Gingrich Hired by Freddie Mac in 1999 to Achieve Business Goals

Newt Gingrich’s former consulting firm released a second contract with Freddie Mac (FMCC), the government-backed mortgage company, signed in July 1999 that required the former U.S. House speaker to help develop messages that would “contribute to the achievement of Freddie Mac business goals.”

The agreement, which guaranteed $520,000 in annual payment to the Gingrich Group, the previous name of his consulting arm, also called on the Republican presidential hopeful to advise on “strategic planning and public policy” and engage in discussions with Mitchell Delk, then the company’s head lobbyist, and other company officials.

The contract included a provision that said Gingrich and his firm would “not provide lobbying services of any kind.” The 1999 contract, signed months after Gingrich had resigned his House seat and speakership under pressure from his Republican caucus, also imposed standard government airfare, hotel and mileage reimbursement rates and limited incidental costs to $65 a day -- expense restrictions not included in a second contract with Freddie Mac that he signed seven years later.

Gingrich’s initial Freddie Mac contract was posted last night on the web site of the Center for Health Transformation, the new name of the former Georgia congressman’s consulting company.

Eight Years, $1.6 Million

The release of the document came amid mounting calls for details about Gingrich’s work for the home mortgage company. Overall, Freddie Mac paid Gingrich at least $1.6 million for advice over a period of eight years, from 1999 to 2007.

The contract made public last night covers the work Gingrich did during his first stint as adviser to Freddie Mac from 1999 to 2002, said Susan Meyers, a spokeswoman for both the Center for Health Transformation and the Gingrich campaign. Employees of the center spent the day combing through file boxes that had been placed in storage for documents related to the Freddie Mac contracts, she said in a telephone interview.

Many Republicans have criticized Freddie Mac because the company invested in risky mortgages and then needed billions of dollars in taxpayer money for a bailout after the housing market meltdown.

Gingrich, who is trying to win Florida’s Jan. 31 primary after two fourth-place primary finishes in Iowa and New Hampshire that preceded his victory over rival Mitt Romney in South Carolina’s race Jan. 21, has rebutted Romney’s characterization of his work for Freddie Mac as lobbying.

Not a Lobbyist

The 1999 contract states that Gingrich wasn’t hired to lobby his former House colleagues. However, the contract also makes clear that Gingrich was engaged to help Freddie Mac pitch its business model to Republicans who were threatening to rein in the government-backed agency and impose more oversight on it.

Delk told Bloomberg News in a November interview that he hired Gingrich to provide advice on issues such as expanding home ownership among Hispanics and on how to make the company’s message resonate with Republicans.

“What he did was provide counsel on public policy issues,” Delk said. “There was no expectation that he would do any lobbying, and he did not do any lobbying.”

Romney, a former Massachusetts governor, and his allies say Gingrich acted as a lobbyist even if he didn’t fit the technical definition.

‘Influence Peddler’

“The speaker for the last 10 years has been an influence peddler in Washington,” New Jersey Governor Chris Christie told reporters in Trenton on Jan. 23. “If the speaker’s uncomfortable with that, I understand why he would be. It’s not necessarily a normal qualification for the president of the United States.”

Under attack by Romney as “an influence peddler in Washington,” Gingrich said during a Jan. 23 debate in Tampa that his consulting firm had hired an attorney to train staffers and ensure that they didn’t cross the line into lobbying.

That consultant, Thomas Susman, said yesterday that he had advised Gingrich on federal and state laws beginning in 2000.

“The assignment was simply to do some training for his associates, provide materials, and to respond to questions and guide him so he would not be required to register as a lobbyist,” Susman, now director of government affairs for the American Bar Association, said in a telephone interview.

Florida Housing

Gingrich’s ties to Freddie Mac have garnered added interest in Florida, which ranks seventh in the U.S. in the rate of foreclosure filings per household. Many Republicans have criticized Freddie Mac because the company invested in risky mortgages and then needed billions of dollars in taxpayer money for a bailout after the housing market meltdown.

“You could have spoken out in a way to say these guys are wrong, this needs to end,” Romney told Gingrich during the debate. “But instead, you were being paid by them. You were making over $1 million at the same time people in Florida were being hurt by millions of dollars.”

While consulting contracts in the business world often have specific project goals and deadlines, the brief description of services in the 2006 Freddie Mac contract is “not unusual” for a Washington agreement, said Howard Marlowe, president of the American League of Lobbyists in Alexandria, Virginia.

Bob Barr, a former U.S. representative who, like Gingrich, represented Georgia, said he had undertaken similar contracts.

“There’s nothing at all unusual about a broad description and a monthly fee,” said Barr, who has endorsed Gingrich. “He’s a very bright guy and knows a lot about almost everything that goes on in Washington and, to me, would be a tremendously valuable” consultant, Barr said.

Main Contact

According to the 2006 contract, Gingrich’s main contact at McLean, Virginia-based Freddie Mac in 2006 was Craig Thomas, director of public policy and a registered lobbyist.

Former and current Freddie Mac executives told Bloomberg News that Gingrich was hired at the time 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.

Romney may also be vulnerable on the issue. A disclosure report filed in August 2011 shows he had a financial interest in Freddie Mac and its sister company Fannie Mae. (FNMA)

The disclosure said he held assets in both Freddie Mac and Fannie Mae valued at between $100,000 to $250,000. He received between $5,001 and $15,000 in interest income from his Freddie Mac assets and another $5,001 to $15,000 in interest income from his Fannie Mae assets. Financial-disclosure reports allow candidates to report assets in broad ranges.

Blind Trust

Romney’s campaign said his assets are in a blind trust, and the trustee makes all the decisions about how they are invested.

One of Romney’s special advisers, former Minnesota Republican Representative Vin Weber, served as a lobbyist for Freddie Mac, according to lobbying disclosures. His firm, Clark & Weinstock, took in $180,000 from the company during the last six months of 2006, according to its report.

Since September 2008, Freddie Mac and Fannie Mae, both now operating under U.S. conservatorship, have cost a total of $153 billion in taxpayer aid.

The center released the contracts after several weeks in which Gingrich gave varying reasons why he couldn’t do so.

At first he said he was bound by a confidentiality agreement with Freddie Mac. After Freddie Mac officials said he was “welcome” to make the contract public, he said the power to release it lay with the Center for Health Transformation.

Stefan Passantino, the center’s attorney who also serves as Gingrich’s campaign attorney, said earlier this month that he wouldn’t allow the document to be released for fear of jeopardizing confidentiality for the company’s other clients. Passantino said in an e-mail this week that he changed his position after he spoke with the general counsel at Freddie Mac and “she expressly authorized release of the contract.”

To contact the reporters on this story: Clea Benson in Washington at cbenson20@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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