Tue November 15, 2011
Why Did Freddie Mac Pay Newt Gingrich $300,000?
Polls continue to show former House Speaker Newt Gingrich solidly in the top tier of Republican presidential contenders. But at the same time, he is dogged by questions about a job he had after leaving Congress: consulting for the mortgage giant Freddie Mac — but not, he says, lobbying.
The questions began at the candidates' debate in Michigan last Wednesday, when CNBC's John Harwood asked Gingrich what he did for a $300,000 contract with Freddie Mac in 2006.
"I offered them advice on precisely what they didn't do," Gingrich said last week.
This didn't make him a lobbyist, he said. And by the strict legal definition of "lobbyist," he's absolutely right.
"My advice as a historian, when they walked in and said to me, 'We are now making loans to people who have no credit history and have no record of paying back anything, but that's what the government wants us to do' — I said to them at the time, 'This is a bubble, this is insane, this is impossible,' " Gingrich said at last week's debate.
'Let's Look At The Politicians'
On the campaign trail, Gingrich says Freddie Mac and Fannie Mae should be broken up. At a New Hampshire debate last month, he endorsed the idea of jail time for Democratic lawmakers Barney Frank and Chris Dodd, who chaired the congressional committees overseeing Freddie and Fannie during the 2008 financial meltdown.
"You ought to start with Barney Frank and Chris Dodd," Gingrich said last month. "And let's look at the politicians who created the environment, the politicians who profited from the environment, and the politicians who put this country in trouble."
Frank, a Democratic representative from Massachusetts, says Gingrich is shifting blame.
"Much of what they complain about was happening during that period [the mid- to late-'90s], and Gingrich as speaker presided over a Congress that did nothing about it," Frank says.
Media accounts in 1999 said Freddie Mac first hired Gingrich that spring when he had just left Congress. His next known contract with Freddie was in 2006, when the George W. Bush administration was pushing Congress to regulate Freddie and Fannie.
For its part, Freddie Mac won't confirm or deny that it ever hired him.
Guy Cecala, the publisher of the industry newsletter Inside Mortgage Finance, says Freddie wouldn't have hired Gingrich for his historical and financial perspectives.
"They had rocket scientists and their own brain trust for doing it," he says. "What they were looking more for was political protection and cover, and they wanted it on both sides of the aisle."
And indeed, NPR spoke with two sources who were at Freddie Mac in 2006. They said Gingrich was hired to help Freddie Mac build alliances on Capitol Hill, and to burnish Freddie's reputation. They said he also met with donors to the company's political action committee.
On Monday, Gingrich told Iowa Public Radio simply that he has never lobbied Congress.
"I explicitly do no lobbying of any kind, and my advice was generic. It wasn't specifically aimed at House Republicans or Congress in general," Gingrich said.
Cecala is dubious.
"I guess it's not a surprise that, you know, someone's trying to reinvent history in terms of some advice they gave to Freddie Mac," he says.
The reality, Cecala says, is that Freddie Mac and Fannie Mae hired legions of former lawmakers because they were the ones who best knew the ins and outs of Capitol Hill.