Is a big consulting payday, or several of them, a big deal in a Republican presidential race? It depends on the client, and it depends on the work. Bloomberg reported overnight that Newt Gingrich scored big over the course of eight years in a series of consulting contracts for Freddie Mac, earning perhaps as much as $1.8 million:
The total amount is significantly larger than the $300,000 payment from Freddie Mac that Gingrich was asked about during a Republican presidential debate on Nov. 9 sponsored by CNBC, and more than was disclosed in the middle of congressional investigations into the housing industry collapse.
Gingrich’s business relationship with Freddie Mac spanned a period of eight years. When asked at the debate what he did to earn a $300,000 payment in 2006, the former speaker said he “offered them advice on precisely what they didn’t do,” and warned the company that its lending practices were “insane.” Former Freddie Mac executives who worked with Gingrich dispute that account.
The Bloomberg account makes it clear that Gingrich never lobbied for Freddie Mac, but the subject of his consultations remains in dispute. Gingrich has stated that he tried to advise Freddie Mac executives to reform their lending practices and advised them on historical problems with loose lending. According to Bloomberg’s sources, in the first few years he provided written support for their initiatives, which they used to argue for support from Congress in the early years of the bubble.
What about later? Bloomberg’s report contains this curious passage about his 2006 contract, which lasted until 2008, just as the bubble popped:
Former Freddie Mac officials familiar with his work in 2006 say Gingrich was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it.
He was expected to provide written material that could be circulated among free-market conservatives in Congress and in outside organizations, said two former company executives familiar with Gingrich’s role at the firm. He didn’t produce a white paper or any other document the firm could use on its behalf, they said.
That’s certainly intriguing. Gingrich could probably write that kind of white paper in his sleep, if he were so inclined. Instead, at least according to Bloomberg’s sources among former Freddie Mac officials, Gingrich didn’t give them anything they could have used to garner more support on Capitol Hill for their bubble-creating policies. What was Gingrich telling them from 2006-8? Gingrich says he’s bound by a confidentiality agreement — standard for consultants with access to highly proprietary information — and I’m betting Freddie Mac won’t be releasing him from those NDAs any time soon.
Perhaps what happened after Gingrich’s contract expired might give some indication as to what was being said internally:
Since his retainer with Freddie Mac ended in 2008, Gingrich has become a critic of the government-sponsored enterprises, which were pushed into insolvency by subprime mortgages.
The two companies, Freddie Mac and Fannie Mae, “are so thoroughly politicized and preside over such irresponsible lending policies that they need to be replaced with smaller, private companies operating without government guarantees, whose leaders focus on making a profit, not manipulating politicians,” Gingrich wrote in his 2011 book, “To Save America.”
It’s possible that Gingrich supported Congressional pressure on Fannie and Freddie to expand home ownership in 1999-2002 during his first round with Freddie, and then changed his mind during his second consultation period. That would mean that both Gingrich and Bloomberg’s sources are telling the truth, but just in the context of different time frames. That would certainly explain why Gingrich didn’t provide them any supporting white papers despite being on a two-year retainer from 2006-8.
Even so, the fact that Gingrich had such a lengthy consulting relationship with such a toxic organization might be enough to turn off Republican voters. The nexus of power and big business is one of the themes of the Tea Party’s efforts at reform, and the ability of the powerful to move into consulting relationships with big-money players like Freddie Mac is one of the symptoms of the problem. If anyone could defend their connections to Freddie, it’s Gingrich, and we’ll see if any defense is possible.