Newt Gingrich Paid $1.6 Million By Freddie Mac To “Win Republican Allies”
As I noted last week, during the CNBC Republican Debate, former Speaker of the House Newt Gingrich said that he had been paid $300,000 by Freddie Mac to offer advice as a historian. As far back as 2008, of course, the Associated Press was reporting that Gingrich had actually been hired by Freddie Mac to advocate the company’s case with the public and pundits, although it doesn’t appear he was lobbying Congressmen and Senators on their behalf. Now, a pair of reports from Bloomberg shows that Gingrich was far more involved with Freddie Mac than his debate response would have us believe, and more than he probably wants to admit now.
First, it looks like Gingrich got far more than $300,000 for his work:
Newt Gingrich made between $1.6 million and $1.8 million in consulting fees from two contracts with mortgage company Freddie Mac, according to two people familiar with the arrangement.
The total amount is significantly larger than the $300,000 payment from Freddie Mac that Gingrich was asked about during a Republican presidential debate on Nov. 9 sponsored by CNBC, and more than was disclosed in the middle of congressional investigations into the housing industry collapse.
Gingrich’s business relationship with Freddie Mac spanned a period of eight years. When asked at the debate what he did to earn a $300,000 payment in 2006, the former speaker said he “offered them advice on precisely what they didn’t do,” and warned the company that its lending practices were “insane.” Former Freddie Mac executives who worked with Gingrich dispute that account.
Gingrich’s first contract with the mortgage lender was in 1999, five months after he resigned from Congress and as House speaker, according to a Freddie Mac press release.
His primary contact inside the organization was Mitchell Delk, Freddie Mac’s chief lobbyist, and he was paid a self- renewing, monthly retainer of $25,000 to $30,000 between May 1999 until 2002, according to three people familiar with aspects of the business agreement.
During that period, Gingrich consulted with Freddie Mac executives on a program to expand home ownership, an idea Delk said he pitched to President George W. Bush’s White House.
In another report, the same reporters reveal that one of Gingrich’s tasks for Freddie Mac was to win over skeptical Republicans:
Former Freddie Mac officials familiar with the consulting work Gingrich was hired to perform for the company in 2006 tell a different story. They say the former House speaker was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it.
If Gingrich concluded that the company’s business model was at risk and that the housing market was a “bubble,” as he said during the debate, he didn’t share those concerns with Richard Syron, Freddie Mac’s chief executive officer at the time, a person familiar with the company’s internal discussions said.
In 2006, before subprime mortgage losses pushed the two firms toward insolvency, the companies were facing calls for stricter regulation and smaller portfolios as the Treasury Department warned about potential financial market instability if they failed to hedge their assets against interest rate shifts and other risks. The companies, which were private but had implicit government backing, also were reeling from a series of accounting scandals.
Although Freddie Mac had developed strong supporters in the Democratic caucus, the firm started a new campaign to win over allies in Republican circles. Hollis McLoughlin, a former Treasury Department chief of staff in President George H.W. Bush’s administration, was brought in to head the effort.
Freddie Mac officials expected Gingrich to provide written material that could be circulated among conservatives on Capitol Hill and in outside organizations, said two former company executives familiar with Gingrich’s role at the firm.
And executives looked to him to help them find innovative ways to address the problems confronting Freddie Mac, said an official familiar with the company’s internal dynamics.
The former speaker attended brainstorming sessions with Freddie Mac’s management. He didn’t produce a white paper or any other document the firm could use on its behalf.
And what of Gingrich’s claim that he warned Freddie Mac about the housing bubble? Well……
Gingrich spoke about the state of the presidential campaign, the major issues, and who might win the party nominations, said a person who attended the event. Afterward, he attended a private lunch with about a dozen top executives of the firm.
None of the former Freddie Mac officials who spoke on condition of anonymity said Gingrich raised the issue of the housing bubble or was critical of Freddie Mac’s business model.
So, there you have it. Gingrich would have us believe that he was warning people about the Housing Bubble and they ignored him, that doesn’t seem to be true. He would have us believe that he was hired by Freddie Mac as a historian, an assertion that was laughable to begin with, and that doesn’t seem to be true either. He wants Republican voters today to think he’s some kind of outsider when the truth is that he’s been a Washington insider for decades now. The more Gingrich continues to rise in the polls, the more stories like this will come out, which is why I just don’t think the Gingrich Boomlet is going to last.