Does anyone out there think that taxpayers should demand that Emanuel Rahm, President Obama’s Chief of Staff, should return the $320,000 he reaped from his time at Freddie Mac? That Rahm was a Freddie Mac board member is no secret, The Chicago Tribune reports. But apparently he did almost nothing for it, The Tribune says in a package on Emanuel and his free ride at Freddie Mac, an early bailout recipient:
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 piece goes on to describe how Freddie hatched a plan to raise money for politicians during Emanuel’s tenure — from which Emanuel benefited after he resigned and ran for Congress. Freddie Mac ended up paying a $3.8 million fine for the activity. The Trib then quotes John Coffee, a lawyer and corporate governance expert, at Columbia University:
“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.”
So does Emanuel get a free ride or should he return the money? True, it’s chump change compared to the million-dollar-plus bonuses handed out on Wall Street. But it ain’t exactly chicken feed for someone who sat by as Freddie Mac embraced disastrous policies. (And the number may actually be higher, only Emanuel and his accountant really know.) The Trib says that Freddie Mac has so far tapped $14 billion in government guaranteed-loans and will soon need another $30 billion to stay in business.