Newt Banked His Share Before the Housing Bubble Burst

Recent disclosures reveal that Federal Home Loan Mortgage Corporation (FHLMC), also known as Freddie Mac, paid Newt Gingrich between $1.6 million and $1.8 million in consulting fees arising from two contracts starting in 1999.

That’s five months after he resigned in disgrace from Congress as House speaker. His relationship with Freddie ended in 2008, just before the great American housing bubble burst wide open sending the U.S. economy and real estate housing market into tailspins from which they have yet to recover.

Freddie Mac, and its big sister, Fannie Mae, now two worthless companies, are creatures of the federal government, created solely for the purpose of expanding the secondary market for mortgages in the United States.

They buy mortgages on the secondary market, pool them, and sell them as mortgage-backed securities to investors. Their entire function is to increase the supply of money available to mortgage lenders for new home purchases by providing full backing guarantees to investors in the instruments.

It was this dubious function, together with the usual corrupt intent of a majority of politicians in Washington, both Democrats and Republicans, to provide hundreds of billions of taxpayer backed dollars in easy credit cash for home ownership to poor people who were otherwise unable to secure financing in the regular markets.

When these un-creditworthy home buyers were unable to make their mortgage payments the scheme unraveled necessitating a colossal government bailout of Fannie and Freddie to the tune of $170 billion so far, and climbing to an expected $193 billion by 2014.  

According to Mitchell Delk, Freddie Mac’s former chief lobbyist, and Gingrich’s primary contact inside the organization, he was paid a self-renewing, monthly retainer of $25,000 to $30,000 between May 1999 and 2002, during which he 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.

“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. They discussed “what the benefits are to communities, what the benefits could be for Republicans and particularly their relationship with Hispanics.”

Gingrich’s second contract with Freddie Mac was a two-year retainer for which he was paid a total of $600,000. Gingrich maintained during a CNBC presidential debate that he advised the troubled firm as an “historian,” and now claims he warned that the company’s business model was a “bubble” and its lending practices “insane.”

But former Freddie Mac officials familiar with the facts dispute Gingrich’s account. They say Gingrich never raised the issue of a potential housing bubble and was never critical of Freddie Mac’s business model. Instead they say that 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.

Former Freddie Mac officials disagree with Gingrich’s characterization of himself as an “historian.” Gingrich was consulted about Freddie’s efforts to become more transparent about “risk and capital management” procedures, risk information disclosure, and how those efforts would be received in Congress, specifically by Republicans.

During Gingrich’s first stint, Freddie Mac wanted to “bond” with Bush administration officials on the idea of creating a “home ownership society” – getting more Latinos and other minorities into home ownership - and worked with Gingrich on that.

"He was hired because he was Newt Gingrich, basically," said one knowledgeable Freddie Mac source.

Gingrich, who, as a presidential candidate, is now all-of-a-sudden a critic of Freddie Mac’s policies, claims that he was not paid to be a lobbyist promoting the firm to other Republicans, but it sure seems like lobbyist duties to me.

After pocketing his share of the loot from the housing bubble, he’s quick now to blame Democrats for the resulting debacle: “You ought to start with Barney Frank,” when talking about people to put in jail, Gingrich said, “Go back and look at the lobbyists he was close to at Freddie Mac,” he insisted during the October 11 Republican presidential debate.

And while we’re at it, I say: how about the lobbyists Newt Gingrich was close to at Freddie Mac?

This is the same Newt Gingrich who recently declared: "I am convinced that if we do not decisively win the struggle over the nature of America, by the time they’re my age [his two grandchildren] they will be in a secular atheist country, potentially one dominated by radical Islamists and with no understanding of what it once meant to be an American."

We have to wonder what he was smoking when he came up with that one. How can Newt Gingrich enjoy any political credibility among reasonable logical voters making stupid statements like that?

This is also the same Newt Gingrich who told the Values Voter Summit: "If judges think that they are unchallengeable, they are… anti-American… profoundly wrong... inevitably corrupted, corrupted in a moral sense," because he thinks that the U.S. Supreme Court shouldn’t have the final say on the constitutionality of laws. He believes that should be up to the Christian majority in Congress. No third branch of government; or checks and balances -- that’s what Newt Gingrich says he wants for America.

Newt Gingrich has recently shot straight to the top in the popularity polls among Republican primary potential voters looking for a radical right wing evangelical social conservative nut case to replace the likes of Michelle Bachmann, Rick Perry, and Herman Cain, each of whom were unceremoniously shot down from that high perch because of glaring inadequacies in their attributes for the job.  

Now I’m afraid the good folks are overlooking Newt’s glaring inadequacies as well which we’ve all known about for years. He’s a thoroughly corrupt career Washington politician and way too radical to get elected president – a perfect example of why Republicans have such a hard time finding freedom loving independents, libertarians, conservative democrats, and middle of the road Americans to vote for them in presidential elections.

I’ll say it again: If the Republicans nominate Newt Gingrich over someone who is actually electable like Mitt Romney, Barack Obama will be the next President of the United States.