Gingrich Role at Freddie Questioned by Romney
Republican presidential candidate Newt Gingrich says his lawyers are blocking him from releasing his consulting contracts with Freddie Mac (FMCC), while he continues to offer accounts of what he did for the government-backed mortgage lending institution that differ from those who worked with him.
Gingrich’s advisory role with Freddie Mac has become fodder for his chief rival for the Republican nomination, former Massachusetts Governor Mitt Romney. The Romney campaign said today it will begin airing a television ad in Florida, site of the next Republican primary, tying Gingrich’s work to the state’s troubled housing market.
At a campaign event today in Tampa, Romney said Gingrich should have seen the housing crisis coming and voters “ought to be able to see what it is he told” Freddie Mac.
Former Governor Tim Pawlenty of Minnesota and Florida House Speaker-designate Will Weatherford said in a Romney-arranged conference call with reporters today that Gingrich must provide “transparency” about his work for Freddie Mac.
“We don’t have insight or transparency into what he actually did,” Pawlenty said. He called Gingrich’s claims that lawyers are holding up the release of the contracts “B.S.” and “just nonsense.”
Romney’s criticism of Gingrich’s work after leaving Congress has earned him praise from some political strategists, who said the ties to Freddie Mac could become more damaging to the former U.S. House speaker than allegations by his second wife that he wanted an “open marriage” so he could continue an affair with a congressional staff member, Callista Bisek, whom he married in 2000.
“I thought it was smart,” Karl Rove, a former adviser to President George W. Bush, said yesterday on “Fox News Sunday.” “He took on Gingrich on the question of character, but not on the question of the marriage, but on the question of, ‘You were working for Freddie Mac. You were the guy who’s the Washington insider.’”
J.C. Watts Jr., a Gingrich supporter and a former U.S. House member from Oklahoma, said in a conference call with reporters today that Romney’s attacks are “silly,” as is the idea that Gingrich was a major player in Freddie Mac discussions in Washington.
No ‘Hand-to-Hand Combat’
Watts left the House in January 2003 and was chairman for six years of FM Policy Focus, a group that pushed for increased regulation of Freddie and its mortgage-lending sister organization, Fannie Mae. Watts said that, even though he had “day-to-day” contact with the people most interested in Freddie Mac, “Newt Gingrich was never on my radar screen.”
“Newt Gingrich was not walking the halls of the House and the Senate” as a consultant to Freddie, Watts said. “He was never doing the hand-to-hand combat.”
Former and current Freddie Mac executives told Bloomberg News that Gingrich was hired to develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it. He wasn’t asked to personally deliver that message on Capitol Hill, they said.
Billions in Bailouts
Many Republicans have criticized Freddie Mac because billions of dollars in taxpayer money were needed to bail it out after the housing market meltdown. Since September 2008, Freddie Mac and Fannie Mae, both now operating under U.S. conservatorship, have received a total $153 billion in taxpayer aid.
Gingrich initially said he couldn’t release the two contracts, which paid him at least $1.6 million, because Freddie Mac officials wouldn’t let him. When the company subsequently said he could make them public, he said his former consulting firm was the impediment. Gingrich’s campaign and the consulting firm employ the same attorney.
In Romney’s new Florida ad, which opens with the word “foreclosed” being stamped over the state of Florida, a male voice says, “While Florida families lost everything in the housing crisis, Newt Gingrich cashed in. Gingrich was paid over $1.6 million by the scandal-ridden agency that helped create the crisis.”
This morning, Gingrich told ABC’s “Good Morning America” that he would be “very comfortable” releasing the contract before the Jan. 31 Florida primary. “I think it would be very helpful,” he said. “Our attorneys are talking with the company.”
He didn’t say which attorneys are involved.
In yesterday’s talk show appearances, Gingrich demurred when asked if he would release the contracts, which according to his campaign ended in 2007; others familiar with his contracts have said they extended to 2008, when the housing market imploded.
On CNN, the former House speaker said he had warned that Freddie Mac’s business model should be reined in and opposed a government takeover when it failed because of investments in risky mortgages.
“As the New York Times reported in July of 2008, I went to the House Republican conference and said, ‘Vote no. Do not give them any more money. They need to be totally reformed and totally overhauled,’” he said on CNN’s “State of the Union.” That story, he said, is “the only public record of any kind about me talking to the Congress about Fannie Mae and Freddie Mac.”
That article, which appeared on July 26, 2008, was about a broad housing relief bill that included foreclosure aid for homeowners and other measures, in addition to authorizing a plan for aiding Freddie Mac and Fannie Mae.
The only reference to Gingrich in the story doesn’t make it clear whether he based his opposition to the legislation specifically because of the aid to the government-sponsored enterprises or because of other parts of the housing bill.
“Former Speaker Newt Gingrich spoke at a private party meeting before the vote,” according to the Times report. He joined House Speaker John Boehner, an Ohio Republican, “in encouraging Republicans to oppose the measure, rallying lawmakers who remember that it was Mr. Gingrich’s ideas that prevailed in the halcyon days of the Republican revolution,” the newspaper reported.
Gingrich’s CNN account also conflicts with comments he made in an interview posted on the Freddie Mac website in 2007, while he was being paid about $30,000 a month to help the company refurbish its image with anti-spending Republican lawmakers and activists. In that exchange, Gingrich urged some regulatory revisions while defending the basic structure of Freddie Mac -- and encouraging the government to expand the model to the space program and other agencies.
The increased pressure on Gingrich to provide more details about his work for Freddie Mac coincides with his campaign’s new momentum going into the Florida primary after his victory in South Carolina’s contest on Jan. 21.
Since Gingrich’s relationship with Freddie Mac was raised in a Nov. 9 debate, he has changed his explanation about why he won’t release his consulting contracts.
At first, he said he couldn’t make the documents public because Freddie Mac refused to waive a confidentiality clause. “I don’t particularly want them to sue us,” he said in a Dec. 30 interview with Bloomberg News.
In January, Freddie Mac officials said Gingrich was “welcome” to release the documents. Gingrich then said the power to make the contract public lay not with him but with his former company, the Center for Health Transformation. The company turned the matter over to its lawyer, Stefan Passantino, who is also national counsel for the Gingrich campaign.
Passantino said in an e-mail this month that he wouldn’t let the company release the document. “The risks of any kind of confidentiality waiver, even if the company tried to limit it to one client or one document, are too great to be feasible,” he wrote.
The center is abiding by its decision not to release the contract, Susan Meyers, a spokeswoman for the company, said in an e-mail yesterday. Passantino and R.C. Hammond, Gingrich’s campaign spokesman, didn’t respond to requests for comment.
Gingrich is continuing to say he warned Freddie Mac that its business model was vulnerable to collapse, even though company executives say they don’t recall hearing that from him at the time.
“The only thing ever published by Freddie Mac, I said you need more regulations,” he said yesterday on NBC’s “Meet the Press,” referring to an April 24, 2007, “Policy Talk” post on the Freddie Mac website.
In that item, written as an interview and posted before the company was overwhelmed by its investments in risky mortgages, Gingrich was robust in his praise of the business model, suggesting that NASA would have been able to send men to Mars if it had the same business model as Freddie Mac and Fannie Mae, known as government-sponsored enterprises.
“While we need to improve the regulation of the GSEs, I would be very cautious about fundamentally changing their role or the model itself,” he said at the time.
To contact the editor responsible for this story: Jeanne Cummings at firstname.lastname@example.org