This should come as no surprise.
Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.
One of those allegedly asleep-at-the-switch board members was Chicago’s Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.
Remember these earnings the next time the administration feigns outrage over corporate pay.
He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals.
The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board’s working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.
On Emanuel’s watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass.
But now that one of their own inner circle is caught up in the scandal, the Democrat-led Congress has decided to focus on more important things like NCAA football rankings. Lucky for him.
The accounting scandal wasn’t the only one that brewed during Emanuel’s tenure.
During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago.
Yet, this whole thing is somehow Bush’s fault. Ask yourself who had the power and influence over the organization while it was perpetrating this historic fraud…
In his final year in office, Clinton tapped three close pals: Emanuel, Washington lobbyist and golfing partner James Free, and Harold Ickes, a former White House aide instrumental in securing the election of Hillary Clinton to the U.S. Senate. Free’s appointment was good for four months, and Ickes’ only three months.
…and who wasn’t.
Former President George W. Bush voluntarily stopped making such appointments following Falcon’s assessment of their uselessness.
And remember Obama’s pledge for a “transparent government”? Yeah, nevermind.
The Obama administration rejected a Tribune request under the Freedom of Information Act to review Freddie Mac board minutes and correspondence during Emanuel’s time as a director.
And remember when Republicans in Congress sounded the alarm and called for more oversight and an investigation into Fannie and Freddie? A measure that was stonewalled and roadblocked by Democrats? Guess who else played a part in making sure the calls for increased regulation went nowhere. Yep, your current White House Chief of Staff.
Another focus of Freddie during Emanuel’s day—and one that played to his skill set—was a stepped-up effort to combat congressional demands for more regulation.
And once Rahmbo was elected to the House, he was named to a committee that was responsible for oversight of Freddie Mac. What a non-coincidence.
Then-Freddie Mac CEO Leland Brendsel also hosted a fundraising lunch for Emanuel’s 2002 campaign that netted $9,500 from top company executives. Brendsel was later ousted in the accounting scandal.
Federal campaign records show that Emanuel received $25,000 from donors with ties to Freddie Mac in the 2002 campaign cycle, more than twice the amount collected that election by any other candidate for the U.S. House or Senate.
Emanuel joined the House in January 2003 and was named to the Financial Services Committee, where he also sat on the subcommittee that directly oversaw Freddie Mac. A few months later, Freddie Mac Chief Executive Officer Leland Brendsel was forced out, and the committee and subcommittee launched hearings to sort out the mess, spanning more than a year. Emanuel skipped every hearing, congressional records indicate.
Today’s lesson in political corruption has been sponsored by the letter (D). Now back to your regularly-scheduled recession.