In a dramatic reversal that is already provoking an outcry from the left, President Obama is seeking to block the release of 44 photos depicting detainee abuse. “The most direct consequence of releasing them, I believe, would be to further inflame anti-American opinion and to put our troops in greater danger,” he told reporters Wednesday. The Justice Department agreed to release the photos by May 28 as a result of an ACLU lawsuit, but Obama met with his legal team last week to say he wasn’t comfortable with the photos coming out for national security reasons. Obama’s been walking a fine line since releasing Bush-era memos detailing harsh CIA interrogation methods—the right has accused him of endangering national security, while the left thinks he let the torturers off the hook by not pushing for a full-scale investigation.

Former Countrywide CEO Angelo Mozilo has already faced a grilling from Congress over the subprime mortgage mess—and he’ll soon be facing civil fraud charges for allegedly engaging in insider trading. Mozilo sold off $130 million of Countrywide stock at the beginning of 2007 (compared to $60 million the year before) before fleeing the crumbling company. Now the Securities and Exchange Commission is preparing to charge him with failing to disclose material information to shareholders and insider trading. Countrywide, which is under criminal investigation, enforced low lending standards for clients who wanted to buy home mortgages—practices that are blamed for triggering the financial collapse. Mozilo’s also facing civil suits in four states for improper lending practices at Countrywide, which Bank of America bought for $2.5 billion last July.

Things might be looking up for those hoping for an overhaul of America’s financial system: The Obama administration wants to regulate the financial instruments that helped bring about the financial crisis and bankrupt some big Wall Street names—including AIG. The proposal to rein in the so-called dark markets, which trade a range of derivatives, will require congressional action. A securities law would be amended so that most derivatives would have to be traded by Securities and Exchange Commission- and Commodity Futures Trading Commission -regulated clearinghouses. Those clearinghouses “would require traders to maintain enough money in reserve so they could cover losses in any investments gone bad,” The Washington Post reports. In a two-page letter to congressional leaders, Treasury Secretary Tim Geithner asked for swift approval of the plan.

Burmese opposition leader Aung San Suu Kyi—who’s been under house arrest for 13 of the last 16 years—will be charged for allegedly entertaining an American man who swam across a lake to her home to visit her. Suu Kyi, a Nobel Peace Prize winner, might be the victim of a setup, pro-democracy activists say. The security around her lakeside home was tightened on Tuesday after the government alleged that John William Yettaw of Missouri—who’s also been detained—spent two days there. The country’s military junta also arrested Suu Kyi’s physician, who has been caring for her as her health worsens.

News break from the AP: President Obama has added a man to his female-dominated short list to replace Supreme Court Justice David Souter. Sources tell the news wire the president is considering more than the reported six people for the post, and one of the add-ons is Carlos Moreno, a California judge who voted to legalize gay marriage in the state. The other possible picks include U.S. Appeals Court judges Sonia Sotomayor and Diane Pamela Wood, Solicitor General Elena Kagan, Michigan Gov. Jennifer Granholm, and Homeland Security Secretary Janet Napolitano. Obama is under pressure to nominate the court’s first Hispanic judge, and he’s also widely expected to name a woman. But surprises could be in store: Sources say he’s considering some people who haven’t yet been named publicly and has yet to narrow down his list.

Will an old man in the Amazon be able to tug at moviegoers’ heartstrings like Wall-E? The stars lined the red carpet at the opening of the Festival de Cannes Wednesday, as Pixar premiered its latest, Up. A decidedly odd sight: Many of the stars strutted their stuff while wearing 3-D glasses. Those in attendance included Tilda Swinton, newly single juror Robin Wright Penn, and the French cultural minister. Anticipation is high for the premieres of Quentin Tarantino’s WWII epic, Inglourious Bastards, as well as Heath Ledger’s last performance, in The Imaginarium of Doctor Parnassus.

Some lucky bailout recipients, like Goldman Sachs and JPMorgan Chase, are anxious to repay TARP funds. American International Group is not one of them: Speaking before Congress on Wednesday, Chairman Edward Liddy—recruited by the government to run the company last September—estimated that it would take three to five years to completely overhaul the insurance giant and pay back the taxpayers. So far, the company has received more than $170 billion from the Treasury and Federal Reserve, The New York Times reports. Liddy said AIG would repay the money in part by selling many of its subsidiaries. He also addressed executive bonuses, saying he and his fellow execs were “well aware” of the controversy. The chairman of the oversight committee keeping an eye on AIG complained during the hearing of “a shroud of secrecy” obscuring the company’s collapse and subsequent bailout.

After 19 long years in space, the Hubble Telescope needs a little makeover—but the repairs are extremely risky. Two days after blasting off from Florida and chasing it 832,000 miles through orbit, NASA astronauts aboard the space shuttle Atlantis grabbed the bus-size telescope with their space craft’s robotic arm in a dangerous and delicate operation. But the seven-strong crew isn’t done yet: They will take five space walks wearing $10 million spacesuits to replace Hubble’s batteries and install other features to make the scope 70 times more powerful than before. NASA has a second shuttle on standby in case the crew needs rescuing—500-degree temperature swings could throw a wrench in the astronauts’ maintenance work.

Somewhere, Ronald McDonald is quaking in his boots. Massachusetts has just passed the nation’s toughest statewide restaurant labeling laws—requiring chain restaurants like McDonald’s and Taco Bell to post calorie counts for their food on all menus. The law comes in response to a state study that found more than half of the adults living in Massachusetts are obese. But will the reminder that a Big Mac is unhealthful be enough to deter fast food lovers? New York City enacted similar a similar law last year, and The Daily Beast can report that there are still overweight people living in the area.

The wait is over: Martin Scorsese will direct a film about famed crooner Frank Sinatra’s life. The director has finally secured the Sinatra family’s blessing—no easy task—and Sinatra’s youngest daughter, Tina, will be an executive producer on the project. The film’s long been rumored to be attached to Scorsese, whom Tina told has journalists she would trust with her father’s story because the director is also Italian-American. Phil Alden Robinson, who wrote and directed Field of Dreams, has signed on to write the screenplay.

Under fire for its role in the "Craigslist murder," Craigslist is planning to partition its "erotic services" ads into a new adult section of the site that will be monitored by the site's staff. The Illinois attorney general announced the switch today, noting that current ads on the popular and free listing site will expire over the next week. In April, a masseuse was found murdered, allegedly the victim of a medical student in Boston who found her via Craigslist.

Nice to see that the Republican Party is thinking seriously about its future. According to Roger Simon at Politico, “A member of the Republican National Committee told me Tuesday that when the RNC meets in an extraordinary special session next week, it will approve a resolution rebranding Democrats as the ‘Democrat Socialist Party.’” Chairman Michael Steele wrote a memo opposing the resolution last month, saying it “will accomplish little than to give the media and our opponents the opportunity to mischaracterize Republicans,” but when Simon asked an RNC member if Michael Steele would have to use the label in all his speeches, he said “who cares?”

Could it have been just last week that investors were flush with confidence that the worst was behind us? With the release of a report documenting lower-than-expected consumer spending in April—a drop of 0.4 percent from March—the bear market is rearing its head again. Another report showing that foreclosed U.S. homes went up by 32 percent last month is adding to the bad news, pushing the Dow down 184.22 points, or 2.2. percent, to close at 8,284.89. The Nasdaq and S&P both shed around 3 percent. Observers worry the recent gains by the market will be short-lived. “This is a market that’s tired [and it’s] using the retail news as an excuse to head lower,” says one expert.

Speaking today at a congressional panel on the torture of detainees, Philip Zelikow, a State Department official during the Bush years, said that the manner in which detainees were interrogated was a "collective failure" on the part of the administration. Zelikow, said that he had personally criticized the torture memos written by the Department of Justice in a memo of his own three years ago, but that it was ignored. He also said that unnamed Bush administration officials tried to censor it entirely by gathering and destroying copies of the memo. During the hearing Senator Sheldon Whitehouse bemoaned the smoke and mirrors surrounding the torture issue, describing a "near avalanche of falsehood" that has obstructed the committee's investigation.

Since beginning his tour of the Middle East, Pope Benedict has struggled to navigate the controversial issues tied to the Holy Land. His endorsement of a Palestinian state while standing on its soil will certainly not diminish the din of criticism. Standing beside the Palestinian president, the Pope said, "The Holy See supports the right of your people to a sovereign Palestinian homeland in the land of your forefathers, secure and at peace with its neighbors, within internationally recognized borders." He also sent a message of solidarity to those living in the Gaza strip, acknowledging "the hardship and the suffering" of life in the territory. The Pope, who has described himself as "a messenger of peace," also offered moral support to the dwindling Christian minority in Palestine.

Obama’s next priority? “President Barack Obama, meeting behind closed doors with congressional leaders of both parties today, stepped outside of the West Wing between sessions this morning to urge Congress to enact sweeping healthcare reforms by the end of this year,” reports the Los Angeles Times. "The stars are aligned," Obama said. “We've got to get it done this year. . . . We don't want any excuses." Nancy Pelosi then assured him that the House is ready to move. "Our goal is to have a healthier America," she said, promising that legislation "will be on the floor by the end of July—I am quite certain."

Google has unveiled its latest innovations, furthering the company's unsettling goal of eventually making all the world's information search-able. Some of the new programs include "rich snippets" that give users a more detailed, accurate summary of search results. Another is "Google Squared," an experimental program that presents data culled from all over the Internet in spreadsheet form. For example, search "small dog," and "a table pop(s) up showing photographs of various dogs, their origin, weight and height in a clear and simple layout." The last innovation? "Skymap," a program for cell phones that uses GPS data to give people a tailor-made map of the stars from their point of view. Cool... and creepy.

Sir Allen Stanford was on the way to to being bumped up on the Forbes list of the 400 richest people in America when everything came crashing down. In a story published in GQ, Stanford himself reflects on the magnitude of the accusation that he swindled thousands of investors by running a multi-billion dollar Ponzi scheme, likening it to losing a loved one. Whether or not Stanford ends up being convicted, there is little doubt that he was top dog on Antigua. His influence over all facets of public life on the island are remarkable, and he used his connections to U.S. politicians to affirm this status. In the good old days before the SEC swooped in, Anituga was a white collar criminal's paradise, with Stanford as its esteemed host.

The International Criminal Court recently indicted Sudan’s president for war crimes including pillaging, rape, torture, and murder—and sources say he’ll soon be charged with genocide—but Omar al-Bashir claims the 300,000 reported civilian deaths since the conflict in Darfur began in 2003 are greatly exaggerated. The country’s campaign against African rebel groups has increasingly targeted civilians over the past six years, but Bashir tells the BBC he had a responsibility to fight the insurgency. “We have never fought against our citizens, we have not killed our citizens,” he said. Bashir claims rebel groups are using human shields, and he estimates the death toll at less than a tenth of the 300,000 reported by the United Nations.

Details about Stephen Gaghan’s upcoming film based on Malcolm Gladwell's nonfiction bestseller Blink have surfaced, answering the question many have been asking: “How can this book be turned into a feature?” Risky Business reports that Al Pacino is in talks to star in the story of the relationship between a Wall Street man and his estranged 20-something son, an idealistic drifter working as a teacher at a downtown New York school. Pacino’s character notices that the son has the talent to size up people and situations on a dime, and tries to use this to both help the boy find himself, and to make some money off of him. The project had initially been set up at Universal but it's been reincarnated as an indie, with William Morris Independent's Incentive film fund coming up with the financing.

Time to nail AIG to the wall again? “[S]enior officials at the Federal Reserve Bank of New York received details about the bonuses more than five months before the firestorm erupted and were deeply engaged with AIG as well as outside lawyers, auditors and public relations firms about the potential controversy,” writes The Washington Post. “But the New York Fed did not raise the alarm with the Obama administration until the end of February.” Treasury Secretary Timothy Geithner was the head of the New York Fed at the time it learned of the bonuses, though his name does not surface in the documents obtained by the Post. The Post also notes that, while employees at AIG’s Financial Products division promised to return about a third of the $165 million paid out in bonuses, “it is unclear when or how much will be returned.’

After deadlocked juries resulted in two mistrials, a Florida jury has finally convicted five men of conspiring with Al Qaeda in the “Liberty Six” terrorism case. One man, Naudimar Herrera, was acquitted of the charges, while the group’s ringleader, Narseal Batiste, was charged on all four counts of terrorism. The FBI rounded up the men in a sting operation in 2006, when an FBI informant posed as an Al Qaeda member. Batiste and his men took footage of various FBI buildings for the informant, who promised to help Batiste in his plan to blow up Chicago’s Sears Building. The defense team said the informant’s actions were a “setup,” and no incriminating materials were found when the FBI raided the group’s warehouse at the end of the sting. Batiste faces up to 70 years in prison.

Democrats who were briefed by the CIA on harsh interrogation techniques, which critics consider torture, are now claiming that the agency released the information about the briefings in order to deflect attention from itself. According to Sen. Carl Levin, who sat on the Senate Intelligence Committee and was briefed on interrogation techniques five times between 2006 and 2007, “There is so much embarrassment in some quarters [of the CIA] that people are going to try to shift some of the responsibility to others.” The document in question lists 40 instances in which the CIA briefed members of Congress between September 2002 and March 2009, fueling claims that House Speaker Nancy Pelosi and other top officials have long known about waterboarding and other tactics but did little to stop them. “Because you brief or notify doesn’t mean there’s any less responsibility of the CIA,” said Intelligence Committee Chairwoman Dianne Feinstein, who argued that the agency was seeking political cover by releasing the documents.

Even on weeknights, the White House is a party house. The Obamas hosted a star-studded poetry jam Tuesday night that President Obama said was meant to “celebrate the power of words.” Michelle, meanwhile, told guests to “enjoy, have fun, and be loose.” Several writers of various backgrounds performed, including James Earl Jones and Mayda del Valle. Director Spike Lee, ABC News anchor George Stephanopoulos, and even veep Joe Biden were spotted in the crowd, enjoying music from bassist Eric Lewis and singer Esperanza Spalding. “Our goal really is to bring the house alive,’’ White House social secretary Desiree Rogers said. Since Inauguration Day, the Obamas have hosted Sheryl Crow, Stevie Wonder, Fergie from the Black Eyed Peas, and Paul Muldoon, a Pulitzer Prize-winning poet from Ireland.

The day after his son murdered five of his fellow soldiers in Iraq, Wilburn Russell, 73, said that the Army “broke” his son. John M. Russell was at a stress center to transfer out of active duty, and was undergoing tests that he didn’t realize were tests, his father said, “so they broke him.” "I hate what that boy did," said the elder Russell. "We're sorry for the families, too. It shouldn't have happened." John Russell’s son, John Russell II, said "He's not a violent person. He's just a loving, caring guy. He doesn't like to see anyone get hurt. For this to happen, it had to be something going on that the Army's not telling us about."

The economy may be bottoming out, but the stimulus has hardly gotten started: According to The New York Times, only 6 percent, or $45.6 billion, of the $787 billion stimulus package has been spent so far, mostly in the form of Medicaid and unemployment benefits. Through the first week of May, the Department of Transportation had spent only $11 million on roadwork projects. “The intent of the stimulus program was to pump money into the economy quickly, and many members of Congress said at the time of its passage that speed was of the essence. But the huge program has been a challenge to administer for both a new administration and for states and local governments grappling with their own fiscal problems.” The Obama administration insists that the stimulus is right on schedule.

Their share prices may have stabilized, but President Obama isn’t finished tinkering with the banks just yet: “The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money,” reports The Wall Street Journal. The initiative, still in its early stages, will attempt to peg pay to long-term performance, as opposed to the current bonus system that rewards short-term risks. Options include “using the Federal Reserve's supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.” The government stresses it won’t try to set pay limits or micromanage, but the banks insist the current structure is necessary to keep employees from defecting to private equity, hedge funds, and foreign banks.

Good news for Madoff victims: About $12 billion was withdrawn from Madoff’s accounts in 2008, half of that within three months of his Ponzi scheme’s implosion. “Those figures offer a bit of hope for Mr. Madoff’s thousands of defrauded customers,” writes The New York Times. “Under federal law, the trustee overseeing the Madoff bankruptcy can sue to retrieve that money from the investors who withdrew it.” The trustee in charge of recovering victims’ money, Irving H. Picard, filed two lawsuits yesterday seeking returns of $6.1 billion. One targets $1 billion from Harley International, a hedge fund in the Cayman Islands, while the other targets $5.1 billion from funds and partnerships managed by Jeffry Picower. The lawsuits allege that both groups “should have realized that their profits were too high and too consistent — and Mr. Madoff’s paperwork and procedures were too sloppy — to be legitimate” and goes on to accuse Picower of “participating in a web of transparently false transactions with Mr. Madoff that were aimed at compensating him for ‘perpetuating the Ponzi scheme’ at the expense of other investors.” On Monday, The Daily Beast's Allan Dodds Franks broke details of the investigation, including news that Picard had found Madoff's circle was broader than originally thought.