Gingrich Firm Releases Freddie Mac Contract

By Clea Benson and Julie Bykowicz - Jan 24, 2012 12:00 PM GMT+0700

Newt Gingrich’s consulting firm yesterday released a copy of its 2006 contract with Freddie Mac (FMCC), which covers just one year of his multiple years of service and documents only $300,000 of the $1.6 million he received from the mortgage company.

The Republican hopeful’s first contract -- spanning 1999 to 2002 and worth between $1 million and $1.2 million, according to two people familiar with the agreement -- wasn’t released because officials at the Center for Health Transformation can’t find it, said Susan Meyers, a center spokeswoman who works for the Gingrich campaign. The 2006 contract also applied to 2007, she said, meaning the total value of that contract was $600,000.

“We’re not even sure we signed anything for 2007,” said Meyers.

Gingrich and his allies have come under increasing pressure from chief rival Mitt Romney to release the records, and his association with Freddie Mac is emerging as major theme in the race. Many Republicans have criticized Freddie Mac because the company invested in risky mortgages and then needed billions of dollars in taxpayer money for a bailout after the housing market meltdown. Since September 2008, Freddie Mac and sister company Fannie Mae, both now operating under U.S. conservatorship, have cost a total of $153 billion in taxpayer aid.

“Why isn’t Speaker Gingrich disclosing the full extent of his relationship with Freddie Mac?” said Brian Jones, a spokesman for the Romney campaign. “Ultimately this disclosure raises more questions than it actually does answer.”

Debate Issue

Within the first few minutes of a candidates’ debate last night in Tampa, Florida, Romney accused Gingrich of working for Freddie Mac’s lobbying shop and of “influence peddling.” Gingrich, 68, denies he lobbied on behalf of the company. The contract makes clear “I was supposed to do consulting work,” he said. “There is no place in the contract that provides for lobbying.”

Romney may also be vulnerable on the issue. His most recent financial-disclosure report, which he filed in August 2011, shows he had a financial interest in Freddie Mac and Fannie Mae. (FNMA)

The disclosure said he held assets in both Freddie Mac and Fannie Mae valued at between $100,000 to $250,000. He received between $5,001 and $15,000 in interest income from his Freddie Mac assets and another $5,001 to $15,000 in interest income from his Fannie Mae assets. Financial-disclosure reports allow candidates to report assets in broad ranges.

Blind Trust

Jones said Romney’s assets are in a blind trust, and the trustee makes all the decisions about how they are invested. Romney “has no input or oversight” over the investments, he said.

The contract released yesterday states that Gingrich and his firm were retained to “provide consulting and related services as requested by Freddie Mac’s Director, Public Policy in exchange for which Freddie Mac will pay Consultant $25,000 per each full calendar month.” The director of public policy was the head of Freddie Mac’s lobbying arm.

“The contract was solely for consulting purposes and not lobbying,” Nancy Desmond, who has served as chairman and chief executive officer of the Center for Health Transformation since Gingrich left the firm to seek the presidency in May, said in a statement.

Gingrich’s consulting contract expired at the end of 2007, Meyers said.

Appealing to Conservatives

Former and current Freddie Mac executives have 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. He wasn’t asked to personally deliver that message on Capitol Hill, they said.

The 2006 contract, written by Freddie Mac and signed by Scott Cotter, a vice president of the Gingrich Group, as the Center for Health Transformation was then called, would have required Gingrich to register as a lobbyist if that was part of the work he did for the company.

The consultant will supply copies of any reports or disclosures “such as reports filed under the Lobbying Disclosure Act,” the document says. Gingrich didn’t register as a lobbyist.

Mitchell Delk, a former chief lobbyist for Freddie Mac, told Bloomberg News in a November interview that he hired Gingrich as a consultant during an earlier stint between 1999 and 2002 to provide feedback on the company’s initiatives.

Providing Counsel

“What he did was provide counsel on public policy issues,” Delk said. “There was no expectation that he would do any lobbying, and he did not do any lobbying.”

During his second stint as a Freddie Mac consultant, Gingrich was hired by company executive Hollis McLoughlin as part of an effort to shape a message that would win over allies in Republican circles, people familiar with the arrangement told Bloomberg News.

The center released the document after several weeks in which Gingrich gave varying reasons why he couldn’t do so.

At first he said he was bound by a confidentiality agreement with Freddie Mac. After Freddie Mac officials said he was “welcome” to make the contract public, he said the power to release it lay with the Center for Health Transformation.

Changing Position

Stefan Passantino, the center’s attorney, said earlier this month that he wouldn’t allow the document to be released for fear of jeopardizing confidentiality for the company’s other clients. Passantino -- who is also counsel to the Gingrich campaign -- said in an e-mail yesterday that he changed his position after he spoke directly with the general counsel at Freddie Mac and “she expressly authorized release of the contract.”

Gingrich also made public remarks on Jan. 22 urging the center to make the records public.

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

The Romney campaign said yesterday it will begin airing a television ad in Florida tying Gingrich’s work to the state’s troubled housing market.

In the ad, which opens with the word “foreclosed” being stamped over the state of Florida, a male voice says, “While Florida families lost everything in the housing crisis, Newt Gingrich cashed in. Gingrich was paid over $1.6 million by the scandal-ridden agency that helped create the crisis.”

Calls for ‘Transparency’

Surrogates for both candidates traded jabs over Gingrich’s work for Freddie Mac yesterday.

Former Governor Tim Pawlenty of Minnesota and Florida House Speaker-designate Will Weatherford said in a Romney-arranged conference call with reporters that Gingrich needed to provide “transparency” about his work for Freddie Mac.

“We don’t have insight or transparency into what he actually did,” Pawlenty said. He called Gingrich’s claims that lawyers are holding up the release of the contracts “B.S.” and “just nonsense.”

J.C. Watts Jr., a Gingrich supporter and a former U.S. House member from Oklahoma, said in a conference call with reporters that Romney’s attacks are “silly,” as is the idea that Gingrich was a major player in Freddie Mac discussions in Washington.

Watts left the House in January 2003 and was chairman for six years of FM Policy Focus, a group that pushed for increased regulation of Freddie Mac and Fannie Mae. Watts said that, even though he had “day-to-day” contact with the people most interested in Freddie Mac, “Newt Gingrich was never on my radar screen.”

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