Newt Gingrich Long Advocated Home Ownership Push Prior To A Reported Freddie Mac $1 Million Payday
WASHINGTON -- Republican presidential contender Newt Gingrich has been one of the most influential conservative voices advocating the use of home ownership efforts to alleviate poverty. Although his work as a highly lucrative consultant for Freddie Mac may have been more political pomp than policy circumstance, Gingrich's political clout was part of the mortgage giant's push to grant bipartisan legitimacy to its epic housing gamble.
The former House speaker's long record of pushing to expand home ownership casts significant doubt on his recent claim that he encouraged Freddie Mac to change its policies during the Bush era, when the mortgage giant shelled out roughly $30,000 a month for Gingrich's work.
R.C. Hammond, a spokesman for the Gingrich campaign, confirmed the paycheck amount to HuffPost, but said the money went to Gingrich's consulting firm, The Gingrich Group. "To say he was paid personally is inaccurate," Hammond said. He went on to say that Freddie Mac paid the firm for "strategic advice on a wide variety of issues," including dealing with the cost of employees' health care. "He wasn't brought in to help them with their lending practices," Hammond said.
Gingrich's work for Freddie Mac was lucrative. His consulting firm was paid between $1.6 million and $1.8 million over eight years to advise the mortgage giant, according to Bloomberg -- a long time for an ex-lawmaker to work with a single client. And those ties have become extremely sensitive as the former House speaker's polling numbers have improved. Many GOP primary voters loathe Fannie and Freddie, and Gingrich and his fellow Republican presidential contenders have attempted to blame the two mortgage giants -- which played a destructive role in the housing bubble -- for unrelated financial misdeeds on Wall Street that crashed the banking sector.
But dating back to Ronald Reagan's first term, Gingrich pushed a conservative "Opportunity Society" platform that encouraged the ownership of property -- particularly houses and corporate stocks -- to promote individual responsibility and social progress. Gingrich has not sought to obscure his views on the matter. In several books, he has advocated for "property ownership." In his 1995 book, "To Renew America," Gingrich wrote:
"We want to ensure that, from day one, people who work hard can see their work pay off. Part of this process involves giving people control over their own housing. Poor people ought to be given a chance to buy the property they live in. "
When Gingrich resigned from Congress in 1998, both he and his top aide would move into the Fannie and Freddie fold. Gingrich was hired as a consultant for Freddie Mac in 1999.
Gingrich's chief of staff, Arne Christenson, became a top lobbyist for Fannie Mae, where he boasted to reporters about providing low-down-payment mortgages, and penned at least one op-ed for the conservative Washington Times newspaper defending Fannie Mae's low-income housing efforts. Christenson wrote:
At least 50 percent of the units that Fannie Mae finances must serve low- and moderate-income people. Fannie Mae must also meet tough percentage-of-business goals for serving residents of underserved areas and for serving very low-income borrowers. For instance, in 2000, Fannie Mae provided $55.6 billion serving 675,000 households living in underserved census tracts - nearly 31 percent of the total households we served. With the exception of Freddie Mac, no other company in America faces the type of quantitative, targeted housing goals that Fannie Mae must meet. We have exceeded the HUD housing goals every year since 1994.
Christenson, who now works for American Express, did not return a call seeking comment. His op-ed was published in 2001, while Gingrich was being paid handsomely by Freddie Mac. Hammond said that Christenson had nothing to do with Gingrich getting the consulting job at Freddie Mac. "It's kind of like one guy going to the Red Sox, and one guy going to the Yankees," Hammond said.
During this period, President George W. Bush was promoting a platform to expand the conservative base dubbed the "Ownership Society," an effort that Jackie Colmes of the Wall Street Journal noted, at the time, was related to Gingrich's long efforts to promote home ownership. Bush and Republican political strategists hoped to use home ownership to convert more middle-class and low-income voters into consistent Republicans. Owning a home, after all, comes with a host of tax liabilities -- most notably property taxes and capital gains, if the home is sold. Making more voters wary of such tax rates would likely help enlist them in the conservative cause.
Gingrich was just one of dozens of political elites involved with Fannie Mae and Freddie Mac. William Daley, currently chief of staff for President Barack Obama -- served on Fannie's board for much of the Clinton years, and former Obama Chief of Staff Rahm Emanuel served on Freddie's board. The companies not only spent millions on campaign contributions and lobbying -- they appointed influential figures from both political parties to lucrative positions at the company.
"When it came to Fannie, Freddie lobbying dollars and political connections, there were probably only a handful of people related to financial services in Washington whose hands were genuinely clean," notes Joshua Rosner, managing director at Graham Fisher & Co. and co-author of "Reckless Endangerment," a history of the recent banking collapse.
Most of these appointees played almost no role in the mortgage giants' policies, but seemed to lend political legitimacy to their activities by their very presence on the payroll. "Occasionally when there's a threat, they'll call their friends and say, 'I don't think it's a good idea for you to do this. Or, hey, Fannie's opening a new multifamily development in your district, you should go to the ribbon cutting ceremony,'" Rosner said.
Several former Gingrich staffers declined to comment on Gingrich's actual work at Freddie Mac. "I don't know enough about it," said Rick Tyler, who worked with Gingrich from July 1999 to June 2011, adding that he doesn't remember Gingrich's work on housing, despite the $1.6 million contract. A.J. Young, who served as CFO of The Gingrich Group, told HuffPost he could neither confirm nor deny the information in Bloomberg's report. Nancy Desmond, a vice president with The Gingrich Group, did not respond to phone calls.
The official talking points for Gingrich's campaign do not specify the candidate's actual work with Freddie Mac. They state that Gingrich endorses government support for home ownership, but only "within a context of learning how to budget and save in a responsible way," which the campaign says Freddie ignored during the housing bubble.
Despite advice that Gingrich may have provided to Freddie Mac, he was on the mortgage giant's payroll during a massive accounting scandal at the company -- which, along with a simultaneous Fannie Mae accounting disaster, was the largest in American corporate history. The company first began paying fines in 2002 to settle charges related to the 101 different violations detailed by its regulator, but continued to settle charges with authorities for years afterward. The debacle forced the company to re-state several years of corporate earnings and resulted in the ouster of Freddie CEO Leland Brendsel, along with an effort to regain his compensation. Gingrich continued to work for Freddie Mac, signing another contract with the company in 2006.
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First Posted: 11/16/11 10:10 PM ET Updated: 11/17/11 12:43 AM ET