FDL founder Jane Hamster and Grover Norquist demands probe of Rahm Emanuel-Freddie Mac connection

Here's the story:

The letter by Jane Hamsher, founder of the liberal Firedoglake Web site, and Grover Norquist, Americans for Tax Reform Chief, was sent Wednesday, one day before the Treasury Department announced that it will lift the $400 billion financial cap on loans to the government-sponsored enterprises to make sure they stay afloat.
It also arrived just before the Federal Housing Financial Authority announced Thursday that it would place salary caps on 11 of the companies' top executives.

Hamsher and Norquist want to know now whether the bailout was in part the result of corrupt practices by Emanuel while he was a board member at Freddie in 2000-2001.

They cited a Chicago Tribune story that described a plan by the executives and the board to use accounting tricks to show shareholders they were reaping massive profits even as they continued down a path of risky investments. The profits were then used to justify the executives' big bonuses. When Emanuel left the board to enter Congress in 2002, he was qualified for $380,000 in stock and options and $20,000 cash.

The two wrote they would like the Justice Department to "begin an investigation into the cause of Fannie and Freddie's conservatorship, into Rahm Emanuel's activities on the board of Freddie Mac (including any violations of his fiduciary duties to shareholders), into the decision-making behind the continued vacancy of Fannie and Freddie's inspector general post, and into potential public corruption by Rahm Emanuel in connection with his time in Congress, in the White House, and on the board of Freddie Mac."

And this is certainly an odd couple especially given the fact that Norquist was the biggest influence in the Bush Administration, state and local politics, Jack Abramoff, and his long association with Karl Rove. Click here.

What is interesting is that the media has ignored how Bush tried since 2003 to try to create an agency to oversee Fannie and Freddie. I had written an article in March of this year and posted it on the blog.

Here is the story:

A little interesting information that I found on the Securities and Exchange website of a memo in July 2008 under then SEC head Christopher Cox in investor protections of short selling in securities of Freddie Mac and Fannie Mae.

Here is the excerpt:

FOR IMMEDIATE RELEASE 2008-143

Washington, D.C., July 15, 2008 - The Securities and Exchange Commission today issued an emergency order to enhance investor protections against "naked" short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks.

The securities identified in the Commission's order:
Company
BNP Paribas Securities Corp.
Bank of America Corporation
Barclays PLC
Citigroup Inc.
Credit Suisse Group
Daiwa Securities Group Inc.
Deutsche Bank Group AG
Allianz SE
Goldman, Sachs Group Inc
Royal Bank ADS
HSBC Holdings PLC ADS
J. P. Morgan Chase & Co.
Lehman Brothers Holdings Inc.
Merrill Lynch & Co., Inc.
Mizuho Financial Group, Inc.
Morgan Stanley
UBS AG
Freddie Mac
Fannie Mae

What the media is not focused on a little nugget found in the NYTimes in 2003. Bush Administration sought to create an agency to oversee Fannie Mae and Freddie Mac. Under the plan, a new agency would be created within the Treasury Department to supervise Fannie Mae and Freddie Mac. This was disclosed in a Congressional hearing in 2003. Then, Treasury Secretary John W. Snow backed the plan. The bill died in the Senate committee. The members of the 108th congress expressed faith in the solvency of Fannie and Freddie.

In 2005, a bill Federal Housing Enterprise Regulatory Reform Act was being implemneted. The purpose of the bill was to increase government oversight of loans given by Fannie Mae and Freddie Mac. That bill died in the Senate committee. This time it was under the 109th Congress.

On July 24, 2008, then President Bush signed into law the Housing and Economic Recovery Act of 2008 which enabled expanded regulatory authority over Fannie Mae and Freddie Mac by the newly established Federal Housing Finance Agency [FHFA], and gave the U.S. Treasury the authority to advance funds for the purpose of stabilizing Fannie Mae or Freddie Mac.

In the end, the collapsed Freddie Mac and Fannie Mae, who were two largest government-sponsored companies and key players in the mortgage lending industry, were seized by then Treasury Secretary Paulson in September 2008.

And here is the White House's reaction to Hamster-Norquist letter: White House: Despite call for probe, Emanuel's job is 'very safe'