McClatchy Washington report 6/9

Top Story

• Feds knew of Gulf spill risks in 2000, document shows

  A decade ago, U.S. government regulators warned that a major deepwater oil spill could start with a fire on a drilling rig, prove hard to stop and cause extensive damage to fish eggs and wetlands because there were few good ways to capture oil underwater.

Spotlight

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  AIG's problems far greater than Bush officials told public

  At the peak of the 2008 financial crisis,then-Treasury Secretary Henry Paulson and top Federal Reserve officials urged a government loan of $85 billion to AIG so the giant insurer's temporary cash squeeze wouldn't trigger global financial chaos. Nearly two years later, taxpayers are on the hook for twice that amount, and it now appears that Paulson and senior Federal Reserve officials either didn't understand AIG's financial situation or were less than candid about one of the largest corporate bailouts in U.S. history.

Latest Headlines

• NOAA confirms oil floating beneath Gulf's surface

  Researchers confirmed Tuesday that oil is floating as deep as 3,300 feet below the surface of the Gulf of Mexico in layers that may pose unprecedented challenges to efforts to clean up the effects of the spewing BP Deepwater Horizon well. The head of NOAA in mid May had denounced scientists' claims of the subsurface oil's presence.
• Haley survives tryst allegations, faces Barrett in S.C. GOP gubernatorial runoff

  South Carolina state Rep. Nikki Haley of Lexington fell just short of winning outright Tuesday's Republican primary for governor. Haley, a Tea Party darling, garnered nearly half of all GOP votes. U.S. Rep. Gresham Barrett from Westminster claimed second in the four-way GOP contest but trailed Haley badly.
• Wall Street lobbyists swarm over financial overhaul bills

  The top 10 lobbying firms that are working on financial regulatory overhaul legislation represented 130 clients and raked in more than $30 million in fees from them during 2009 and the first quarter of this year, according to a study that the Center for Public Integrity, a watchdog group, released Tuesday.
• 'Sensible immigration policy' doesn't sit well with many in Texas GOP

  Norm Adams wants Texas to find middle ground in the nationwide immigration debate. The 65-year-old Houston insurance agent caused a ruckus Tuesday by presenting his "sensible immigration policy" to Texas Republican Party faithful gathered in Dallas to prepare for their state convention. His proposal is designed to secure the borders, deport noncitizens with violent records and give visas to illegal immigrants, who would pay taxes at a higher rate than citizens. In the process, he said, Republicans might regain countless Hispanic voters who shifted to the Democratic Party.
• Joran van der Sloot draws Peru's attention away from OAS summit

  Secretary of State Hillary Clinton and diplomats from 30 nations are holding a high-profile meeting in Peru this week. But few are paying attention because of a less-welcome visitor: Joran van der Sloot. News of the visiting dignitaries — in town for the annual Organization of American States meeting — was largely buried inside newspapers as van der Sloot's mug and blaring "He Confessed!" headlines dominated covers.
• Obama will veto Alaska Sen. Murkowski's EPA proposal

  The White House made it clear Tuesday that President Barack Obama will veto Sen. Lisa Murkowski's proposal to curtail the U.S. Environmental Protection Agency's effort to regulate greenhouse gas emissions, in the unlikely event the Alaska Republican's proposal passes Congress. Murkowski on Thursday will ask fellow senators to vote on a rarely used disapproval resolution, which signals congressional displeasure with the EPA's finding that greenhouse gases endanger public health.
• Senate weakens bid to tax Wall Street like rest of us

  Senate Democrats Tuesday weakened efforts to end a controversial Wall Street tax break, watering down a bid to raise taxes on managers of hedge funds, private-equity funds, venture capital firms and other business partnerships.
• Whitman, Fiorina get GOP nod in California races

  California governor candidate Meg Whitman and U.S. Senate candidate Carly Fiorina made history by becoming the first women to win the California Republican Party's nomination to the state's highest elected offices on Tuesday night.
• Libertarians say U.S. political attitudes are shifting their way

  Though still overshadowed by Republicans and Democrats, Libertarians say the political mood is trending in their direction, exemplified by the rise of the Tea Party movement and seething anger at the status quo in Washington.
• Commentary: A U.N. investigation of Israel flotilla incident would be a joke

  Latin America's immediate condemnation of the Israeli raid on a pro-Palestinian flotilla last week is understandable, but the region's support for an investigation by the United Nations Human Rights Council is outrageous. The U.N. group is dominated by some of the world's worst dictatorships and most viscerally anti-Israeli regimes.