According government reports reviewed by ABC News, Barack Obama’s newly appointed chief of staff, Rahm Emanuel, was a board director at Freddie Mac during the mortgage scandal and the board failed to spot “red flags.”
More than a few economists believe that actions by Freddie Mac began the country’s “economic meltdown.” This year the federal government took over Freddie Mac and Fannie Mae “pledging at least $200 billion in public funds.” The Justice Department is currently investigating the accounting procedures of Freddie Mac .
ABC reviewed a complaint filed by the Securities and Exchange Commission stating that Freddie Mac “misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2002.”
Emanuel was appointed to the Freddie Mac board by President Bill Clinton in 2000. Although Emanuel was not specifically named in the SEC complaint, the entire board was accused by the Office of Federal Housing Enterprise Oversight (OFHEO) of having "failed in its duty to follow up on matters brought to its attention."
A spokesperson for Emanuel told ABC news that while on the board for a “short” 13 months, Emanuel "believed that Freddie Mac needed to address concerns raised by Congressional critics."
Freddie Mac agreed to pay a $50 million penalty in 2007 to settle the SEC complaint and four top executives of the Federal Home Loan Mortgage Corporation were charged with negligent conduct and, like the company, agreed to settle the case without admitting or denying the allegations.
Emanuel resigned when he ran for Congress in 2001.