Morning Must Reads from DCExaminer

New York Times -- Obama Orders Improvements in Security Policies
The State Department took interest in the dire warnings given by the father of the underwear bomber about his son’s Jihadist tendencies, but without other “biographic information” the National Counterterrorism Center found those warnings did not qualify him for the “no-fly” list.
And the day after that failure put the bomber on the plane, the head of the Counterterrorism Center still left town, with White House approval, for a family ski trip.
The new report from President Obama’s top terrorism advisor about the Christmas Day bombing attempt shows that State Department officials did not yank Umar Farouk Abdulmutallab’s visa on the spot, perhaps because of confusion with records.
But the real problem is in the fact that when the Western-style businessman father of a young, male, Muslim foreign national says his son is trying to attack America isn’t enough to get at least temporary addition to the no-fly list.
That dot should have needed no connecting, but even so, the president is ordering the intelligence community to speed up analysis and its dissemination dramatically.
The other part of plan is to make sure that TSA workers get to look at you naked before you are allowed to board a flight.
Writers Jeff Zeleny and Helene Cooper explain the president’s refusal to profile passengers.
“‘We are at war,’ Mr. Obama said, releasing an unclassified version of a report on the attempted attack.
He pledged not to ‘succumb to a siege mentality’ sacrificing the country’s civil liberties for security, but he called for expanding the criteria for adding people to terrorism watch lists.”

New York Times -- Fed Advice to A.I.G. Scrutinized
The Federal Reserve has given up most of the pretext that it operates above the political fray. Instead of operating at some arms-length distance on policy questions with the White House, the central bank is engaging in rather rank political gamesmanship. It’s become like a department of the executive branch but without the reporting requirements.
Writer Mary Williams Walsh tells us that a lawyer for the New York Fed told bailed out insurer AIG to withhold information on official reports about the size of the Fed’s payments to investors with AIG policies and the depth of the problems facing the company.
“The Fed’s lawyer, Ethan T. James, of Davis Polk & Wardwell, deleted all references to the $10 billion in swaps that could not be torn up. He wrote in the margin: “There should be no discussion or suggestion that A.I.G. and the N.Y. Fed are working to structure anything else at this point.”
After receiving his instructions, A.I.G. deleted the reference to the $10 billion derivatives problem from its filing.”

Wall Street Journal -- EPA Proposes Tighter, Costlier Smog Limits
Writers Mark Peters and Stephen Power tell us how a new EPA smog rule, which the agency says may cost the private sector up to $90 billion a year, will work.
Smoggy cities will still be smoggy, but less smoggy places will be regulated.
“According to the agency, more than twice the 322 counties that violate current federal ozone standards would fail to comply if the new standard were set at 0.06 ppm. For areas thrown into noncompliance for the first time, the standards could result in new pollution controls on large factories, or requirements for retail gasoline outlets to sell cleaner-burning fuel. Under federal law, states are required to submit plans to the EPA that detail how they will comply with the government's ozone standards. Those that don't submit such plans or fail to implement them risk losing highway funds.”

The Hill -- Pelosi vows to defend House healthcare bill
The House speaker is making noise about not signing off on the Senate health bill having heard grumbling from her members over their problems with the Senate plan. The president is even planning another trip up to the Hill to quell unrest among House members.
But, as writers Jared Allen and Jeffrey Young explain, the calculus remains the same – with several Senators itching for an excuse to spike the legislation and no margin of error within Harry Reid’s caucus, it is the House that must yield. At least they won’t have to do it on C-SPAN.
“House Democrats will caucus again on Tuesday, and on Wednesday they begin their three-day ‘Issues Conference,’ where they will hear from Obama directly.
Many members are awaiting guidance from the president, and there is a hope that he will help the two chambers clear their remaining hurdles.
Talk of meeting in the middle on certain areas was already permeating some of the policy discussions on Thursday.”

Washington Post -- Steele comments have GOP aides pleading, 'Get him to stop'
Philip Rucker and almost everyone else writing about Michael Steele suggests that the anger at Steele inside the GOP is because he suggested that the party wouldn’t win the majorities in Congress this year.
But the heart of the problem is how it happened: while Steele was out on a book tour, selling his own book. Steele was already in hot water for doing paid speeches in addition to his work as chairman, but a book designed to be provocative (and saleable) by pointing out what’s wrong with the party was too much.
The RNC is facing cash flow problems and organizational challenges, but Steele is still selling Steele.
It prompted top Hill aides to call for Steele to tone it down in a party conference call this week. Steele responded on ABC radio saying: 'I've had enough of it. If you don't want me in the job, fire me. But until then, shut up. Get with the program or get out of the way.'
Perhaps most worrisome for Steele is becoming the new Scozzofava:
“Former House Speaker Newt Gingrich (R-Ga.) came to Steele's defense Thursday, telling a group of reporters in Atlanta that he is ‘a fan of Steele's’ even though the chairman ‘makes a number of old-time Republicans very nervous.’
‘He comes out of a different background,’ Gingrich said, according to the Associated Press. ‘ . . . But I think he's pretty close to what we need. He's different, he's gutsy and he's going to make a number of Republicans mad.’”