NYT: Gingrich’s ties to Fannie Mae and Freddie Mac are deeper than you think
posted at 9:53 pm on February 3, 2012 by Allahpundit
Awfully thoughtful of the Times to toss this grenade in his lap just hours before Nevadans head out to caucus. Then again, what’s the worst that can happen? He loses by 30 points instead of 25?
You know who this benefits?
Once he became speaker in 1995, Mr. Gingrich’s support loomed large as the companies sought to shore up flagging confidence among the Republicans and bolster the case for home ownership, officials said.
“Whenever you could get Republicans who supported you, it was important, and the more prominent the Republican, the better,” said William Maloni, a senior vice president at Fannie Mae until 2004. “Newt would have been important.”…
In a showdown critical to the companies’ fortunes, Mr. Gingrich played an important behind-the-scenes role in helping block a proposal in 1995 that would have forced Fannie and Freddie — rather than taxpayers — to pay potentially billions of dollars in increased fees, according to interviews and press accounts at the time.
At the time, Representative Jim Leach, a senior Republican from Iowa who led the House banking committee and was a fierce critic of Fannie and Freddie, wanted the companies to pay the bulk of about $4.8 billion to finance a reserve for ailing savings and loan institutions…
A separate attempt within the House budget committee in 1995 to raise fees on Freddie and Fannie by hundreds of millions of dollars also died without a vote after Mr. Gingrich rejected it. The speaker asserted that raising fees would violate the Republicans’ oft-cited no new tax pledge.
Read it all as there’s lots more, including former Gingrich congressional advisors going to work for Fannie/Freddie as well as a trip Newt took to Ireland in 1998 promoting home ownership that was sponsored by the two companies together with Habitat for Humanity. He somehow neglected to mention it in his financial disclosures that year. His support for them wasn’t unusual in Congress at the time (or even 10 years later), but of course he was no ordinary member. Romney’s focus, I’m sure, will be on the counterfactual suggested by those boldface parts: What would have happened if Fannie and Freddie had been forced to pay those fees in the mid-90s? Would they have done business differently thereafter? Even if not, Team Mitt’s going to accuse Gingrich of having arranged a de facto bailout of the companies by making taxpayers cover the fees instead of them, which makes for a nice retort to Newt’s new “Obama-lite” talking point. The only good news here, I guess, is that at least the Times didn’t drop this on him on the eve of the South Carolina vote. Exit question: A big deal, or is the Newt/Freddie connection already priced into his political stock by now?
Update: I added another paragraph from the story to the blockquote because a commenter noted that the fees Fannie/Freddie initially were asked to pay were related to shoring up savings & loan orgs in distress. Fair enough; the quote mentions that now.