Reply #43: Actually, there IS abundant evidence of conflict of interest and potential malfeasance and coverup.

[inna]

1) While on the board of Fannie and Freddie from 2000-2001, Emanuel was "aware, and supportive of" not just unsavory, but ILLEGAL practices, as reported by the Chicago Tribune ( http://www.chicagotribune.com/news/politics/obama/chi-rahm-emanuel-profit-26-mar26,0,2144542,full.story , http://www.swamppolitics.com/news/politics/blog/2009/03/rahm_emanuels_freddie_mac_prof.html ):

"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 report by the Office of Federal Housing Enterprise Oversight (OFHEO), the oversight board for Fannie/Freddie, “provided evidence that non-executive members of the Board were aware, and supportive of, management in this regard, including the use of derivatives to improperly manage the earnings of Freddie Mac.”)

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.

The board was throttled for its acquiescence to the accounting manipulation in a 2003 report by Armando Falcon Jr., head of a federal oversight agency for Freddie Mac. The scandal forced Freddie Mac to restate $5 billion in earnings and pay $585 million in fines and legal settlements. It also foreshadowed even harder times at the firm.

2) The White House blocks any investigation into Emanuel's activities while on the board of Freddie Mac from 2000-2001

Rahm claims he just “doesn’t remember” what happened during that time, but the White House turned down the Tribune’s FOIA request for the board minutes and correspondence from the time Rahm was there. They claimed it was “commercial information,” even though at the time of the request Freddie was wholly owned by the federal government.


3) Amazingly, the White House eliminates ANY oversight of Fannie and Freddie and basically blocks any investigation into fraud in the financial crisis and the abuses in the credit markets!

What's stunning is that Obama's Department of Justice basically fired the Inspector General responsible for overseeing and investigating of wrongdoing or other abuses related to the Federal Housing Finance Agency (i.e., Fannie and Freddie)
( http://www.huffingtonpost.com/2009/11/10/fannie-and-freddie-fire-t_n_353018.html ), and, amazingly, the administration failed to make a new appointment - despite multiple warnings that it's a critical gap in oversight - and left the agency (which is responsible for some $6 trillion in home mortgages) without ANY oversight ( http://www.huffingtonpost.com/2009/12/02/white-house-told-multiple_n_377437.html http://www.nakedcapitalism.com/2009/11/freddie-and-fannie-oust-outside-supervisor.html )


4)And now, they announce (on Christmas eve no less) that the slush fund for Fannie and Freddie for picking up toxic mortgage is unlimited: http://www.washingtonpost.com/wp-dyn/content/article/2009/12/24/AR2009122402367.html

Treasury uncaps credit line for Fannie, Freddie

The Obama administration pledged on Thursday to back beleaguered mortgage finance giant Fannie Mae and Freddie Mac, no matter how big their losses may be in the next three years.

The administration waited until financial markets had closed on Christmas eve to make the announcement, thwarting chances for critics to have their voices heard.

Under a law put in place before the government seized the two mortgage agencies in September 2008, Treasury Secretary Timothy Geithner had until the end of this year to increase the limit without asking Congress for approval.

The Treasury's announcement came just hours after the companies said their chief executives would be paid up to $6 million on an annualized basis for 2009.