Rivals say Emanuel ‘looked the other way’ during financial scandal
By Fran Spielman and Abdon M. Pallasch Staff Reporters January 18, 2011 1:10PM
Updated: April 7, 2011 3:18PM
Two candidates for mayor used former President Bill Clinton’s visit Tuesday to suggest that Clinton’s plum appointment of Emanuel to the board of government mortgage giant Freddie Mac means Emanuel shares some blame for the nation’s foreclosure crisis.
Emanuel “sat on his hands, looked the other way and took the cash” when presented with an “Enron-style” scandal at Freddie Mac, said challenger Gery Chico, who is expected to be endorsed by Chicago’s Fraternal Order of Police today.
Standing in a foreclosed home on the West Side in a separate appearance, challenger Miguel del Valle said, Emanuel “needs to visit a home like this and explain what his role with Freddie Mac was.’’
After leaving Clinton’s White House, Emanuel parlayed his political connections into an investment banking job in which he earned $16 million over three years. He also made at least $320,000 as a Freddie Mac director after he was given what Chico calls a “sweetheart appointment” by Clinton.
During his 14 months there, “Freddie Mac loosened its own lending standards and began taking on riskier subprime loans,’’ del Valle said.
Chico alleged that Emanuel and other Freddie Mac board members were told about “an illegal scheme to misstate profits” from risky investments. The goal was to “push earnings onto the books in future years,” making Freddie Mac “appear profitable” and help maximize bonuses for company brass, Chico said. The scandal forced Freddie Mac to restate $5 billion in earnings and pay $585 million in fines and legal settlements.
“ He sat on his hands, looked the other way and took the cash,” Chico said.
Emanuel’s spokesman, Ben LaBolt, said Emanuel was not on Freddie Mac’s audit committee and was not named in any of the critical reports about the scandal.