Bloomberg News

Gingrich Pressured to Release Freddie Mac Consulting Contracts

January 26, 2012

(For more campaign news, go to ELECT.)

Jan. 23 (Bloomberg) -- Republican presidential candidate Newt Gingrich is refusing to release his consulting contracts with Freddie Mac while continuing to offer accounts of what he did for the government-backed mortgage lending institution that differ with those who worked with him.

Gingrich’s stance, which he based upon advice from his former consulting firm’s attorney who also serves as counsel to his campaign, is being challenged by chief Republican rival, former Massachusetts Governor Mitt Romney.

“I’d like to see what he actually told Freddie Mac,” Romney told reporters on Jan. 21 gathered outside his South Carolina campaign headquarters in Greenville. “Let’s see what his report was.” Today, former Minnesota Governor Tim Pawlenty and Florida House Speaker-designate Will Weatherford will hold a conference call for reporters on Gingrich’s work for Freddie Mac, the Romney campaign announced last night.

Romney’s move earned praise from some political strategists, who said the ties to Freddie Mac could become more damaging to Gingrich than allegations by one of his ex-wives that he wanted an “open marriage” so he could continue an affair with his current wife, Callista Gingrich.

“I thought it was smart,” Karl Rove, a former adviser to President George W. Bush, said yesterday on “Fox News Sunday.” “He took on Gingrich on the question of character, but not on the question of the marriage, but on the question of, you were working for Freddie Mac. You were the guy who’s the Washington insider.”

Freddie Mac Angst

Many Republicans abhor Freddie Mac because of the billions in taxpayer money that bailed it out after the housing market meltdown. Since September 2008, Freddie Mac and mortgage lending sister institution Fannie Mae, both now operating under U.S. conservatorship, have received a total $153 billion in taxpayer aid.

Gingrich has said he can’t release his two contracts, which paid him at least $1.6 million, because Freddie Mac officials wouldn’t let him. When the company subsequently said he could make them public, he said his former consulting firm was the impediment.

In yesterday’s talk show appearances, Gingrich demurred when asked if he would release the contracts, which according to his campaign ended in 2007; others familiar with his contracts have said they extended to 2008 when the housing market imploded.

On CNN, the former House speaker said he had warned that Freddie Mac’s business model should be reined in and opposed a government takeover when it failed because of investments in risky mortgages.

Mainstream Media Evidence

“As the New York Times reported in July of 2008, I went to the House Republican conference and said vote ‘no.’ Do not give them any more money. They need to be totally reformed and totally overhauled,” he said during an appearance yesterday on CNN’s “State of the Union” with Candy Crowley. That article, he said, is “the only public record of any kind about me talking to the Congress about Fannie Mae and Freddie Mac.”

That story, which appeared on July 26, 2008, was about a broad housing relief bill that included foreclosure aid for homeowners and other measures in addition to authorizing a plan for aiding Freddie Mac and Fannie Mae.

The only reference to Gingrich in the story doesn’t make it clear whether he based his opposition to the legislation specifically because of the aid to the government-sponsored enterprises or other parts of the housing bill.

Private Party Meeting

“Former Speaker Newt Gingrich spoke at a private party meeting before the vote and joined (House Speaker John) Boehner in encouraging Republicans to oppose the measure, rallying lawmakers who remember that it was Mr. Gingrich’s ideas that prevailed in the halcyon days of the Republican revolution,” the story said.

Gingrich’s CNN account also conflicts with comments he delivered in 2007 during an internal Freddie Mac interview while he was being paid about $30,000 a month to help the company refurbish its image with anti-spending Republican lawmakers and activists. In that exchange, Gingrich urges some regulatory revisions while defending the basic structure of Freddie Mac -- and encouraging the government to expand the model to the space program and other agencies.

Finally, the speaker’s description of his work differs from those who worked with him. Former and current Freddie Mac executives told Bloomberg News that Gingrich was hired to develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it.

Increased Pressure

The increased pressure on Gingrich to provide more details about his work for Freddie Mac come as his campaign has new momentum going into the Jan. 31 Florida primary after his victory in South Carolina’s contest on Jan. 21.

Since Gingrich’s relationship with Freddie Mac was raised in a Nov. 9 debate, he has changed his story about why he won’t release his consulting contracts.

At first, he said he couldn’t make the documents public because Freddie Mac refused to waive a confidentiality clause. “I don’t particularly want them to sue us,” he said in a Dec. 30 interview with Bloomberg News.

In January, Freddie Mac officials said Gingrich was “welcome” to release the documents. Gingrich then said the power to make the contract public lay not with him but with his former company, the Center for Health Transformation. The company turned the matter over to its lawyer, Stefan Passantino, who is also national counsel for the Gingrich campaign.

Gingrich’s Attorney Refusal

Passantino said in an e-mail this month that he wouldn’t let the company release the document because, “The risks of any kind of confidentiality waiver, even if the company tried to limit it to one client or one document, are too great to be feasible.”

The center is still abiding by its decision not to release the contract, Susan Meyers, a spokeswoman for the company, said in an e-mail yesterday. Passantino and R.C. Hammond, Gingrich’s campaign spokesman, didn’t respond to requests for comment.

Gingrich is continuing to say he warned Freddie Mac that its business model was vulnerable to collapse, even though company executives say they don’t recall hearing that from him at the time.

“The only thing ever published by Freddie Mac, I said you need more regulations,” he said yesterday on NBC’s “Meet the Press,” referring to a 2007 interview posted on the company’s website.

In that 4-year-old interview with Freddie Mac, posted before the company was overwhelmed by its investments in risky mortgages, Gingrich was robust in his praise of the business model, suggesting that NASA would have been able to send men to Mars if it had the same business model as Freddie Mac and Fannie Mae, known as government-sponsored enterprises.

“While we need to improve the regulation of the GSEs, I would be very cautious about fundamentally changing their role or the model itself,” he said at the time.

--Editors: Jeanne Cummings, Jim Rubin.

To contact the reporters on this story: Clea Benson in Washington at cbenson20@bloomberg.net; Julie Bykowicz in Washington at jbykowicz@bloomberg.net

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


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