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The issue with Palin (and GW Bush) using personal email accounts for government business is that there are state and federal laws regulating the retention of official government records.
Email is a "government record" of the people's business.
As exhibited by this incident, there is also the national security issue of using insecure, unencrypted private mail to transmit sensitive messages.
This is an issue, because if Palin achieves federal executive status, it would be a really bad idea for her to use Yahoo.com to send supposedly secret information over the internet.
Most people do not realize that their emails and instant messages are transmitted "in the clear" and can be easily intercepted.
The use of private email for public business has been also abused by the Bush White House to evade official scrutiny.
This is quite a bit different than a private business owner (not subject to FOIA regulations) using personal email to transmit business information - though for publicly traded companies, Sarbanes-Oxley may also come into play.
Finally, (in Palin's case) it shows poor judgment and a lack of forethought to use such easily cracked security questions and answers on an email account that contains communications related to the people's business.
After all, Palin supposedly works for the people of Alaska and Bush supposedly works for the taxpayers of America.
This is why so many folks have so much to say about it...