Republican presidential candidate Newt Gingrich tried to stem the damage from reports that he earned more than $1.6 million from Freddie Mac during the housing crisis, issuing a statement reiterating his defense that he never lobbied for the mortgage-finance giant and that he made that fact clear to all his consulting clients after he left Congress.
While denying that he ever advocated against legislation affecting Freddie Mac, Gingrich’s statement did not address one of the more serious issues raised by a Bloomberg News story published on Tuesday: that Gingrich was tasked with building bridges to congressional Republicans and to develop an argument on behalf of the company’s public-private structure that would resonate with conservatives who wanted to dismantle it.
Freddie Mac and larger sibling Fannie Mae have long been under attack by conservatives, who oppose interference in the mortgage market by the two government-sponsored enterprises, which are part public and part private.
Gingrich’s statement stressed that Freddie Mac was “a small part of the client and revenue base of the Gingrich Group,” and it noted that the former House speaker also had contracts with IBM, Microsoft, and the U.S. Chamber of Commerce. The consulting group’s fees were “comparable to that of many consulting firms.”
In the most extensive account to date of Gingrich’s work for the mortgage giant, Bloomberg reported on Tuesday that Freddie Mac paid Gingrich $1.6 million to $1.8 million over an eight-year period from 1999, when he left Congress, to 2008, when the second of two contracts ended.
Gingrich said at a candidates’ debate last week that he advised the organization that its involvement in the subprime mortgage market was “insane” and that its business model was helping to cause a housing bubble. The Bloomberg story said, “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.”
The sources told Bloomberg that Gingrich was expected to provide written material that could be circulated among free-market conservatives in Congress. The two mortgage entities were ultimately became insolvent as a result of subprime mortgages.
Below is the complete text of Gingrich’s statement, issued late in the day on Wednesday:
Atlanta, Ga.--ln response to a Bloomberg News story today about Freddie Mac's hiring of the consulting firm, The Gingrich Group, over the course of an eight year period, Newt 2012 released the following fact sheet:
- Newt Gingrich welcomes scrutiny of his record in public office and as a small businessman. Gingrich believes that properly vetting the potential next president is absolutely necessary in a free society and that a properly vetted nominee for the Republican Party will better be able to defeat President Obama and lead our country in rebuilding the America we love.
- Gingrich has never lobbied for Freddie Mac, or any client, nor has anyone in any of the organizations he founded after leaving office as part of their work with them. Gingrich made a decision after resigning that he would never be a lobbyist so that nobody would ever question the genuine nature of his advice and perspectives. This prohibition against lobbying was made very clear to all Gingrich Group clients and strict internal protocals were developed to prevent lobbying. Today’s Bloomberg article confirms that Gingrich and his firm did no lobbying for Freddie Mac.
- Nor did Gingrich, as part of his contract, advocate against pending legislation affecting Freddie Mac, as Gingrich was accused of doing by the moderator at the CNBC debate in Michigan. This, too, was confirmed by the Bloomberg News article this morning.
- Freddie Mac was a small part of the client and revenue base of The Gingrich Group and Gingrich’s various small businesses. The Gingrich Group offered strategic advice to a wide variety of clients about a wide variety of issues, including IBM, Microsoft, The US Chamber of Commerce and more. Gingrich Group fees were comparable to that of many consulting firms.
- Gingrich is broadly favorable of the concept of Government Sponsored Enterprises (GSE) but believes the financial crisis shows that Fannie Mae and Freddie Mac should be broken up and their smaller successors be moved off of government guarantees and into the free market.
- Gingrich also is in favor of efforts to increase home ownership in America but as a conservative believes it has to be within a context of learning how to budget and save in a responsible way, the opposite of the lending practices that led to the financial crisis.