Chief of Staff desigate Rahm Emanuel was on the Board of Directors of Freddie Mac when the firm was hit by a scandal, it has been revealed.
According to ABCNews.com:
President-elect Barack Obama's newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot "red flags," according to government reports reviewed by ABCNews.com.
President-elect Barack Obama's newly appointed chief of staff, Rahm Emanuel, served on the board of directors of the federal mortgage firm Freddie Mac at a time when scandal was brewing at the troubled agency and the board failed to spot "red flags," according to government reports reviewed by ABCNews.com. According to a complaint later filed by the Securities and Exchange Commission, Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002.
Emanuel was not named in the SEC complaint but the entire board was later accused by the Office of Federal Housing Enterprise Oversight (OFHEO) of having "failed in its duty to follow up on matters brought to its attention."
In a statement to ABCNews.com, a spokesperson said Emanuel served on the board for "13 months-a relatively short period of time."
Emanuel was appointed to the Board by Bill Clinton and served there until he resigned in May 2001 to run for Congress.
The Associated Press notes:
Clinton appointed Emanuel to mortgage giant Freddie Mac's board, a post that paid him at least $292,774 in director's fees, according to a financial disclosure report Emanuel filed in 2002 when he ran for Congress. Emanuel served on the board when Freddie Mac misstated its earnings by $5 billion for 2000-2002. When the problem was uncovered in 2003, three top Freddie Mac executives were forced out.
And the Wall Street Journal writes:
Mr. Obama's choice of Mr. Emanuel to lead his White House staff through the economic crisis symbolizes the awkward balancing act that Democrats will face as they reshape the financial industry that they have also cultivated for political support.
Mr. Emanuel earned $16.2 million in a two-year stint working in Chicago for investment-banking firm Wasserstein Perella & Co. He also served on the board of Freddie Mac, the mortgage giant that was nationalized this year in the financial crisis.
It is interesting that Barack Obama seems to surround himself with Freddie Mac and Fannie Mae alumns. While Emanuel has not been charged with any wrongdoing, it certainly stinks that people associated (i.e., Jim Johnson, Jaime Gorelick, Frainklin Raines) with the failed two mortgage firms were a part of his campaign or now being selected to be a part of his administration.
It also underscores that the financial meltdown can be laid at the feet of the Democrats.
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