Why did Senator Dianne Feinstein of California suddenly resign as chair of a powerful military appropriations subcommittee last week? That’s the question much of Washington is asking, and liberal government watchdog groups are apparently not going to give her a pass on the issue. They believe her withdrawal is linked to her subcommittee’s allocation of millions of dollars in defense contracts to companies partly owned by her husband.

The story began two months ago when Metro Newspapers, a group of alternative weeklies in northern California, laid out an impressive array of defense contracts that had been awarded to Perini Corp. and URS Corp., both of which Ms. Feinstein’s husband, financier Richard C. Blum, maintained an ownership stake in.

The articles detailed several instances in which Senator Feinstein apparently pressed for spending on anti-terrorism programs that benefited her husband’s companies. In 2002, she wanted to know from Pentagon officials why Army bases weren’t being protected. The next year, she demanded to know why funds allocated for anti-terror protection had not been spent. As Cybercast News Service reports, “Just over a month later, URS announced a $600 million contract to provide services for U.S. Army bases that included anti-terrorism force protection.”

On another occasion, Ms. Feinstein asked a military official when money would be spent on a facility at Hickam Air Base in Hawaii. URS later announced a $42 million contract to build the facility.

Melanie Sloan, executive director of the liberal group Citizens for Responsible Ethics in Washington, told Metro Newspapers that the issues surrounding Senator Feinstein could be huge. “There are a number of members of Congress with conflicts of interest,” Ms. Sloan said. “But because of the amount of money involved, Feinstein’s conflict of interest is an order of magnitude greater than those conflicts.”

Adding to the mystery is that Senator Feinstein’s office isn’t talking or commenting much on her sudden resignation from a key subcommittee. You can bet that her silence will only encourage reporters to get to the bottom of her reasons for leaving.

~ John Fund at OpinionJournal’s Political Diary [Subscribe here]

A sidenote from LC: Will the mainstream media really be encouraged and followup on Ms. Feinstein’s problem? Doubtful.