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 said this morning the payments were for “strategic advice over a long period of time.” His fees were sent to his consulting firm, The Gingrich Group, not to him personally, he said in an interview after making a campaign appearance in Des Moines, Iowa.
He said he couldn’t recall details of the contracts with Freddie Mac. “You are asking me about 12 years ago,” he said.
This afternoon, the Gingrich campaign issued a set of talking points in response to the coverage by Bloomberg News of his contract with Freddie Mac.
In the e-mailed memo, the campaign said Gingrich welcomed scrutiny of his record. “Freddie Mac was a small part of the client and revenue base of The Gingrich Group and Newt’s various small businesses,” the memo said.
Gingrich’s first contract with the mortgage company 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.
‘Really Got It’
“I spent about three hours with him talking about the substance of the issues and the politics of the issues, and he really got it,” said Delk, adding that the two discussed “what the benefits are to communities, what the benefits could be for Republicans and particularly their relationship with Hispanics.”
One idea that the former Georgia congressman proposed that Freddie Mac didn’t pursue was initiating a program with the Boy Scouts of America to teach youngsters the importance of saving money and maintaining good credit so they would qualify to buy a home later in life.
In 2001, according to one person familiar with the work Gingrich performed, company officials asked him for feedback on their plan to publicly embrace “six voluntary commitments.”
The six items included a pledge to periodically issue subordinated debt, manage liquidity, undergo capital stress tests and expand various types of risk disclosures. Gingrich applauded the ideas, saying they would enable Freddie Mac to demonstrate benefits to the taxpayer, the person said.
Not a Lobbyist
“What he did was provide counsel on public policy issues,” Delk said in an interview. “There was no expectation that he would do any lobbying, and he did not do any lobbying.”
While campaigning in Iowa earlier this week, Gingrich, 68, was asked about his relationship with Freddie Mac. He said he did no lobbying “of any kind.”
At another event today in Des Moines, he declined to answer questions about what advice he gave Freddie Mac.
“I’m not going to get in an argument about what was and what wasn’t said,” he said. “I favor the people who need help getting housing if it’s done in a prudent way. That’s public record. I have given speeches all over the place about that.”
Gingrich’s second contract with Freddie Mac was a two-year retainer for which he was paid a total of $600,000, said two people familiar with the agreement.
What he did for the money is a subject of disagreement. Gingrich said during the CNBC debate that he advised the troubled firm as a “historian.” Gingrich said he warned that the company’s business model was a “bubble” and its lending practices were “insane.”
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.
“We dispute your sources’ account,” said R.C. Hammond, a Gingrich campaign spokesman.
A Freddie Mac spokesman declined to comment on the Gingrich contracts.
Former Freddie Mac officials familiar with his work in 2006 say Gingrich 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.
He was expected to provide written material that could be circulated among free-market conservatives in Congress and in outside organizations, said two former company executives familiar with Gingrich’s role at the firm. He didn’t produce a white paper or any other document the firm could use on its behalf, they said.
Since his retainer with Freddie Mac ended in 2008, Gingrich has become a critic of the government-sponsored enterprises, which were pushed into insolvency by subprime mortgages.
The two companies, Freddie Mac and Fannie Mae, “are so thoroughly politicized and preside over such irresponsible lending policies that they need to be replaced with smaller, private companies operating without government guarantees, whose leaders focus on making a profit, not manipulating politicians,” Gingrich wrote in his 2011 book, “To Save America.”
In an Oct. 11 Republican presidential debate, he said Democrats and the housing-loan practices led to the industry’s collapse.
“You ought to start with Barney Frank,” when talking about people to put in jail, Gingrich said, referring to the Massachusetts congressman who’s the top Democrat on the House Financial Services Committee. “Go back and look at the lobbyists he was close to at Freddie Mac,” Gingrich said in the debate, sponsored by Bloomberg News and the Washington Post.
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