Rahm Emanuel was not named in a complaint filed by the U.S. Securities and Exchange Commission. But the entire board was cited by the Office of Federal Housing Enterprise Oversight for failing to spot "red flags," government reports reviewed by ABC News said.

The SEC complaint said Freddie Mac, known formally as the Federal Home Loan Mortgage Corporation, misreported profits by billions of dollars to deceive investors between the years 2000 and 2002.

In a statement to ABC, a board representative said Emanuel, while on the panel, "believed that Freddie Mac needed to address concerns raised by congressional critics."

The agency agreed to pay a $50 million penalty in 2007 to settle the SEC complaint.

Freddie Mac's actions are cited by some economists as the beginning of the country's economic meltdown.