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November 07, 2008

Emanuel was director of Freddie Mac in 2002

Rick Moran
Just about the time that housing loan giant Freddie Mac began to dole out money to people whose prospects of paying it back were about as good as hitting "21" in Blackjack, newly minted White House chief of staff Rahm Emanuel was sitting on the board of directors of that august institution overseeing the budding catastrophe.

ABC News:

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 (click here to read) but the entire board was later accused by the Office of Federal Housing Enterprise Oversight (OFHEO) (click here to read) of having "failed in its duty to follow up on matters brought to its attention."


First it's easy to understand why they missed all those "red flags." They were too busy waving white ones as they surrendered their responsibility to their shareholders by  basically sweeping the bad news about defaults under the rug by cooking the books.

And while it is tempting to overstate the case about how much Freddie Mac and Fannie Mae policies contributed to the recent financial meltodown, it is crystal clear that Emanuel and his colleagues did nothing to stop it and actively tried to prevent knowledge of the dangers inherent in risky lending practices from reaching Congress.

Interesting folks our new president is hiring, huh?

 



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