations with Hamas and said that she is “deeply sympathetic” to Israel’s desire to protect its people. At the same time, she seemed to part a bit from the Bush administration by pointing out that the Palestinians have suffered “tragic humanitarian costs.”

 In other confirmation news, most papers front Timothy Geithner’s meeting with key senators yesterday to discuss his failure to pay some income taxes. In addition, there were questions about the immigration status of a former household employee but that isn’t seen as that big of a deal because it came as news to Geithner that her papers had expired three months before she stopped working at his home. The bigger problem for the man who would oversee the Internal Revenue Service is his underpaying of taxes earlier this decade. He has since paid back more than $48,000 in back taxes and interest.

Democrats played down the issue, saying that Geithner made a simple mistake during his time at the International Monetary Fund that is common for employees of international institutions. In 2006, the IRS discovered that Geithner owed taxes in 2003 and 2004, and then the Obama transition team discovered he had failed to pay the same taxes for 2001 and 2002, which he promptly corrected. As the NYT and WSJ highlight, the question then becomes why he didn’t pay back everything he owed once the IRS pointed out his mistake, and some say he knowingly took advantage of the statute of limitations. No one expects the revelations to block his confirmation, but the WP reports that two Republican senators blocked a request to proceed with the hearing on Friday, although Democrats still hope he will be confirmed by Inauguration Day.

In a move that is making some lawmakers in closely contested districts nervous, the LAT reports that Obama’s political team is quietly planning to create an organization, known internally as “Barack Obama 2.0,” that would sustain the huge network of grass-roots supporters he gained in the campaign. It’s still in the early stages, but it looks like the network would not only lobby for the president’s agenda but also start working on his re-election. In part, the network, which might be run out of the Democratic National Committee, could be used to pressure lawmakers, including Democrats, to help Obama pass controversial legislation. Republicans created a similar structure under Bush, but they used it to win elections and not influence members of their own party. In addition, there are discussions about creating a separate service organization to help victims of natural disasters “under the Obama umbrella.”

The WP off-leads, and the WSJ tops its world-wide newsbox with Fed leaders urging Congress to approve the release of the second half of the $700 billion bailout package because, quite simply, ailing financial institutions need more money. In a back-to-the-past moment, Federal Reserve Chairman Ben Bernanke said yesterday that there should be a renewed effort to help banks get rid of toxic assets from their balance sheets. You might remember that was the initial purpose of the bailout plan, but it was later scrapped in favor of cash infusions. Bernanke warned that a stimulus package is unlikely to lead to a lasting economic recovery unless financial institutions are also strengthened. While lobbying lawmakers, Obama made it clear he wouldn’t hesitate to use his veto power if they fail to release the funds.

In a front-page analysis, the NYT says Washington is slowly coming to the realization that banks are going to need more money. Even the bailout’s critics recognize that things probably would have been a lot worse without the cash infusions, but “the problems are still acute, if less apparent on the surface.” Analysts now expect that total losses from the credit crisis could reach $1.8 trillion, which is twice as high as previous estimates.

In an interesting piece, the NYT takes a look at a Michigan bank that got $72 million from the government but still isn’t “doing much lending.” The bank is hardly an exception and illustrates how banks are using the cash to stabilize their balance sheets.

The WP’s Harold Meyerson writes that “if the Treasury had set out to design a system to demonstrate once and for all that trickle-down economics doesn’t work, it could not have done better than TARP” since banks are taking care of themselves courtesy of Uncle Sam. That’s why it’s essential that lawmakers approve a measure that would direct banks that get government money to start lending when they approve the release of the next $350 billion. The measure is particularly important considering that Obama’s appointees have repeatedly “sided with banks against the public interest.”

The NYT reveals that the company that turned Botox into a blockbuster hit now has its sights set on helping people get longer and fuller eyelashes. Many doubt that a large number of people will really spend $120 a month for fuller lashes but others say this is bound to be the biggest thing in cosmetic medicine since Botox. “If you think about it in terms of luxury,” the company’s chief executive said, “it’s four dollars a day.”

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