Friday, November 07, 2008

Pres-Elect Obama's New Chief of Staff Has Freddie Mac Issues

If he had a (R) after his name, the media might have made more of this. But Rahm Emanuel isn't a Republican. He's a Democrat enforcer that President Elect Barack Obama chose to be his Chief of Staff.

Emanuel is a tough guy, but he's got skeletons in his closet that should give people pause as to Obama's choice and judgment.

Emanuel was on the board of Freddie Mac when Freddie Mac was cooking the books. He didn't blow the whistle on the situation or the fact that the entity was about to go broke over the subprime mess, which he and his fellow Democrats chose to ignore for years in the name of affordable housing. As ABC News now reports:
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

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.
No one has accused Emanuel of wrongdoing in those complaints, but one really ought to question his judgment and inability to note the serious problems facing Freddie Mac.

Jammie also points out this particular issue with Emanuel's tax situation. Apparently, he doesn't pay any property taxes because he's declared his home the office of a charitable foundation. Nearby homes of similar size pay upwards of $6,000 a year in property taxes. Emanuel pays nothing.

Of course, I've pointed out previously that Emanuel has issues stemming from what he knew about the Tim Mahoney mess in Florida. He was responsible for getting Mahoney elected, and then learned about the affairs, and worked to keep the news from leaking. I'm curious as to why the media isn't digging deeper to find out what Emanuel knew about that situation.

Hot Air notes the possible civil and criminal liability facing Emanuel if it can be shown he signed off on the bogus numbers generated by Freddie Mac.
This is no small matter. Had this happened when Sarbanes-Oxley was in effect, Emanuel would have had to sign off on those numbers under penalty of perjury. He could be liable for criminal prosecution. As it is, his actions and omissions as a board member may still result in civil and criminal liability, if the SEC discovers that he had a hand in the fraud committed at Freddie Mac, or if Emanuel knew about it and failed to act to stop it.

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