December 24, 2009
Fox News reports : 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.
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.
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.”
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.
In their letter to Holder, Hamsher and Norquist wrote 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.
Read the entire article HERE.
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End notes:
Frank Raines, the CEO of Fannie during its downfall received a golden parachute.
Obama, Frank & Dodd, LLP
May 22, 2009
Examples abound of how poorly government run businesses perform, but none compares to the disaster promulgated by Fannie Mae under Franklin Raines. Was Raines qualified to head Fannie Mae? He seemed to have the right college degrees but as we are finding out, those degrees are about as valuable as the prize in a cracker-jack box. Raines greatest qualifications were his Democrat party affiliation and intimate relationship with Barney Frank. What qualified Raines to keep his job were Fannie Mae campaign contributions to House and Senate Democrats, dishonest bookkeeping practices that showed a profit and an inept investigation of his company by his good buddy Barney Frank. For his efforts, Mr. Raines took a cool $90,000,000 in bonuses in addition to his regular salary.
http://www.newmediajournal.us/staff/rubolotta/2009/05222009.htm
Rahm Emanuel tied to Freddie Mac just before its downturn.
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.
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.
Many of those same risky investment practices tied to the accounting scandal eventually brought the firm to the brink of insolvency and led to its seizure last year by the Bush administration, which pledged to inject up to $100 billion in new capital to keep the firm afloat. The Obama administration has doubled that commitment.
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.
Like its larger government-chartered cousin Fannie Mae, Freddie Mac was created by Congress to promote home ownership, though both are private corporations with shares traded on the New York Stock Exchange. The two firms hold stakes in half the nation’s residential mortgages.
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.
Read the rest HERE.
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Don’t hold your breath on this one. The Attorney General Holder has proven to rescind any charges against leftists.
He won’t prosecute the Black Panthers about the voting incident in Pennsylvania.
Holder was part of the pardon for embezzler Rich.
Did Obama know this was about to “break” as news? Will Rahm Emanuel be protected by Executive Order Amending 12425 signed by Obama on December 16th?
Executive Order — Amending Executive Order 12425
EXECUTIVE ORDER
– – – – – – –
AMENDING EXECUTIVE ORDER 12425 DESIGNATING INTERPOL
AS A PUBLIC INTERNATIONAL ORGANIZATION ENTITLED TO
ENJOY CERTAIN PRIVILEGES, EXEMPTIONS, AND IMMUNITIES
By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 1 of the International Organizations Immunities Act (22 U.S.C. 288), and in order to extend the appropriate privileges, exemptions, and immunities to the International Criminal Police Organization (INTERPOL), it is hereby ordered that Executive Order 12425 of June 16, 1983, as amended, is further amended by deleting from the first sentence the words “except those provided by Section 2(c), Section 3, Section 4, Section 5, and Section 6 of that Act” and the semicolon that immediately precedes them.
BARACK OBAMA
THE WHITE HOUSE,
December 16, 2009.
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INTERPOL will now be able to maintain files on US citizens.
By this EO, Obama has conferred diplomatic immunity upon INTERPOL, exemption from being subject to search and seizure by law enforcement, exemption from US taxes, and immunity from FOIA requests, etc.
Obama just declared INTERPOL records immune from search and seizure — “The archives of international organizations shall be inviolable.”
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So again……WHERE is the transparency Obama promised?
It is all about POWER……and MONEY.
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