That Didn’t Take Long: Rahm Emanuel Transition Co-Chair Resigns Over Ethics Violations

That Didn’t Take Long: Rahm Emanuel Transition Co-Chair Resigns Over Ethics Violations

By Doug Powers  •  February 26, 2011 06:01 PM

**Written by Doug Powers

As you would expect in Chicago politics, all potential Team Rahm transition co-chairs were subjected to stringent background checks… except for the ones who weren’t:

(CNN) – A co-chair of Chicago mayor-elect Rahm Emanuel’s transition team resigned from her new post Friday after it was revealed that she left her high-level state job last summer over ethics violations, CNN confirmed Saturday.

Judy Erwin previously served as the executive director of the Illinois Board of Higher Education and served on then-candidate Barack Obama’s Education Policy Committee during his 2008 presidential campaign. On Thursday, she was named to Emanuel’s transition team and according to a news release, Erwin was also recently hired as managing director for ASGK Public Strategies, the communication management firm founded by former Obama senior adviser David Axelrod.
[…]
But a recent decision by the state Executive Ethics Commission says Erwin used her state e-mail account and phone to campaign for Obama, engaging in campaign fundraising activity and using staff resources to help plan her trip to the 2008 Democratic National Convention.

A full 24 hours from appointment to resignation for ethics reasons. Is that a new Chicago record? Highly unlikely.

Given the man under whom Emanuel studied the art of smooth transition at the executive level, I’d expect more problems in the very near future.

**Written by Doug Powers

Max Baucus on Obamacare’s hidden agenda – redistribution of wealth

Thursday, March 25, 2010
Posted by: Hugh Hewitt at 5:08 PM

Max Baucus is the Chair of the Senate Finance Committee, and the Democrat most responsible fo Obamacare’s final shape other than Nancy Pelosi.

In an unusual speech on the Senate floor moments ago, Max Baucus declares that the “healthcare bill” to be  “an income shift, it is a shift, a leveling to help lower income middle income Americans.”  Baucus continued, “[t]oo often, much of late, the last couple three years the mal-distribution of income in America is gone up way too much, the wealthy are getting way, way too wealthy, and the middle income class is left behind.  Wages have not kept up with increased income of the highest income in America.  This legislation will have the effect of addressing that mal-distribution of income in America.”

Max Baucus on Obamacare’s hidden agenda – redistribution of wealth
http://www.youtube.com/watch?v=rY4Qbv7gPbo&feature=player_embedded

Baucus’ candor is appreciated, though the fact that he waited until the bill passed to announce the real agenda behind the massive tax hikes isn’t a profile in courage.  And the seniors on fixed income who are about to lose Medicare Advantage would laugh at Baucus’ pseudo-populism.

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Rahm Emanuel’s profitable stint at mortgage giant

Rahm Emanuel’s profitable stint at mortgage giant

Short Freddie Mac stay made him at least $320,000

Chief of Staff

The White House Chief of Staff Rahm Emanuel listens as President Barack Obama delivers remarks to open the White House Forum on Health Reform in the East Room of the White House. (Tribune photo by Zbigniew Bzdak / March 5, 2009)

 

Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago’s Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation’s mortgage woes and fulfilling the administration’s pledge to impose responsibility on the financial world.

Emanuel’s Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation’s current economic mess.

Though just 49, Emanuel is a veteran Democratic strategist and fundraiser who served three terms in the U.S. House after helping elect Mayor Richard Daley and former President Bill Clinton. The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker a decade ago.

In business as in politics, Emanuel has cultivated an aggressive, take-charge reputation that made him rich and propelled his rise to the front of the national stage. But buried deep in corporate and government documents on the Freddie Mac scandal is a little-known and very different story involving Emanuel.

He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals.

The board met no more than six times a year. 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.

Falcon, director of the Office of Federal Housing Enterprise Oversight, found that presidential appointees played no “meaningful role” in overseeing the company and recommended that their positions be eliminated.

John Coffee, a law professor and expert on corporate governance at Columbia University, said the financial crisis at Freddie Mac was years in the making and fueled by chronically weak oversight by the firm’s directors. The presence of presidential appointees on the board didn’t help, he added.

“You know there was a patronage system and these people were only going to serve a short time,” Coffee said. “That’s why [they] get the stock upfront.”

Is Rahm Emanuel in trouble?

Is Rahm Emanuel in trouble?

Rick Moran
Not legal trouble, mind you. But the Chicago Sun Times is reporting that Rahmbo’s contacts with Blagojevich over Obama’s  senate seat are much more extensive than either Obama or Emanuel have led us to believe.

President-elect Barack Obama’s incoming chief of staff, Rahm Emanuel, was pushing for Obama’s successor just days after the Nov. 4 election, sources told the Chicago Sun-Times.

Emanuel privately urged Gov. Blagojevich’s administration to appoint Obama confidante Valerie Jarrett, and the Sun-Times learned Tuesday that he also pressed that it be done by a certain deadline.

Jarrett was initially interested in the U.S. Senate post before Obama tapped her to be a White House senior adviser, sources say.

The disclosure comes days after Obama’s camp downplayed Jarrett’s interest in the post.

At one point, an “emissary” who said he represented Jarrett had discussions with Blagojevich chief of staff John Harris and the governor about naming Jarrett to the post, according to a criminal complaint.

In addition to the discussions, Emanuel submitted a list of names of candidates suitable to the Obama team to the governor’s administration. Jarrett was not among those names because she had pulled herself out of the running at that point, a source with the Obama camp said.

The Sun Times also printed a rumor picked up by the inconsistent Michael Sneed that Emanuel was on 21 of the taped conversations made by the Feds. That could mean almost anything. It could mean that other topics were discussed between the two besides the senate seat. It could also mean that Emanuel kept calling Blago back urging him to make up his mind already and appoint one of the approved candidates. Of course, it could also mean that Emanuel was negotiating something with Blago. We’ll have to wait to find out if Emanuel even addresses the substance of his conversations with Blago.

There has always been one curious angle to the Jarrett for senate story. According to Jim Lindgren’s timeline culled from the criminal complaint, Obama let it be known on the weekend of November 8-9 that his choice to replace him was Jarrett. On Monday the 10th, Blago had a conference call with several advisors and perhaps even the “emissary” noted above where he discussed several scenarios that would enrich himself by selling the senate seat. (By this time, anyone involved in the negotiations could see that Blagojevich was seeking monetary considerations in return for the seat.)
 

That very night – November 10 – Obama named Jarrett to his White House staff. As Lindgren points out:

The likeliest scenario is that one of the many participants in Blagojevich’s Monday phone calls either floated his plans to the Obama transition team to assess their response or tipped off the Obama camp about the reckless ideas that Blagojevich had planned.

In any event, within hours of Blagojevich substantially expanding his circle of confidants, the Obama camp withdrew Jarrett’s name from consideration and attributed that withdrawal to the President’s wanting Jarrett in the White House. And the Obama staffers went out of their way to depict this as Obama’s choice, rather than Jarrett’s, which would have been more common. The report claims Obama’s involvement in the decision and suggests a direct effort to undercut the idea that Obama was pressuring Blagojevich to appoint Jarrett.

It could be coincidence that Obama pulled Jarrett out of a prickly ethical situation and the two events may not even be connected. What the two timelines suggest however, is that Obama either knew or suspected that Blago was trying to sell the seat and, to his credit, wanted no part of it.

This raises the equally troubling question if he knew, why didn’t he inform the authorities? This is the real exposure of the Obama camp to trouble; the idea that they are a lot less “transparent” than they are bragging they are. And the problem for Emanuel is that he may have listened to Blago’s attempted bribes and did nothing to inform Fitzgerald.

Would it be enough to cost Emanuel his job? The fact that he is not speaking to the press suggests that it is that serious.