November 17, 2011--Freddie, Fannie, and Newt

During last week's Republican debate new front-runner Newt Gingrich was asked about his work with mortgage giants Freddie Mac and Fannie Mae. It was noted that after he left the speakership and Congress in disgrace he was paid $300,000 in consulting fees by them.

But since these semi-governmental agencies have been blamed by conservatives for the housing bubble and the ensuing economic collapse, reporters wanted to know what he did for them to earn that fee. Was he, in other words, a part of the problem Republicans were assigning to Fannie and Freddie? Had he played some complicitous part in ironically undermining the Republican narrative that ignores banks and other financial institutions' role and responsibility for the Great Recession? Was Newt, in other words, working for the GOP's enemy?

But as always happens when a presidential candidate moves into the lead, a close look at Newt's past became fair game. And it was soon discovered that he actually made between $1.6 million and $1.8 million in consulting fees from two contracts with Freddie Mac, according to people familiar with the arrangement.

The total amount is significantly larger than the $300,000 payment Gingrich was asked about on November 9th during the CNBC debate. And it was much more extensive than had been claimed by Gingrich--it spanned eight years, beginning just five months after he resigned from Congress.

And what Newt actually did for Freddie during those years was very different from what he nonchalantly tried to brush off last week. The former Speaker blithely said he “offered them advice about history," enigmatically, on the history of "precisely what they didn’t do” and, he attempted to get us to believe, warned the company that its lending practices were “insane.”

Former Freddie Mac executives who worked with Gingrich dispute that account.

The true history of Gingrich's substantial involvement with Fannie and Freddie was not unearthed by some left-wing blogger out to get him but comes instead from the heart of the financial establishment itself--Bloomberg News.

Two days ago they reported:

Former Freddie Mac officials familiar with the consulting work Gingrich was hired to perform for the company . . . 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. [Emphasis added.]

Clearly Gingrich was more than Freddie's and Fannie's favorite historian. But this didn't stop him from hypocritically blaming the economic debacle on these mortgage agencies.

Also from Bloomberg:

Gingrich has been sharply critical of housing industry loan practices and Democrats who he said “created the environment” for the meltdown. In an Oct. 11 Republican presidential debate, Gingrich said, “You ought to start with Barney Frank,” the Massachusetts congressman who serves as the ranking Democrat on the House Financial Services Committee, when talking about people to put in jail.

“Go back and look at the lobbyists he was close to at Freddie Mac,” Gingrich said in the debate.

But Newt, of course, failed to note that he himself was one of those lobbyists.

So as to leave no ambiguity about Gingrich's role with Freddie, Bloomberg reported:

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 Freddie] to head the effort.

McLoughlin hired Gingrich and several other Republicans, including former Representative Vin Weber and political message expert Frank Luntz, to assist the cause. [My emphasis.}

For decades Newt Gingrich has been all about money--his money--and deep into scams about how to make as much of it as possible. He has former wives to support, a lavish lifestyle, and a current wife with expensive taste in jewelry. It is thus no wonder that he has not been candid about his lucrative lobbying work for Fannie and Freddie. And if his role with them confuses the attempt by the GOP to blame them for all our troubles, so be it.

Gingrich's way to deal with it? Simply avoid the truth. The Republican base so much hates Mitt Romney that he may get away with it.