Mayoral Candidates Remember Rahm's Freddie Mac Past

Gery Chico and Miguel del Valle took the opportunity of Bill Clinton's visit to Chicago to slam Rahm Emanuel for his “cozy relationship” with Clinton, his ties to mortgage giant Freddie Mac and the national housing crisis. Clinton was in Chicago for a private fundraiser for Emanuel. “When Rahm Emanuel had the chance to blow the whistle on corrupt activity taking place on the Freddie Mac board, he sat on his hands, looked the other way and took the cash,” Chico told CBS2. “It was a character test and Rahm Emanuel failed.” Citing a Tribune report that Emanuel was paid almost half a million dollars as a board member at Freddie Mac and was informed by board executives of a plan to mislead shareholders about profits, Chico compared Emanuel's experience to Enron, calling it “an illegal scheme to misstate profits” from risky investments “almost exactly like Enron did.” “We can’t afford a mayor who would look the other way when presented with this kind of corruption," Chico said.

In a separate event held on the West side, Miguel del Valle held a press conference in an abandoned, foreclosed home owned by Bank of America, one of 11 bank-owned homes on the block. “Rahm Emanuel, who wants to be mayor of Chicago, needs to visit a home like this and explain what his role with Freddie Mac was,” del Valle said in a statement. “The voters need to know the truth,” del Valle said. “Families like the one who lived in this home deserve to know the truth.” Del Valle also called for a more socially responsible investment policy, modeled on the one recently passed in San Jose, California, that would divert money from banks serving as city depositories that have slowly and inconsistently modified loans. Bank of America ranks near the bottom in speed and frequency of loan modifications. “I would like to invite Bank of America officers to visit this house,” del Valle said. “There are neighbors on both sides of this house. If this house goes up in flames, their lives are in danger.”

Emanuel's campaign has denied the candidate's responsibility in the scandal, saying he was not on the audit committee and wasn't named in any reports critical of the scandal. The Tribune's report, however, notes that Armando Falcon, the director of the Office of Federal Housing Enterprise Oversight, concluded "that the board of directors on which Emanuel sat was so pliant that Freddie Mac's managers easily were able to massage company ledgers. They manipulated bookkeeping to smooth out volatility, perpetuating Freddie Mac's industry reputation as 'Steady Freddie,' a reliable producer of earnings growth. Wall Street liked what it saw, Freddie Mac's stock value soared and top executives collected their bonuses."