The collapse of mortgage giants Fannie Mae and Freddie Mac were key elements in the financial meltdown of 2008. It's no secret that Democrats under Bill Clinton had used both organizations as personal piggybanks to reward loyal friends. Note: President Bush put a stop to such gross patronage during his Administration.
We all know about the tens of millions in bonuses Fannie Mae paid to Franklin Raines, former Clinton White House Budget Director and Jamie Gorelick, former Clinton Deputy Attorney General. (So far no angry ACORN protests outside their palatial homes and no demand by Democrats in Congress that the money be returned).
But what continues to go largely unreported is the role that White House Chief of Staff Rahm Emanuel played at Freddie Mac and the compensation he earned for showing up for board meetings six times a year. Later, as a candidate for congress Emanuel received more in campaign contributions from Freddie Mac than any other candidate.
With all the outrage over AIG bonuses why no outrage over the role Democrats played in the Fannie Mae, Freddie Mac mess?
Rahm Emanuel's profitable stint at mortgage giant
By Bob Secter and Andrew Zajac
March 26, 2009
...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.
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.
[B]uried deep in corporate and government documents on the Freddie Mac Freddie Mac scandal is a little-known and very different story involving Emanuel.
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.
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.
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.