The continuing resolution approving spending limits for the remainder of fiscal year 2011 passed the House today and is expected to pass the Senate, setting the stage for the next big budgetary task in Congress: raising the nation’s debt ceiling. Treasury Secretary Tim Geithner said that U.S. will reach its legal borrowing limit around May 16th.

Several Republican members of Congress have taken the debt ceiling — and thus the credit worthiness of the United States — hostage for various demands. For instance, many Republicans say that they will refuse to raise the debt ceiling unless Congress approves a balanced budget amendment or agrees to cut Social Security benefits.

Rep. Mike Pence (R-IN) said on Sunday that, “I will not support an increase in the debt ceiling without real and meaningful changes in spending in the short-term and in the long-term.” However, back in 2002 Pence felt very differently about the debt ceiling. During a speech on the House floor, Pence said that the debt ceiling needs to be increased because failure to do so could threaten Social Security benefits. “I truly believe if you owe debts, pay debts,” Pence said:

I rise today as a conservative Member of this institution, Mr. Speaker. I did not come here to increase the government’s debt. I came here believing, as so many people I represent believe, that if you owe debts, pay debts.

I spoke to an elderly woman on a radio program in Richmond, Indiana, today, in the heart of the heartland district that I represent. And Mr. Speaker, she said with fear in her voice that she was worried that a conservative like me would not support raising the debt ceiling and would put at risk her Social Security check. She assumed that my loathing of red ink would cause me to vote in such a way or fail to act in such a way that it would jeopardize her benefits and the benefits of people that she loves.

Well, I assured her then and I rise today to assure all those that are listening, Mr. Speaker, that I will not do that. I truly believe if you owe debts, pay debts.

Watch it:

Pence is far from the only Republican who once found raising the debt ceiling to be a noncontroversial task worthy of wide support, but now wants to extract concessions in return for doing it. Senate Republicans also raised the debt ceiling immediately after passing the 2003 Bush tax cut.

A cadre of state attorneys general — led by Iowa Attorney General Tom Miller (D) — have been negotiating a settlement with the nation’s biggest banks over the foreclosure fraud scandal that came to light several months ago. By settling, the banks would avoid litigating over widespread allegations of fraudulent documents and improper foreclosure procedures (including the infamous use of “robo-signers“).

While the attorneys general and the federal bank regulators — including the Office of the Comptroller of the Currency (OCC) and the Federal Reserve — were seemingly united in these talks at the beginning, the regulators broke off and have come to their own settlement with the banks. And as CAP Housing Policy Adviser Alon Cohen notes, the regulators’ settlement is a weak one:

There is no mention of penalties, and the servicers’ repeated focus on “processes” is replaced by the terms “policies and procedures” and “internal controls,” nearly all of which presumably should already be in place. While the AG settlement required oversight by a third party monitor appointed by the AGs and the new Consumer Financial Protection Bureau, the federal regulators permit the servicer to hire its own monitor with regulator approval…To believe that the terms of the federal consent orders will change how servicers operate would mean placing our faith in the same regulators who have monitored and been on site at banks throughout this crisis.

As The Atlantic’s Daniel Indiviglio put it, the regulators made an “attempt to ensure that foreclosures are processed accurately and fairly in the future, but they fail to penalize banks and servicers for any wrongdoing that may have occurred in the past.” The regulators said that they will come back later to assess monetary fines.

This isn’t necessarily the end of the process, as the AG’s insist they are still moving forward, but there’s a chance that any real reform in foreclosure practices that the AG’s get into an agreement could be pre-empted by the deal struck by federal regulators. Several Republican attorneys general have also broken away from the settlement talks, saying that banks shouldn’t have to pay for their role in the foreclosure crisis.

The Senate Permanent Subcommittee on Investigations released a scathing 650-page report yesterday detailing some glaring examples of Wall Street’s malfeasance leading up to the 2008 financial crisis. Two of the highest-profile culprits in the report are Goldman Sachs and Deutsche Bank, as emails from both institutions reveal that they were selling securities that they knew were toxic and then shorting those same securities to turn a profit.

For instance, one Deutcshe Bank trader, Greg Lippman, described the assets his bank was peddling as “crap” and “an absolute pig”:

– Email regarding GSAMP 06-NC2 M8, an RMBS security that contained New Century loans and was issued by Goldman Sachs: “[T]his is an absolute pig.” (12/8/2006)

– Email describing ABSHE 2006-HE1 M7, a subprime RMBS security issued by Asset Backed Securities Corporation Home Equity Loan Trust, as a “crap deal”; and describing ACE 2006 HE2 M7, a subprime RMBS securitization issued by ACE Securities Corp., as: “[D]eal is a pig!” (3/1/2007)

Goldman Sachs did the same thing (in less colorful language), going so far as to tell investors that it’s interests “were aligned” with their own, even as it was spending billions betting against the very securities that it was selling. In all, Goldman “generated net revenues of $3.7 billion” betting against securities.

Aspects of the Dodd-Frank financial reform law were “designed to address and reduce these conflicts.” The most important of these provisions is known as the Volcker Rule, which would limit the ability of large investment banks like Goldman Sachs to trade for their own account, outside of doing business for their customers. But these very provisions are under attack by Republicans in Congress.

In a hearing today, House Republicans are expected to push the Financial Stability Oversight Council — the new body tasked with monitoring systemic risk in the financial system — to water down the Volcker Rule. Sen. Orrin Hatch (R-UT) said earlier this week that he is concerned that trading restrictions, including the Volcker rule, will simply be “unduly burdensome regulations.” Over at ThinkProgress, Ian Millhiser goes over the potentially criminal aspects of Goldman’s actions.

Yesterday, a Senate subcommittee investigating Wall Street’s role in the recent financial collapse released a massive, 639-page report documenting the role mortgage lenders, investment bankers, and insufficient regulatory checks on Wall Street played in creating America’s worst economic disaster since the Great Depression. But this congressional investigation could lead to much more public scrutiny into one of Wall Street’s biggest players. In a statement announcing the report’s findings, subcommittee chair Sen. Carl Levin (D-MI) suggested that Goldman Sachs could face criminal charges:

Sen. Carl Levin (D-Mich.) said on Wednesday that he plans to refer Goldman officials, and potentially officials from other organizations, to the Justice Department for possible prosecution and to the Securities and Exchange Commission for possible civil proceedings.

“In my judgment, Goldman clearly misled their clients and they misled the Congress,” said Levin, the chairman of the Senate Permanent Subcommittee on Investigations. [...]

Levin said prosecutors should look at not only Goldman’s statements to the public about its investment products, but also the statements officials made to Congress. Goldman officials, including chief executive Lloyd Blankfein, gave testimony that was “inaccurate,” Levin said. It is a crime under federal law to make a false statement to Congress or to obstruct congressional proceedings.

Levin’s investigation drew headlines after he grilled a top Goldman executive for continuing to push investors to purchase an investment that Goldman described as a “shitty deal” in its internal emails. As the Levin report explains, Goldman’s management “sent out numerous sales directives or ‘axes’ to the Goldman sales force, stressing that [selling the shitty deal] was a priority for the firm.”

This deal was just one example of Goldman “profit[ing] from the failure of many of the…securities it had underwritten and sold.” As the report explains, Goldman frequently touted securities that it expected to fail to outside investors, and then bet against those securities by taking a “short position” on them. In total, Goldman “generated net revenues of $3.7 billion” by betting against securities, while their alleged victims were left with an investment that was worth only a fraction of what they paid for it.