Thursday, October 21, 2010

Make Up Hides Valerie Jarrett's White House Bio

The White House bio on Senior Advisor Valerie Jarrett is incomplete.  Corporate boards are mentioned but not detailed.  Valerie Jarrett sat on the board of RREEF America II, Harris Insight Funds,  the Chicago Stock Exchange and CHX Holdings.

Jarrett knows real estate development, having worked at The Habitat Company from 1995 to 2008.  She succeeded Daniel E. Levin as President of Habitat in 2007.

The Habitat Company is one of the nation’s premier developers and managers of residential apartments and condominiums. Habitat has developed more than 17,000 housing units and currently manages more than 20,000 units.

The Habitat Company oversaw the Chicago Housing Authority through a receivership arrangement for twenty three years.  Habitat earned a 3% fee plus overhead costs.  In 1999 that amounted to a taxpayer supported 6.6%.  While the arrangement ended in June 2010, it existed for all of Jarrett's tenure.

RREEF America tapped Valerie's real estate acumen.  Their website describes the company:

RREEF acquires and manages investments in commercial and residential property, and real estate securities on behalf of its institutional and private clients worldwide. Its product offering is global and comprehensive, including core, value-enhanced and high yield property investments as well as investments in publicly traded real estate securities.

RREEF is the real estate investment management business of Deutsche Bank’s Asset Management division. RREEF employs more than 650* employees in 13 cities around the world to help investors meet a wide range of objectives – from diversification, to preservation of capital, to long-term performance.  Named one of the world’s largest real estate investment managers in Watson Wyatt’s Global Alternatives Survey, June 2009, RREEF has €41.0/$50.3 billion in assets under management worldwide as of 30 June 2010.

Habitat developed public housing projects with federal money.  Did any of Habitat's projects end up in securitized mortgages?  Were any backed by Fannie Mae or Freddie Mac?  Did Freddie Mac board member Rahm Emanuel provide any leverage for hometown projects?

Next up is Jarrett's Harris Insight Funds, which provided investment products via Chicago's Harris Bank:

Harris Insight Funds is a family of 19 funds with more than $10.5 billion in assets under management, including approximately $2.4 billion in equity, $936.8 million in fixed income, and $7.2 billion in money market assets at February 28, 2006.

The vast majority was in money market funds.  Harris conducted a strategic alliance with Phoenix Wealth Management in 2006. Money market funds experienced trouble in 2007.  Difficulties accelerated into fall 2008.

Interestingly, Harris (HT) Insight Funds abandoned its SEC registration in 2000.  A 2001 filing illuminated practices like short sales, securities lending, investing in warrants and a master fund/feeder fund structure.  It also stated:

No Fund may purchase or sell commodities or commodity contracts, except that it may enter into (a) futures, options, and options on futures, (b)forward contracts, and (c) other financial transactions not requiring thedelivery of physical commodities.
In other words, derivatives.  Jarrett played a role in America's financial sins, which came due.  Her bio states:

Ms. Jarrett served as Chairman of the Board of the Chicago Stock Exchange, Inc, from April 2004 through April 2007, and Chairman of the Board of the Chicago Stock Exchange Holdings, Inc., from February 2005 through April 2007.

CHX's 2006 annual report showed:

In July 2006, CHX Holdings entered into a strategic transaction in connection with the investment by Banc of America Strategic Investments Corporation; Bear REX, Inc., an affiliate of Bear, Stearns & Co., Inc.; E*Trade Capital Markets Execution Services, LLC; and The Goldman Sachs Group, Inc. (together, the “Investors”).
Did the Chicago Exchange help implode Wall Street or add to its darkness?  Valerie welcomed Wall Street's investment:

Valerie Jarrett, CHX Chairman, said, "This transaction represents an endorsement of the Exchange's strategic plan to leverage existing volume and connectivity, and to integrate a state of the art electronic trade matching engine in order to attract significant new business. We welcome these key industry leaders as shareholders and we are confident that they will play a vital role in increasing shareholder value while we continue to serve the investing public."

The 2006 report stated:

The SEC and CHX currently are conducting investigations of certain trading activity by the former CHX specialist firms, focusing on instances where a former specialist firm might have traded for its own account to the disadvantage of customer orders.

Under Valerie's chair-womanship, the exchange fired 30% of its employees in 2005. In March 2007, a Jarrett-chaired board terminated the defined-benefit pension plan for employees.  A portion of the pension funds returned to CHX, which undertook strategies to have this taxed at 20% vs. 50% (page 19 of the 2007 annual report).

Change?  Hardly.

P.S. Another omission is her time on the board of the German Marshall Fund.   Surely, Tea Partiers noticed this connection, given their predilection for calling Obama Fuhrer?  

Update 11-23-13:  Valerie Jarrett's secret lover is not Ronald McDonald, but Ahmad Rashad.  This according to HuffPo

Update 6-25-17:  Valerie Jarrett joined the board of Ariel Investments.  She'll join Arne Duncan, a Managing Partner at Ariel