Bloomberg News

Gingrich Defends Freddie Mac Payments as He Gets More Scrutiny

November 23, 2011

(For more election news, see {ELECT <GO>}.

Nov. 17 (Bloomberg) -- Newt Gingrich defended payments of at least $1.6 million he received from mortgage company Freddie Mac, saying he provided “strategic advice over a long period of time” and that his work would remind voters of his knowledge of how Washington works.

On campaign stops in Iowa where he might have basked in a recent surge in state and national polls to the upper ranks of Republican presidential contenders, Gingrich yesterday also said scrutiny of the payments was justified.

“Everything is legitimate,” Gingrich told reporters when asked whether the queries into his mortgage work were warranted. “This is the presidency.”

His campaign announced it would release all the documents it legally could on payments to Gingrich by Freddie Mac since he left Congress in early 1999. Gingrich said the fees were sent to his consulting firm, the Gingrich Group, and that he couldn’t remember the details of the contracts. “You are asking me about 12 years ago,” he said.

The questions were prompted by a Bloomberg News report that Gingrich made between $1.6 million and $1.8 million in consulting fees from two contracts with the agency that he has scolded on the campaign trail. He has blamed Freddie Mac of helping cause the mortgage crisis in the U.S. housing market.

Historian’s ‘Advice’

Gingrich at a Nov. 9 debate acknowledged receiving $300,000 from Freddie Mac in 2006, saying he was paid to offer “advice as a historian.” He said he gave them “advice on precisely what they didn’t do,” which was to stop making loans to people with no credit history.

He said yesterday that the “strategic advice” he also provided would underscore “that I know a great deal about Washington, and if you want to change Washington -- we just tried four years of amateur ignorance and it didn’t work very well -- so having somebody who actually knows Washington might be a really good thing.”

Asked by a reporter if the payments might cause some to think he was being bought to be a friendly voice for Freddie Mac, he said, “No, I don’t think that any more than your institution is being bought when people advertise in it.”

Renewed Review

The focus on Gingrich’s Freddie Mac connection shows the advantages -- and disadvantages -- of his improved standing in the Republican presidential field. With the Republican nomination contests set to start in Iowa on Jan. 3, Gingrich’s rise has brought with it a renewed examination of a decades-long career in government and the private sector.

The former speaker of the U.S. House was asked at a forum in Des Moines if he could convince voters that he can handle a full examination.

“If three or four weeks from now, I have confronted the scrutiny, as you put it, in an even-keeled way, then they’ll be able to relax and go, ‘Oh, he was certainly even-keeled,’” he said. “If I blow up and do something utterly stupid, they’ll be able to say, ‘Gee, I wonder who the next candidate is?’”

Gingrich, 68, said he is expecting more probing questions about his career.

“Everybody will dig up everything they can dig up,” he said. “That’s fine. They should.”

Poll Results

A CNN national poll released this week showed Gingrich near the top of the Republican field, along with former Massachusetts Governor Mitt Romney.

A Bloomberg News poll also released this week showed Gingrich in the top tier of candidates in Iowa. Among those likely to attend the caucuses, Gingrich received support from 17 percent, putting him in a statistical tie with businessman Herman Cain, U.S. Representative Ron Paul of Texas and Romney.

“Newt Gingrich is not out of this thing, and I think he’s performed well in many of these debates and that has been a benefit to his candidacy,” Republican Governor Terry Branstad of Iowa told reporters this week. “It’s still a very much wide- open race.”

A challenge for Gingrich is that almost half of respondents in Bloomberg’s Iowa poll said they would rule out a candidate who has been married three times and had an extramarital affair.

Gingrich is in his third marriage. And in a March 2007 interview with a Christian group, Focus on the Family, he admitted to having had an extramarital affair at roughly the same time he was criticizing former President Bill Clinton for his affair with Monica Lewinsky.

Heightened attention to Gingrich’s ties to Freddie Mac could present another obstacle.

‘Small Part’

In responding to the Bloomberg News story, the Gingrich campaign said in an e-mail statement, “Freddie Mac was a small part of the client and revenue base of the Gingrich Group and Newt’s various small businesses.”

As a candidate, Gingrich had been mostly written off after more than a dozen of his campaign staff members -- including his national co-chairman and campaign manager -- resigned in June following discord over strategy, the role of the candidate’s wife, Callista, and money problems.

Gingrich is the latest Republican to see his poll numbers rise as some in the party search for an alternative to Romney, who has led in fundraising and polls much of the year.

2008 Race

Social conservatives, who turn out in large numbers in the Iowa caucuses, four years ago balked at Romney’s past support of abortion rights and the Massachusetts health-care law he signed. Romney finished second in the 2008 caucuses to former Arkansas Governor Mike Huckabee, a showing that helped derail his presidential bid.

R.C. Hammond, a Gingrich spokesman, said that as of yesterday the campaign didn’t have any campaign offices or paid staff members in Iowa. That, though, is about to change, he said.

Gingrich’s wrap-up of a three-day swing through Iowa included an appearance yesterday at the Machine Shed Restaurant in suburban Des Moines. He typically started his remarks with a history lesson -- this one about former President John Quincy Adams.

He also shook virtually every hand in the room and signed autographs. “Obviously, I’d love for you to be with me on Jan. 3,” he told potential caucus-goers.

Tom Allen, 69, a church pastor who hasn’t decided whom he favors in the Republican race, was among those who came to see Gingrich, and his reaction was positive.

“He’s at the top of the list,” Allen said. “I respect his intelligence and his tenure in leadership.”

--Editors: Don Frederick, Jim Rubin.

To contact the reporter on this story: John McCormick in Urbandale, Iowa, at jmccormick16@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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