Senate frontrunner lied about serving in Vietnam

Richard Blumenthal

Connecticut Attorney General Richard Blumenthal, the acknowledged front runner for the Senate seat being vacated by Chris Dodd, lied repeatedly about serving in Vietnam.

Blumenthal, a Democrat, not only never served in combat, he sought multiple deferments to avoid military service and — when those deferments ran out — used political connections to land a coveted spot in a Marine reserve unit that ran Toys for Tots drives and other ceremonial activities in Washington — assuring he would never serve in a war zone.

“We have learned something important since the days that I served in Vietnam,” Blumenthal told a gathering in Norwalk, CT, in March of 2008. “And you exemplify it. Whatever we think about the war, whatever we call it — Afghanistan or Iraq — we owe our military men and women unconditional support.”

Blumenthal often claimed service in Vietnam. In 2002, addressing a rally of military families in Bridgeport, CT, Blumenthal talked about attitudes for Veterans returning in Vietnam.

“When we returned, we saw nothing like this,” Blumenthal said. “Let us do better by this genration of men and women.”

The New York Times uncovered Blumenthal’s deception in a front page story today and noted that dozens of stories about the Connecticut Attorney General describe him as a Vietnam veteran and that Blumenthal never attempted to correct the record.

Now, Blumental tells The Times, his story is that he “misspoke” about his service during the event in Norwalk.

Although claims about serving in Vietnam became a major part of his political life, selective service records obtained by the Times through the Freedom of Information Act show he actively sought, and received, at least five deferments from military service.  He used connections with powerful friends, like Washington Post publisher Katherine Graham, to obtain a rare “2-A” occupational deferment while working as a special assistant to her.

In 1969, however, Blumenthal, while working in the Nixon White House, received a low draft lottery number — 152. With official help, he landed a spot in 1970 a ceremonial Washington-based Marine Corps. reserve unit that was better known for running Toys for Tots drive and refurbishing playgrounds in the District of Columbia.  The unit was never dispatched to Vietnam or considered for wartime service.

Lying about Vietnam is not Blumental’s only deception. In 2004, he claimed to have served as captain of the Harvard swim team. School records show he was not even a member of the team.

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Dems ramp up pressure on Wall Street

Democrats planned to keep up the pressure on Republicans after an expected setback put the brakes on Senate consideration of financial regulations.

But their task got slightly more complicated by the defection — at least for now — of one Democrat, Sen. Ben Nelson of Nebraska.

Nelson voted with Republicans on Monday to deny Democrats the 60 votes they needed to advance the legislation to a floor debate. Democrats were expected to try again Tuesday, and yet again the day after if necessary.

In a statement, Nelson, a conservative Nebraska Democrat, said his vote reflected concerns about the bill raised by Nebraska businessmen. Before the vote, Nelson huddled with Senate Banking Committee Chairman Christopher Dodd to discuss a regulatory item of interest to one Nebraska businessman in particular — billionaire investor Warren Buffett.

The legislation would require derivatives — previously unregulated exotic securities — to be traded in open exchanges and cleared through a third party that would guarantee the contracts. An agreement Monday between Dodd and Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., would exempt existing derivatives from the clearing requirements.

Lincoln’s proposal also would have exempted existing derivatives contracts from margin requirements, or collateral. Dodd succeeded in eliminating the collateral exception. That would potentially add significant costs to companies with derivatives portfolios, such as Buffett’s Berkshire Hathaway Inc.

“I was prepared to grandfather existing derivatives that have not been cleared, but I can’t say you can’t have margin requirements,” said Dodd, D-Conn., explaining his discussion with Nelson.

In his statement, Nelson asserted that “no one should view my vote today as an indication that I won’t support the bill currently being negotiated by the Banking Committee.”

At the end, Senate Majority Leader Harry Reid switched his vote to “no,” too — a maneuver that will enable him to call for a new tally as early as Tuesday. If that failed, Reid, D-Nev., envisioned another vote Wednesday.

A Tuesday vote would come on the same day a Senate investigative subcommittee planned to draw attention to a Securities and Exchange Commission lawsuit alleging fraud by the giant investment house Goldman Sachs. Scheduled witnesses include Goldman chairman and chief executive Lloyd Blankfein and Fabrice Tourre, the Goldman Sachs trader at the center of the SEC charges.

Democrats believe public pressure and the scent of a Wall Street scandal have given them the upper hand. Republicans themselves have taken up the Democrats’ Wall Street-bashing rhetoric and have voiced hope that a bill will ultimately pass.

“All of us want to deliver a reform that will tighten the screws on Wall Street,” said Senate Republican leader Mitch McConnell of Kentucky. “But we’re not going to be rushed on another massive bill based on the assurances of our friends on the other side.”

Richard Shelby, the top Republican on the Banking Committee, again expressed optimism that he and Dodd could strike a deal over remaining differences. “Most Republicans want a bill, but they want a substantive bill,” said Shelby, R-Ala.

But while Dodd continued to meet with Shelby, Reid’s plan to continue testing Republican resolve illustrated the Democrats’ lack of patience for more negotiations.

“We will not tolerate efforts to slow-walk this process or water down this reform,” Reid said.

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Dems to GOP: ‘Go ahead, make our day’

Democratic Senators Christopher Dodd and Mark Warner (AFP)

With a showdown vote looming, Democrats are resisting Republican appeals for a broad compromise on financial overhaul legislation and are eager to test whether GOP unity will crack in an anti-Wall Street political climate.

The top negotiators on the regulatory bill — Democratic Sen. Christopher Dodd and Republican Sen. Richard Shelby — professed to be close to a deal during a joint appearance on NBC’s “Meet the Press.”

But Shelby conceded that “inches sometimes are miles,” and the two did not hold a negotiating session Sunday.

The legislation is the most sweeping effort to rein in financial institutions since the Great Depression. Aimed at avoiding a recurrence of the near collapse of the financial system in 2008, it would create a mechanism for liquidating large firms that get into trouble, set up a council to detect systemwide financial threats and establish a consumer protection agency to police lending. The legislation also would require derivatives, blamed for helping precipitate the meltdown, to be traded in open exchanges.

The House already passed its version of the legislation.

Senate Republican Leader Mitch McConnell on Friday blocked Democrats’ efforts to bring the bill up for debate, setting up a vote Monday that will require 60 votes to move ahead. McConnell and Shelby said Sunday that without a deal with Dodd, all 41 Republican senators would vote to stall the start of debate. Shelby said a deal in time for the vote was unlikely.

But unlike the health care debate, public sentiment was not working in favor of Republicans. Public opinion is leaning toward more regulation of large financial institutions, and a Securities and Exchange Commission lawsuit alleging fraud by Goldman Sachs has added the cloud of scandal to Wall Street.

On Sunday, Dodd agreed to toughen his overarching bill with stronger rules on derivatives, including one that had drawn objections from the Obama administration, according to a Democratic official familiar with the negotiations. Dodd entered into a tentative deal with Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., to incorporate her committee’s derivatives provisions into the broader regulatory legislation. At least two Republicans — Sens. Charles Grassley of Iowa and Olympia Snowe of Maine — are on record supporting Lincoln’s derivatives package.

Derivatives are the complex securities blamed for helping precipitate the 2008 Wall Street crisis.

One of the most sweeping of Lincoln’s restrictions would require banks to spin off their derivatives business into subsidiaries with a separate source of capital. Large banks fiercely opposed the provision. The Obama administration has called for banks to end trading in speculative securities but not to jettison operations that create derivatives markets for clients.

In yet another attempt to attract Republicans, Democrats appeared willing to jettison from the bill a $50 billion fund — financed by large banks — that would have been used to liquidate failing firms once considered “too big to fail.” The fund has been one of the main targets of GOP criticism.

Democrats said the time had come to move on with the bill.

“Are we going to start the debate or are we going to shut it down and continue negotiating, negotiating, negotiating?” Sen. Sherrod Brown, D-Ohio, asked on ABC’s “This Week” Sunday.

For now, Republicans are using the only leverage they have — the threat of 41 unified votes — to seek a bigger GOP imprint on the bill.

The impasse reflects differences over how to contain large, interconnected financial firms and how to liquidate them when they fail. But Democrats and Republicans also differed on how to protect consumers and how to set limits on previously unregulated exotic instruments such as derivatives.

Dodd has already incorporated a number of Republican ideas into his version of the bill following negotiations with Shelby and Republican Sen. Bob Corker of Tennessee. Democrats, particularly liberals, have become increasingly worried that a compromise with Shelby will limit their ability to amend the bill during floor debate.

Dodd tried to reassure them.

“We can’t take care of everything in the bill,” he said, referring to his talks with Shelby. “Obviously our colleagues will want to be heard.”

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