After President Clinton named Rahm Emanuel to the board of Freddie Mac in 2000, the current White House Chief of Staff sat on a board of directors deemed “so pliant” by Armando Falcon Jr,. , head of a federal oversight agency for the government-sponsored mortgage giant,
that Freddie Mac’s managers easily were able to massage company ledgers. They manipulated bookkeeping to smooth out volatility, perpetuating Freddie Mac’s industry reputation as “Steady Freddie,” a reliable producer of earnings growth. Wall Street liked what it saw, Freddie Mac’s stock value soared and top executives collected their bonuses.
“The scandal forced Freddie Mac to restate $5 billion in earnings and pay $585 million in fines and legal settlements. It also foreshadowed even harder times at the firm.“Â Not just that, “Freddie Mac reported recently that it lost $50 billion in 2008. It so far has tapped $14 billion of the government’s guarantee and said it soon will need an additional $30 billion to keep operating.”
As Freddie Mac crumbled, putting taxpayers on the hook for $44 billion, not to mention the losses suffered by stockholders, Emanuel pocketed a hefty sum, making “at least $320,000 from his time at Freddie Mac. Two years after leaving the firm, Emanuel reported an additional sale of Freddie Mac stock worth between $100,001 and $250,000.”
It would be nice to know if the aide to the president now trying to find a means to fix the mess created in large part by mismanagement at the Government-Sponsored Enterprises, including Freddie, had done anything to alert the board to the accounting gimmickry of the management, or if he helped further its demise by endorsing their schemes, but
The Obama administration rejected a Tribune [the paper breaking the story] request under the Freedom of Information Act to review Freddie Mac board minutes and correspondence during Emanuel’s time as a director.
As Jonathan Adler puts it, “he was paid a handsome sum and turned a blind eye to accounting and political shenanigans.”
I wonder if he’ll give any of that money back, given what its failure has cost the economy, you know, kind of like some people are suggesting AIG Execs do with their bonuses.
Even after he stepped down from Freddie’s board, Rahm kept taking. As a Congressman, he was the thirteenth largest “recipient of Fannie Mae and Freddie Mac Campaign Contributions from 1989 to 2008,” ahead even of Barney Frank, then a ranking Democrat on the House Banking Committee (later chairman of the House Financial Services Committee).
Kudos to the Chicago Tribune for breaking this story.Â I wonder if other organs of the MSM will pick up on this and demand access to those Board minutes, as they surely would if there were an (R) after Rahm’s name (or that of his boss).
Not only is the president’s Chief of Staff a hard-charging partisan, but he’s been on the take from a corrupt government institution.Â That combination has put Republicans in hot water for lesser offenses.Â And so should it for Rahm Emanuel.