March 26, 2009

Keep repeating the mantra...

"We inherited this crisis. We inherited this crisis. We inherited this crisis..."

By the time [current White House Chief of Staff Rahm] Emanuel joined Freddie Mac, the company had begun to loosen lending standards and buy riskier sub-prime loans. It was a practice that later blew up and contributed to the current foreclosure crisis.

In his investigation, Falcon concluded that the board of directors on which Emanuel sat was so pliant that Freddie Mac's managers easily were able to massage company ledgers. They manipulated bookkeeping to smooth out volatility, perpetuating Freddie Mac's industry reputation as "Steady Freddie," a reliable producer of earnings growth. Wall Street liked what it saw, Freddie Mac's stock value soared and top executives collected their bonuses.

Another focus of Freddie during Emanuel's day—and one that played to his skill set—was a stepped-up effort to combat congressional demands for more regulation.

During a September 2000 board meeting—midway through Emanuel's 14-month term—Freddie Mac lobbyist R. Mitchell Delk laid out a strategy titled "Political Risk Management" aimed at influencing lawmakers and blunting pressure in Congress for more regulation. Through Delk's initiative, Freddie Mac sponsored more than 80 fundraisers that raised at least $1.7 million for congressional candidates despite a federal law that bans corporations from direct political activity.
And the howls of OUTRAGE and subpoenas and calls for people like Emanuel to have their bonuses taxed at 90% or more start coming in three...two...never. Yeah. It's good to be a friend of The One.

(h/t)

Update: A clarification is in order. The article doesn't mention whether or not Emanuel got bonuses for his 14-month stay at Freddie Mac. What it talks about is that for his duties, which apparently "required little effort," he made $320,000. Also, two years after leaving the mortgage firm, he "reported an additional sale of Freddie Mac stock worth between $100,001 and $250,000." That's still a hell of a lot of money for helping to cause the mortgage meltdown.

Posted by: Sean M. at 11:10 PM | Comments (3) | Add Comment
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