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Gingrich defends big contracts with Freddie Mac

By Thomas Beaumont

Associated Press

Published: Wednesday, Nov. 16 2011 2:11 p.m. MST

FILE - In this Nov. 9, 2011 file photo, Republican presidential candidate former House Speaker Newt Gingrich speaks during a Republican Presidential Debate at Oakland University in Auburn Hills, Mich. Rising in national polls, Gingrich found himself on the defensive Wednesday over huge payments he received over the past decade from the housing mortgage giant Freddie Mac.

Paul Sancya, File, Associated Press

URBANDALE, Iowa — Rising in polls and receiving greater scrutiny, Republican presidential candidate Newt Gingrich found himself on the defensive Wednesday over huge payments he received over the past decade from the mortgage giant Freddie Mac.

Gingrich, who now is near the top in polling on the GOP race, said he didn't remember exactly how much he was paid, but a former Freddie Mac official said it was at least $1.5 million for consulting contracts stretching from 1999 to 2007. The official spoke on condition of anonymity to discuss a personnel matter.

Long unpopular among Republicans, federally backed Freddie Mac and its larger sister institution, Fannie Mae, have become targets for criticism stemming from the housing crisis that helped drive the nation deep into recession and then hampered recovery. Gingrich himself criticized Barack Obama in 2008 for accepting contributions from executives of the two companies.

Speaking with reporters in Iowa on Wednesday, Gingrich said he provided "strategic advice for a long period of time" after he resigned as House speaker following his party's losses in the 1998 elections. He defended Freddie Mac's role in housing finance and said, "every American should be interested in expanding housing opportunities."

On Tuesday, a House committee voted to strip top executives of Freddie Mac and Fannie Mae of huge salaries and bonuses and to put them on the same pay scale as federal employees. After disastrous losses, both companies were taken over by the government in 2008, and since then a federal regulator has controlled their financial decisions.

During the 2008 campaign, Gingrich suggested in a Fox News interview that presidential candidate Obama should return contributions he had received from executives of the two companies. He said that in a debate with Obama, GOP presidential nominee John McCain "should have turned and said, 'Senator Obama, are you prepared to give back all the money that Freddie Mac and Fannie Mae gave you?'"

Gingrich sought Wednesday to portray his history with Freddie Mac as a sign of valuable experience.

"It reminds people that I know a great deal about Washington," he said. "We just tried four years of amateur ignorance, and it didn't work very well. So having someone who actually knows Washington might be a really good thing."

Fannie Mae and Freddie Mac buy home loans from banks and other lenders, package them into bonds with a guarantee against default and then sell them to investors around the world. The two own or guarantee about half of all U.S. mortgages and nearly all new mortgage loans.

Gingrich's history at Freddie Mac began in 1999, when he was hired by the company's top lobbyist, Mitchell Delk. He was brought in for strategic consulting, primarily on legislative and regulatory issues, the company said at the time. That job, which paid about $25,000 to $30,000 a month, lasted until sometime in 2002.

In 2006, Gingrich was hired again on a two-year contract that paid him $300,000 annually, again to provide strategic advice while the company fended off attacks from the right wing of the Republican Party.

Freddie Mac and Fannie Mae for years had been under scrutiny from Republicans on Capitol Hill who opposed government involvement in the mortgage business and wanted to scale back the companies' size and impose tough regulation.

In last Wednesday's Republican presidential debate, Gingrich sought to explain his role at Freddie Mac as that of a "historian" sounding dire warnings about the company's future. He said company officials told him "we are now making loans to people that have no credit history and have no record of paying back anything, but that's what the government wants us to do." He said his advice was to tell them, "this is insane."

Former executives dispute Gingrich's description of his role.

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