Posted on 02/22/2010 6:38:35 AM PST by BIOCHEMKY
Today, Grover Norquist and I are calling for an investigation into Rahm Emanuel’s activities at Freddie Mac, and the White House’s blocking of an Inspector General who would look into it. The letter follows: (Letter printed in body of comment below)
Rahm Emanuel was appointed to the board of Freddie Mac in February of 2000 by Bill Clinton, after serving as White House political director where he was a vocal defender of Mr. Clinton during the Monica Lewinski matter. He served there until leaving to run for Congress in 2001, which qualified him for $380,000 in stock and options and a $20,000 annual fee.
According to the Chicago Tribune, during his tenure the board was notified by executives of their plans to misstate the earnings of Freddie Mac: “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.” (3/5/2009)
The Tribune further reported that “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.”
In December 2003, a report (PDF) was written by Armando Falcon Jr., head of the entity charged with oversight of Freddie Mac, the Office of Federal Housing Enterprise Oversight (OFHEO). The report asserts that company executives “demanded whatever level of earnings management was necessary to achieve steady rapid growth in Enterprise profits.” It also “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,” citing notes from a June 2, 2000 meeting of the Board of Directors (p. 24).
The OFHEO report concluded that board had “failed in its duty to follow up on matters brought to its attention.” The SEC filed a complaint (PDF) saying that Freddie Mac had “misreported profits by billions of dollars in order to deceive investors between the years of 2000 and 2002,” per ABC News.
In Congress, Rahm Emanuel worked to pass a bailout of Fannie and Freddie, cosponsoring the Housing and Economic Recovery Act of 2008, which also dissolved OFHEO. It moved their regulatory authority to the Federal Housing Finance Agency (FHFA), which took Fannie and Freddie under conservatorship in September 2008. The same act abolished the Federal Housing Finance Board (FHFB) and replaced it with the FHFA.
After Mr. Emanuel was named Chief of Staff, the White House denied a Chicago Tribune Freedom of Information Act request for information on his Freddie Mac activities: “The Obama administration rejected a Tribune request under the Freedom of Information Act to review Freddie Mac board minutes and correspondence during Emanuel’s time as a director. The documents, obtained by Falcon for his investigation, were “commercial information” exempt from disclosure, according to a lawyer for the Federal Housing Finance Agency.” However, at the time of the request Freddie Mac was no longer a “commercial” enterprise, having been taken over by the government in September of 2008.
According to ABC News, the Justice Department is in possession of these records, yet no indictments have been forthcoming: “Freddie Mac records have been subpoenaed by the Justice Department as part of its investigation of the suspect accounting procedures” they reported in November 2008.
When the OFHEO and the FHFB were abolished, FHFB employees were automatically transferred to the FHFA and retained their “same status, tenure, grade, and pay.” Ed Kelly, who had been the Inspector General for the FHFB, was looking into the wrongdoing of Fannie and Freddie at the FHFB when the Justice Department, using the authority of the 2008 law Emanuel cosponsored, stripped him of Inspector General authority and removed him from oversight of Fannie and Freddie.
The Huffington Post obtained copies of an internal memo (PDF) on the ruling by the Justice Department’s Office of Legal Counsel. They report that “the ruling came in response to a request from the Federal Housing Finance Agency itself — which means that a federal agency essentially succeeded in getting rid of its own inspector general.”
The memo states that “Congress did not intend for the FHFA to have an Acting or interim IG pending the confirmation of a PAS IG.” But according to the Huffington Post, “the chairmen of the House and Senate banking committees, Rep. Barney Frank (D-Mass.) and Sen. Chris Dodd (D-Conn.), both told HuffPost that Congress had no intention whatsoever of revoking Kelley’s authority to operate as an IG.”
According to Neil Barofsky, the Special Inspector General overseeing the TARP bank bailout: “It’s a serious gap in oversight,” Barofsky told HuffPost of Ed Kelley’s loss. “It does impact what we do. Ed was a member of our TARP IG council and a partner in our investigative work.” Barofsky said he still investigates areas of FHFA, but his mandate only covers “a sliver of what they do.”
The Huffington Post further reports that it is the White House’s failure to appoint an Inspector General that has stalled the process: “Federal Housing Finance Agency officials insist[] that they notified Congress about the problem and pressed the Obama administration “multiple times” to appoint someone to the position tasked with rooting out wrongdoing at Fannie Mae, Freddie Mac and the Federal Home Loan Bank,” they report.
I addition to his role as White House Chief of Staff, Mr. Emanuel is heavily involved in decisions made by the Treasury Department . The Wall Street Journal reported in May that “Rahm wants it” has become an unofficial mantra in the Department. It is therefore of grave concern that the New York Times reports the Treasury is negotiating to increase their commitment to Fannie and Freddie, in the absence of independent oversight: “Fannie Mae and Freddie Mac, which buy and resell mortgages, have used $112 billion — including $15 billion for Fannie in November — of a total $400 billion pledge from the Treasury. Now, according to people close to the talks, officials are discussing the possibility of increasing that commitment, possibly to $400 billion for each company, by year-end, after which the Treasury would need Congressional approval to extend it. Company and government officials declined to comment.”
Attorney General of the United States of America U.S. Department of Justice 950 Pennsylvania Avenue, NW Washington, DC 20530-0001
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 cover up of potential malfeasance 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 support your acting 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 that would be needed after that date. But there currently is no Inspector General exercising independent oversight of 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 $6 trillion 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 “commercial” entity, even though it was wholly owned by the government at the time the request was made.
If the Treasury approves the $800 billion commitment to Fannie and Freddie by the end of the year, it will mean that 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.
Before the White House commits any more money to Fannie and Freddie, we call on the Public Integrity Section in 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.
We also call for the immediate appointment of an Inspector General with a complete remit to go after this information.
We both come from differing political ideologies. One of us is the conservative head of a transparency foundation, and the other is the publisher of a liberal political blog. But we make common cause today out of grave concern for the future of our country in the wake of corruption-riddled bailouts. These bailouts continue to rob Main Street to benefit Wall Street, and, because of that, we together demand the resignation of Mr. Emanuel, a man who has steadfastly worked to obstruct both oversight and inquiry into the matter. Rahm Emanuel’s conflicts of interest render him far too compromised to serve as gatekeeper to the President of the United States.
We will lay out the details further below, and are available at your earliest convenience to meet with you directly.
Sincerely,
Jane Hamsher
Grover Norquist
Thank you for posting this.
Since the deal was made with David Gregory’s wife,
don’t expect NBC to report anything.
Bookmark.
*ping*
Rahm Emanuel is supposedly also formerly the Head of Mossad North America.
Additionally, the Chicago investment firm where he was employed in Sept. of 2008 made significant investments effective Sept. 11, 2008 that were favored by losses in both airline and insurance stocks.
Other Rahm Emanuel scuttlebut: Emanuel, along with of Rupert Murdoch’s Fox News Network journalist, John P. Ellis (son of George Herbert Walker Bush’s sister, Nancy Bush),
the late Robert Nicolas Booth, and current Congressman Eric Cantor (R-VA), and current Israeli Prime Minister Benjamin Netanyahu, have been involved in the THEFT of a $250 BILLION U.S. Treasury Note and up to 2500 metric tons of gold from the U.S. Treasury and the U.S. Federal Reserve.
Just scuttlebut?
Emanuel is wallowing in trillions of stimulus and bailout dollars. G/S got $17 Billion from Ohaha's AIG bailout---how much of that $17B went to Emanuel---that was wire-transferred to offshore banks?
An interesting early chapter in the Goldman-Emanuel relationship took place in the setting of Bill Clinton’s campaign for the White House in 1992. Clinton hired Emanuel as his chief fundraiser.
At the same time, however, Emanuel was on the payroll of Goldman Sachs, receiving $3,000 per month from the firm to “introduce us to people,” in the words of one Goldman partner at the time. This is certainly a noteworthy relationship, but it’s one that has almost entirely escaped scrutiny.
Did Emanuel reveal to Ohaha all his Wall Street ties as the trillion dollar fimnancial bailouts commenced? (smirk)
In his four terms in Congress, Emanuel raised $74,750 from Goldman, making the firm his number four source of funds. Goldman helped Emanuel. So how has Emanuel helped Goldman? The most obvious answer is in Emanuel’s lead role in shepherding the “$700 billion” bailout—----first proposed by former a Goldman CEO Henry Paulson—through the skeptical House.
How much of the trillion dollar stimulus did Emanuel---suck up----that was wire-transferred to offshore banks? Emanuel's dual citizenship is crucial----since Israel is the only place in the world where an individual can debark, bring a suitcase full of cash to a bank and nobody asks where it came from or if taxes were paid on it. Emanuel's father is an Israeli and Rahm once volunteered for the military in that beleagured country.
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BACKSTORY Rahm Emanuel was appointed to the Freddie Mac board Feb 2000 by Bill Clinton, after serving as Clinton's White House political director. Emanuel was a vocal defender of Clinton after scumbag Monica Lewinski gave Clinton BJ's in exchange for a top federal job....and may have aided and abetted the multiple sex rendezvous.
Emanuel then left to run for Congress in 2001...this qualified Emanuel for $380,000 in stock and options and a $20,000 annual fee..... plus all this lowlife could steal.
In Congress, the America-hating worm put the US in financial jeopardy----he passed a bailout of Fannie and Freddie, cosponsoring the Housing and Economic Recovery Act of 2008, which also dissolved OFHEO. It moved their regulatory authority to the Federal Housing Finance Agency (FHFA), which took Fannie and Freddie under conservatorship in Sept 2008.
The same act abolished the Federal Housing Finance Board (FHFB) and replaced it with the FHFA.
CASE IN POINT We kept reading and hearing about Obama's rushing Congress to approve the $787 billion stimulus package early this year. Now uber-Lobbyist Thomas Hale Boggs, Esq, interviewed by ABC nightly news several weeks ago, said, "there's $2 TRILLION federal stimulus waiting to be distributed". Boggs said he was getting unprecedented numbers of calls from all over the US......from those who want a piece of it. (Boggs is the son of former Cong Hale Boggs and brother of former ABC-TV commentator Cokie Roberts).
CASE IN POINT Obama tapped VP Joe Biden to "allocate" the stimulus $$trillions. Biden's family was involved with Texas financier H. Allen Stanford, now charged with an $8 billion offshore fraud, the WSJ said. The Bidens $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and a Stanford Financial Group entity, and was known as the Paradigm Stanford Capital Management Core Alternative Fund, the paper said. Stanford-related companies marketed the fund to global investors and also invested about $2.7 million of their own money in the fund, the paper said, citing a lawyer for Paradigm.......... Paradigm Global Advisors is owned through a holding company by the VP's son, Hunter, and Joe Biden's brother, James, according to newspapers.
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Behind The Real Size of the Bailout (its $14 trillion)
Mother Jones | Dec. 21, 2009 / FR Posted Jan 04, 2010, by E. Pluribus Unum
A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle:
Treasury Department bailout programs
Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].
Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokerages—as much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].
TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid. Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets." GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion [PDF].
Citigroup asset guarantee: In this joint Treasury, Federal Reserve, and FDIC program, the government agreed to cover potential losses to a Citigroup asset pool worth $301 billion [PDF].
T-bill auctions to fund the Fed: In November 2008, the Treasury announced that it would borrow $260 billion to fund the Supplementary Financing Program, whose proceeds were deposited with the Federal Reserve.
TARP overpayment: This June, the Congressional Budget Office estimated that the federal government would lose $159 billion from its TARP loans and investments due to changes in their market value. (So far, Treasury has earned $14.4 billion in dividends from TARP.)
Bank of America asset guarantee: In this joint Treasury, Federal Reserve, and FDIC program, the government agreed to cover potential losses to a Bank of America asset pool worth $118 billion. Bank of America has withdrawn from the program and has paid the government $425 million [PDF] in compensation.
Potential international fund liabilities: In April, the United States committed up to $100 billion to fund the International Monetary Fund's lending and ensure that it "has adequate resources to play its central role in resolving and preventing the spread of international economic and financial crises."
HAMP: The Home Affordable Modification Program offers financial incentives to lenders to modify home loans. $75 billion in federal funds has been committed; $50 billion of that comes from TARP is set aside to modify mortgages not owned or guaranteed by Frannie Mae, Freddie Mac or other government-sponsored entities.
Treasury exchange stabilization fund: A temporary program to insure the holdings of publicly offered money market mutual funds.
GSE credit facility program: Additional credit made available to Fannie Mae and Freddie Mac. Expires December 31, 2009.
Federal Reserve bailout programs
Commercial Paper Funding Facility: With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion [PDF] was earmarked for the program.
Mortgage-backed securities purchase: In 2009, the Fed earmarked up to $1.25 trillion to buy investments based on home loans.
Term Asset-Backed Securities Loan Facility: TALF provides financing to investors who are buying asset-backed securities. In February 2009, the Fed and Treasury announced an expansion of the program to generate up to $1 trillion in new lending.
Foreign Central Bank Currency Liquidity Swaps: The Fed has provided $755 billion [PDF] for currency liquidity swaps with foreign central banks.
Money Market Investor Funding Facility: The MMIF was established in October 2008 to provide loans for investors buying certificates of deposit and commercial paper. According to SIGTARP, $600 billion [PDF] was allocated for the program.
Treasury Purchase Program: In March 2009, the Fed was authorized to purchase up to $300 billion of treasury securities.
GSE Program: In March 2009, the Fed increased its purchases of debt from government-sponsored enterprises (Fannie Mae and Freddy Mac) from $100 billion to $200 billion.
Primary Dealer Credit Facility: The PDCF provides overnight loans to primary dealers (financial firms that can engage in direct transactions with the federal government). The Fed allocated $147.7 billion [PDF] for it in 2009.
ABCP MMMF liquidity facility: The Asset-Backed Commercial Paper (ABCP) Money Market Mutual Fund (MMMF) Liquidity Facility (whew!) provides loans to financial institutions purchasing commercial paper from money market mutual funds. According to SIGTARP, the Fed allocated $145.9 billion for the program in 2009.
JPMorgan Chase/Lehman Brothers: In September 2008, the Fed gave JPMorgan Chase $148 billion in help the near-bankrupt Lehman Brothers.
Open Market Operations: In September 2008, the Fed injected $125 billion into the market by purchasing securities and repurchase agreements, or repos, in which primary dealers borrow cash from the fed.
Tri-Party Repurchase Agreements: The Fed provided $124.6 billion [PDF] for this type of repo in 2009.
Primary Credit: The Fed provided $112 billion [PDF] to offer loans at a discounted rate to eligible institutions in 2009.
Temporary Reserves: Between August and September 2007, the Fed made $93 billion of temporary reserves available for loans to financial firms.
Single-Tranche Repurchase Agreements: In 2009, the Fed offered a total of $80 billion for short-term loans to holders of mortgage-backed securities.
Term Auction Facility: Under TAF, the Fed auctions short-term loans to financial institutions. The amount of loans offered has varied widely; between December 2009 and January 2010, $75 billion in loans will be available.
AIG preferred stock interests, credit, and loan: The Fed provided $53 billion to the struggling AIG in various forms between 2008 and 2009.
AIG Securities Lending Facility: In October 2008, the Fed authorized the Federal Reserve Bank of New York to borrow up to $37.8 billion in securities from AIG.
Maiden Lane II and III (AIG): In 2008, the Fed authorized its New York branch to form three limited liability companies: Maiden Lane, Maiden Lane II, and Maiden Lane III. It provided $52.5 billion to Maiden Lane II and III to assist AIG.
Maiden Lane I (Bear Stearns): The Fed provided $29.8 billion to Maiden Lane I to acquire Bear Stearns' assets and facilitate its merger with JPMorgan Chase.
TSLF: The Term Securities Lending Facility offers Treasury collateral to the Federal Reserve Bank of New York so it can auction weekly loans to financial institutions. $25 billion in loans will be available between November 2009 and January 2010.
TOP: The Term Securities Lending Facility Options Program allowed primary dealers to get TSLF loans in exchange for collateral. At the time of the program's termination in June 2009, $50 billion in loans had been offered.
Expansion of system open market account securities lending: In July 2009, the Fed increased its limit for loans of securities to brokers from $3 billion to $5 billion, for a total of $36 billion [PDF] in new lending.
JPMC/Bear Stearns Loan provided by the Fed.
Liz,
THANK YOU for all of the detail you posted about the reak size of the bailouts for the private financial sector and the financial relationships that involve the FED RESERVE and Treasury subsidiaries.
THANK YOU very much.
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