Thread: Probe demand of Rahm Emanuel at Freddie as Money Rolls In

Odd Couple Demands Probe of Rahm Emanuel at Freddie as More Money Rolls In
Updated December 24, 2009

FOXNews.com

Two strange bedfellows have asked Attorney General Eric Holder to investigate President Obama's right-hand man, chief of staff Rahm Emanuel, for his potential role in the near collapse of mortgage giants Fannie Mae and Freddie Mac, just as Treasury lifts the cap on their bailout money.

WASHINGTON -- Two strange bedfellows have asked Attorney General Eric Holder to investigate President Obama's right-hand man, chief of staff Rahm Emanuel, for his potential role in the near collapse of mortgage giants Fannie Mae and Freddie Mac.

The letter by Jane Hamsher, founder of the liberal Firedoglake Web site, and Grover Norquist, Americans for Tax Reform Chief, was sent Wednesday, one day before the Treasury Department announced that it will lift the $400 billion financial cap on loans to the government-sponsored enterprises to make sure they stay afloat.

It also arrived just before the Federal Housing Financial Authority announced Thursday that it would place salary caps on 11 of the companies' top executives.

Since the financial bailout began, Fannie and Freddie have received $111 billion in taxpayer loans. In August, the administration projected the cost for rescuing Fannie and Freddie would total $170 billion.

Treasury Department officials said the cap will be replaced with a flexible formula to ensure the companies can stand behind the billions of dollars in mortgage-backed securities they sell to investors.

"The amendments to these agreements announced today should leave no uncertainty about the Treasury's commitment to support these firms as they continue to play a vital role in the housing market during the current crisis," the department said in a statement.

FHFA issued its own ruling Thursday that the base salary for officers besides the CEO, CFO and COO cannot exceed $500,000 a year. That means five officers are exempt and 11 will now face a cap.

The capped executives will be allowed to get up to one-third of their salary in additional incentive bonuses. Any deferred cash salary -- like stock salary received by private company executives who received bailouts -- will be paid partly as a means to keep executive officers working at the GSEs.

FHFA acting chief Edward DeMarco said the compensation deal is to mimic the one set up by pay czar Kenneth Feinberg for private companies.

"The enterprises must attract and retain the talent needed to accomplish (their) objectives. We have worked with the enterprises' boards and sought the guidance of the Special Master of TARP Executive Compensation, to develop competitive compensation packages that benefit from the structural standards created for the TARP-assisted firms," DeMarco said.

Eight of the then-top 11 executives at Fannie Mae left the company just before the U.S. government stepped in with its bailout, as did the four highest paid executives at Freddie Mac.

Treasury officials will provide an updated estimate for Fannie and Freddie losses when President Obama sends his 2011 budget to Congress in February. The formula Treasury will use will provide the institutions with a sufficient cushion based on the losses they may incur over the next three years.

But Hamsher and Norquist want to know now whether the bailout was in part the result of corrupt practices by Emanuel while he was a board member at Freddie in 2000-2001.

They cited a Chicago Tribune story that described a plan by the executives and the board to use accounting tricks to show shareholders they were reaping massive profits even as they continued down a path of risky investments. The profits were then used to justify the executives' big bonuses. When Emanuel left the board to enter Congress in 2002, he was qualified for $380,000 in stock and options and $20,000 cash.

In their letter to Holder, Hamsher and Norquist added that the White House has stonewalled any inquiries into Emanuel's role on the board, noting that the acting inspector general was "stripped of his authority earlier this year by the Justice Department, relying on a loophole in a bill Mr. Emanuel cosponsored and pushed through Congress shortly before he left for the White House."

The White House has not appointed a new inspector general to determine whether crimes were committed by the board to defraud investors, the two noted, and the statute of limitations for empaneling a grand jury is about to run out.

"Under the influence of Rahm Emanuel, the White House is moving a trillion-dollar slush fund into corruption-riddled companies with no oversight in place. This will allow Fannie and Freddie to continue to purchase more toxic assets from banks, acting as a back-door increase of the TARP without congressional approval," Hamsher and Norquist wrote.

The two wrote they would like the Justice Department to "begin an investigation into the cause of Fannie and Freddie's conservatorship, into Rahm Emanuel's activities on the board of Freddie Mac (including any violations of his fiduciary duties to shareholders), into the decision-making behind the continued vacancy of Fannie and Freddie's inspector general post, and into potential public corruption by Rahm Emanuel in connection with his time in Congress, in the White House, and on the board of Freddie Mac."

Asked about the letter on Thursday, White House spokesman Bill Burton did not address the allegations, saying, "I have the feeling that Rahm's job is very safe."

The Associated Press contributed to this report.
http://www.foxnews.com/politics/2009/12 ... ds-probe...

Hamsher, Norquist Team Up To Call For Resignation Of Rahm Emanuel


By David Dayen
Firedoglake.com
December 23, 2009


You may have read about this at the mothership, but Jane Hamsher and Grover Norquist are teaming up as an unusual coalition, writing a letter to Attorney General Eric Holder calling for an investigation into the activities of White House Chief of Staff Rahm Emanuel while on the board of Freddie Mac in 2000 and 2001, and for Emanuel to resign.

The matter of Emanuel’s work at Freddie Mac has been documented in the media. He spent one year on the board of the quasi-governmental agency and pocketed $320,000. The Chicago Tribune alleges that Emanuel’s time on the board coincided with a major accounting scandal at the agency, and that he did little or nothing to stop it. There were also political scandals:

During (Emanuel’s) 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.

Hamsher, Founder & Publisher of Firedoglake.com, and Norquist, President of Americans for Tax Reform, allege that the White House has blocked an investigation into Emanuel’s time on the Freddie Mac board, in an effort to run out the clock on the statute of limitations, which expires in 2011. Currently, there is no Inspector General overseeing the mortgage giant. Hamsher and Norquist note that the White House blocked a Freedom of Information Act request into Emanuel’s activities after he was named Chief of Staff.

The charges are serious, but many will doubtless be taken aback by the ideological differences among the two who penned the request.

The letter is below.

Dear Attorney General Holder,

We write to demand an immediate investigation into the activities of White House Chief of Staff Rahm Emanuel. We believe there is an abundant public record which establishes that the actions of the White House have blocked any investigation into his activities while on the board of Freddie Mac from 2000-2001, and facilitated the coverup of potentially criminal actions until the 10 year statute of limitations has run out.

The purpose of this letter is to connect the dots to establish both the conduct of Mr. Emanuel and those working with him to thwart inquiry, and to aid you to act speedily so that the statute of limitations does not run out before the Justice Department is able to empanel a grand jury.

The New York Times reports that the administration is negotiating to double the commitments to Fannie and Freddie for a total of $800 billion by December 31, in order to avoid the congressional approval which would be needed after that date. But there currently is no Inspector General exercising independent oversight over these entities. Acting Inspector General Ed Kelly was stripped of his authority earlier this year by the Justice Department, relying on a loophole in a bill Mr. Emanuel cosponsored and pushed through Congress shortly before he left for the White House. This effectively ended Mr. Kelly’s investigation into what happened at Fannie and Freddie.

Since that time, despite multiple warnings by Congress that having no independent Inspector General for a federal agency that oversees five and a half trillion dollars in mortgages is a serious oversight, the White House has not appointed one.

We recognize that these are extremely serious accusations, but the stonewalling by Mr. Emanuel and the White House has left us with no other redress. A 2003 report by Freddie Mac’s regulator indicated that Freddie Mac executives had informed the board of their intention to misstate the earnings to insure their own bonuses during the time Mr. Emanuel was a director. But the White House refused to comply with a Freedom of Information Act request from the Chicago Tribune for those board minutes on the grounds that Freddie Mac was a “commercialâ€

obama will stop the investigation and use chicago style thuggery to make sure it never sees the light of day