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Emanuel Got $320K For Freddie Mac Stint

From the Chicago Tribune:

White House Chief of Staff Rahm Emanuel and Senior Adviser Valerie Jarrett wait for the start of President Barack Obama’s news conference in the East Room of the White House in Washington, Tuesday, March 24, 2009.

Rahm Emanuel’s profitable stint at mortgage giant

Short Freddie Mac stay made him at least $320,000

By Bob Secter and Andrew Zajac

March 26, 2009

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…

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.

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

Because of Freddie Mac’s federal charter, the board in Emanuel’s day was a hybrid of directors elected by shareholders and those appointed by the president.

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…

Financial disclosure statements that are required of U.S. House members show Emanuel made 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. The document did not detail whether he profited from the sale.

Sarah Feinberg, a spokeswoman for Emanuel, said there was no conflict between his stint at Freddie Mac and Obama’s vow to restore confidence in financial institutions and the executives who run them. At the same time, Feinberg said Emanuel now agrees that presidential appointees to the Freddie Mac board "are unnecessary and don’t have long enough terms to make a difference."

Former President George W. Bush voluntarily stopped making such appointments following Falcon’s assessment of their uselessness.

In an interview, Falcon said the Freddie Mac board did most of its work in committees. Yet proxy statements that detailed committee assignments showed none for Emanuel, Free or Ickes during the time they served in 2000 or 2001. Most other directors carried two committee assignments each.

Contrary to the proxy statements, Feinberg said she believed that Emanuel served on board committees that oversaw Freddie Mac’s investment strategies and mortgage purchase activities. But Feinberg acknowledged she had no official documents to back up that assertion.

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. The documents, obtained by Falcon for his investigation, were "commercial information" exempt from disclosure, according to a lawyer for the Federal Housing Finance Agency.

Emanuel’s board term expired in May 2001, and soon after he launched his Democratic congressional bid…

In his investigation, Falcon concluded that the board of directors on which Emanuel sat was so pliant 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.

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.

During a September 2000 board meeting—midway through Emanuel’s 14-month term—Freddie Mac lobbyist R. Mitchell Delk laid out a strategy titled "Political Risk Management" aimed at influencing lawmakers and blunting pressure in Congress for more regulation. Through Delk’s initiative, Freddie Mac sponsored more than 80 fundraisers that raised at least $1.7 million for congressional candidates despite a federal law that bans corporations from direct political activity.

Emanuel spokeswoman Sarah Feinberg said Emanuel "can’t remember the meeting or topic" but might have been in attendance when Delk outlined his plans. Feinberg downplayed the significance of the fundraiser thrown for Emanuel, which brought in $7,000, stressing that it was but one of many hosted by Delk. The event stood out in at least one respect, however…

"Rahm was a good friend of mine. He was on Freddie Mac’s board. He was very much supportive of housing," said Delk, who resigned under pressure in 2004.

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.

Feinberg said Emanuel recused himself "from deliberations related to Freddie Mac to avoid even the appearance of favoritism, impropriety or a conflict of interest."

We posted back in November 2008 about Mr. Emanuel’s amazingly profitable work-free stint at Freddie Mac.

But it can’t be remembered too much.

And we only had him getting $250,000 for his burdensome weeks of influence peddling.

Meanwhile, lest we forget, Mr. Emanuel first got elected to Mr. Blagojevich’s House seat.

Which of course was all too fitting.

(Thanks to CGardner for the heads up.)

This article was posted by Steve on Thursday, March 26th, 2009. Comments are currently closed.

12 Responses to “Emanuel Got $320K For Freddie Mac Stint”

  1. proreason says:

    Rahm the Impaler (no gay allusion intended) has certainly been quiet lately, hasn’t he?

    No doubt he has been working feverishly behind the scenes to improve the lot of the American people.

  2. Reality Bytes says:

    Now – please turn your hymnals to page 666

    O come, O come, E-ma – – a – nu – – el
    And with your thugs from ga – a – tes of hell
    We mourn what you’ve done to us here
    Until a new Reagan soon may soon appear.

    Rejoice! rejoice!

    Emmanuel from hell
    In jail we pray you someday may dwell.


    • catie says:

      Excellent! Let’s hope he winds up in a cell and that he is forced to give his 320K to either Henrietta or Peggy the Moocher.

  3. All reference to things which are not good as relates to the ONE and his closest guardians magically disappear, or become altered.. This too will pass and become unimportant.

  4. U NO HOO says:

    Steve, would you please make the printing below photos much darker and/or larger so we old guys with old eyes can read it easier?


    Thank you.

    • Reality Bytes says:

      U NO: You know, somewhere in the unpublished parts of the Obama plan for health care savings, you can bet that “old guy” will become a thing of the past via rationing. Read Chris Buckley’s “Boomsday” – a hilarious fictional read that is starting to look all too real.

    • Steve says:

      “Steve, would you please make the printing below photos much darker and/or larger so we old guys with old eyes can read it easier?”

      I’ve made that font a little larger. See if it is better for you.

  5. Grzegorz says:

    Anybody else think that Rahm Emanuel looks like Joseph Goebbels?

  6. proreason says:

    It’s almost as if the criminal minds in Congress have figured out that sending peasants with pitchforks to string up bankers might not be the absolute best way to work the country out of the financial “crisis”, given that Congress isn’t smart enough to wipe their own asses, and the bankers are the ones who have the combinations to the vaults.


    Apparently, the unconstitutional grandstanding is withering away, and the 90% tax bill is forgotten until The Moron’s poll numbers need another shot of adrenline.

    No chance, of course, that Rahn the Impaler (no gay implication intended) little “compensation” issues had anything to do with it. After all, $320K is chump change to a political scam artist who has gourged himself at the public money trough for decades.

  7. Professor_Repulso says:

    “We need a Greed Czar.
    “After all, with the precedent TARP sets, we now stand at the precipice of a new age of fairness. We’ve long targeted certain groups with tax policy, most notably those who earn more than the average burned-out, ponytailed, jowl-breakdown, closet-socialist ex-hippie. But now we’ve opened up a whole new world of targeted taxation. And given what people complain about, I can envision what’s on the horizon.
    “We can have the Barry Bonds bill, to tax the earnings of athletes above that $250,000 threshold. I mean, I always hear how sportsmen are overpaid, and why should they earn more than a nurse or schoolteacher? Bonds himself was making a cool $22 million annually (plus endorsements) as of 2006, and that was partially the result of using steroids to pump himself up bigger than a government bureau. Skin ’em to the bone, I say.
    “Then we can have the John Edwards Act, to tax trial lawyers on all earnings above, you guessed it, 250G. Think about it: Why should a man get rich bankrupting hospitals? Oh, don’t misunderstand me. Greedy doctors and hospitals should be broken, but that can be left to Barack Obama and socialised (British spelling. Since we’re becoming like Europeans governmentally, let’s really get into the spirit) medicine. There’s no reason for greedy lawyers to get rich performing that noble task.
    “Finally, I have a few more suggestions: The Ludacris Act and the Russell Simmons Act, for rappers and rap moguls. The Madonna Act, The Cher Act, The Dan Rather Act, and, before my act gets old, I’ll say that I’m not intellectually capable of itemizing America’s millions of sin phenomena in need of remedy. Only the government can do that. But I can provide a basic outline.
    “We need to address all the Seven Deadly Sins. The climate is right for a Greed Czar right now, but we also need a Wrath Czar (hate), a Sloth Czar, a Gluttony Czar, an Envy Czar, a Lust Czar and a Pride Czar. And at risk of seeming presumptuous, I now present by nominees for these posts.
    “Greed Czar: Rod Blagojevich or William Jefferson. No one understands a problem like someone who has been there. Democrat Louisiana Congressman Jefferson has gotten his hands dirty, down in the gutter, wallowing in gobs of money, as evidenced by the fact that authorities found $90,000 worth of marked bills in his freezer. He well understands the lure of cold cash. As for Blagojevich…’nough said. We’ll choose the one who manages to stay out of prison.
    “Lust Czar: This is a no-brainer – Bill Clinton. Barney Frank is a close second for once having a call-boy operation run out of his home, though.
    “Hate Czar: Barack Obama’s longtime friend and pastor Jeremiah Wright, and Reverend Joseph Lowery can be his assistant. Who better to make sure that “white will embrace what is right”?
    “Envy Czar: Since Winston Churchill said the ‘gospel of envy’ is socialism, I’ll have to go with Vermont Senator Bernie Sanders. I respect the fact that, unlike other Senate socialists, he’s honest enough to proclaim what he is.
    “Gluttony Czar: There are many worthy of mention in this category. One that comes to mind is Democrat Gerald Nadler, a congressman from my state who was once affectionately called ‘Congressman Waddler’ by former Senator Alphonse D’Amato. Yet the obvious choice is a relative unknown, Republican member of the Mississippi house W. T. Mayhall, Jr. Representative Mayhall made all the other contenders look like poseurs in 2008 when he distinguished himself by proposing HB 282, a bill that would have prohibited restaurants in his state from serving fat people. It also would have had the positive unintended consequence of addressing greed in restaurateurs, since fat people constitute about 75 percent of the industry’s customers in Mississippi.
    “Pride Czar: This is easy – Al Gore. Who else but the man who invented the Internet and knows he can save the planet from imminent ecological disaster?
    “Sloth Czar: I’m the man. If you understood my lifestyle, you’d know why. But I’m sure I’d be good at enforcing industriousness on everyone else.
    “Moreover, we may be approaching a fortuitous intersection of political will and scientific discovery. It is being reported that scientists are developing the ability to read minds with brain scanning equipment, which means we perhaps won’t have to long rely on merely circumstantial indicators of sinful thoughts such monetary compensation or dalliances with interns. I mean, just because a medical assistant only makes $19 an hour doesn’t mean he isn’t flushed with feelings of greed upon receiving his paycheck; just because a man is never caught in adultery doesn’t mean lust is absent from his heart. But such things won’t matter soon, as government will just be able to determine if a subj…er, citizen is manifesting untoward thoughts. So if little Johnny exhibits brainwaves associated with greed upon collecting his 50 cents for a glass of lemonade at the stand, Uncle Sam can tax a portion of it sufficient to make his brainwaves, uh…as Barack Obama would say, change.
    “Of course, I don’t claim to be a seer or even a futurist. But I do know about the power of precedents and can recognize another giant step toward a perfection of the human spirit that only complete submission to the angels of government can bring. You may say that I’m a dreamer, that it can’t be done. I say something else.
    “Yes, we can.”

    It’s Time for a Greed Czar by Selwyn Duke

  8. mybrotherkeeper says:

    Where are the Republicans at about this and all the other Democratic fingerprints on our economic crisis?!?

    Oh, I forgot, we are supposed to be “classy” — like Bush!

    Maybe if he had opened up his mouth, it would have been newsworthy enough for even the MSM to cover it, and truth would have received a witness. As it is, we are all still waiting, hoping the Republicans will find their tongues.

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