President-elect Barack Obama’s newly appointed chief of staff, Rahm Emanuel, served on Freddie Mac’s board of directors when scandal was brewing at the federal mortgage firm.
Emanuel was named to the board by President Clinton in 2000 and resigned when he ran for Congress in May 2001.
According to a complaint filed by the Securities and Exchange Commission, Freddie Mac misreported profits by billions of dollars in an effort to deceive investors between the years 2000 and 2002, ABC News reports.
The SEC charges that in 2000, 2001, and 2002, Freddie Mac misrepresented its income to “present investors with the image of a company that would continue to generate predictable and growing earnings.”
The role of Freddie Mac’s 18-member board of directors was sharply criticized by the Office of Federal Housing Enterprise Oversight in 2003. A report from the agency stated that the board had been informed of the suspect accounting tactics but “failed to make reasonable inquiries of management,” and “failed in its duty to follow up on matters brought to its attention.”
Emanuel was not named in the SEC complaint.
An Emanuel representative told ABC News that Emanuel’s 13 months of service on the board was “a relatively short period of time,” and added that while on the board Emanuel “believed that Freddie Mac needed to address concerns raised by Congressional critics.”
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