Mayoral candidate Gery Chico asked some hard questions about front-runner Rahm Emanuel's role in the financial collapse of lender Freddie Mac Tuesday, and in a larger sense the economic collapse of 2008.
Emanuel served on the board of directors of the federal mortgage firm after he left the Clinton White House in 2000. During his time there the Securities and Exchange Commission said Freddie Mac misreported profits by billions of dollars in order to deceive investors between the years 2000 and 2001.
Emanuel was not named in an SEC complaint -- and denies wrong doing -- but Chico says he deserves some of the blame for the scandal.
"He was informed by board executives of a scheme - like Enron," says Chico of Emanuel's role. " When Rahm Emanuel had the chance to blow the whistle - he sat on his hands."
Freddie Mac agreed in 2007 to pay a $50 million fine for it's deceptive practices. Four top executives from the company were charged with negligent conduct and the Federal Housing Enterprise Oversite committee accused the entire board of failing in its duties.
Chico timed the news conference to coincide with a visit by former president Bill Clinton - the man who appointed Emanuel land the Freddie Mac job.
The Chico camp followed up with this statement:
According to a Chicago Tribune report, Emanuel was paid roughly $400,000 to attend no more than nine meetings as a member of the Freddie Mac board. During that time, Emanuel was informed by board executives of a scheme to mislead shareholders about profits, leading to an Enron-type scandal that cost taxpayers more than half a billion dollars in settlements and legal fees, according to the report.
That wasn’t the only scandal that brewed during Emanuel’s tenure. According to the Tribune, while Emanuel was on the Freddie Mac board, the Board was also made aware of a scheme that led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel benefited from one of those parties when he ran for Congress, according to the Tribune.
The Emanuel campaign responded with the following statment.
"Rahm was appointed to the Freddie Mac board by President Clinton because of his work on the Plan for Transformation as Vice Chair of the CHA, and Mr. Chico knows that it's not credible to suggest that Rahm is responsible for the housing crisis which began years after he served on the Board. While he is not being honest about Rahm's record, we will be honest about Mr. Chico's," said Emanuel spokesman Ben Labolt.
"Instead of serving the people of Chicago, Mr. Chico's record shows that he greased the wheels for his special interest clients while serving in city government. When he began serving on the School Board his clients did $500,000 in business with the city, and when his tenure concluded they did over $250 million in business with the city. We know his clients gained -- the question is whether the students of Chicago did."