The Campaign Spot

Election-driven news and views . . . by Jim Geraghty.

‘A $1 million contract at Freddie was chump change.’


A Morning Jolt reader who was a consultant for Freddie Mac offers a bit of perspective on what he saw there:

I worked at Freddie as a consultant during the same timeframe that Newt was there. I can tell you that the place was creepy with consultants of all ilk. The semi-circle drive in front of the main building was logged jammed with Lincoln Towncars come 4:30 pm every day. I’ve stood in line with Paul Begala waiting to get a coffee at the Starbucks in the Freddie lobby. Freddie at its height was a multi-trillion-dollar company that had only about 6,000 employees. Everyone else was a consultant or contractor.

These are the things I can tell you:

1.       Raines worked at Fannie not Freddie, Freddie was always the little brother to Fannie. The egregious behavior was common to both, but the highly visible Capitol Hill connections were mostly Fannie based (operative word there is highly visible). Freddie’s connections were of the more discreet variety.

2.       A $1 million contract at Freddie was chump change. Almost charity. Our firm, which shall remain nameless but focused on IT development and mortgage policy, ran anywhere from $50 million to $80 million annually during our heyday. If a staffer of mine came to me with a new $1 million dollar add-on, and he or she was young and starting out, then I’d make a medium deal out of it. If it was one of my seasoned managers then I would wonder why he was bugging me with a job that small. And the fact that Newt had it spread over more than one year makes it even smaller.

3.       It’s absolutely not inconceivable that they asked him about history. The problem is that no one is asking Newt “what kind of history.” I pretty sure that they weren’t interested in the transition of Old English to Middle English and how that affects one’s interpretation of Canterbury Tales. More likely that asked him to review the historical voting records of specific legislators and provide context on what background conversations were occurring at the time and how one would interpret their votes and seek to influence them in the future. That would be very Freddie.

4.       I’ve used lobbyists in my job (BTW, that doesn’t make me a bad person; it’s a form of free speech). The first thing you check out is the credentials of a lobbyist to confirm that everything is on the up and up. Credentials specifically mean “are you registered as a lobbyist?” A “no” answer is very very very problematic as it exposes all parties to potential legal action. Newt was not a registered lobbyist. Period.

5.       Newt was my congressman from 1992 (when I moved to GA) to his departure. I’ve met him. The thing that’s fun about Newt is going to listen to him speak. It’s political theatre. You’re in the audience waiting for his next zinger. It’s almost like listening to George Carlin with a conservative political slant. I love Newt. I don’t want George Carlin to be my next President. My wife and I, both lifelong ultra conservatives, are voting for Romney. The primary process is all retail politics at the small meeting level. It is perfect for Newt. That scares me.

6.       And last of all, the Dos Equis man doesn’t do a push up, he bench presses the earth . . .

This was in response to a portion of today’s Morning Jolt:

I’m willing to take Gingrich at his word. I think he honestly believes his work had nothing to do with lobbying. I think he could take a lie-detector test and declare that he was hired for his wisdom, public policy and historical knowledge and the needle wouldn’t budge. The biggest problem here isn’t the lie he’s telling to us; it’s the lie he’s telling to himself.

What did Freddie Mac really want from Gingrich? Cynics (waving hand) will suspect that the organization, full of lifelong professional Democrats like Franklin Raines and with close ties to Barack Obama, Hillary Clinton and Christopher Dodd, wanted a prominent Republican name around to stick up for them. He was the fig leaf/token Republican to enable them to argue that they had bipartisan support.

But even aside from that angle, Gingrich isn’t being honest with himself about what he was doing. The Washington Examiner’s Tim Carney notes that legally, Gingrich was lobbying.

Specifically, the Freddie Mac executive who hired Gingrich was not the CEO, nor the VP for operations, nor the VP for communications, but Craig Thomas, the VP for Public Policy — that is, the head of Freddie Mac’s lobbying operations. Thomas was a registered lobbyist at the time.

So, Gingrich may or may not have made lobbying contacts on Freddie’s behalf, but it appears he was being paid to aid Freddie Mac’s lobbying agenda. Say Gingrich was providing memos to Thomas on how to lobby (and given Thomas’s job as top lobbyist, what else would he be helping Thomas with?), that counts as “Lobbying Activity” according to the law:

Freddie Mac used Newt Gingrich, telling him what he wanted to hear, that his expertise was so unique and special and valuable that it was worth $300,000 to them. They used him, and Newt appears to have not realized it.

The Romney campaign will argue that Gingrich’s defenses on Freddie Mac are cynical lies, while ignoring the much, much more disturbing and damaging interpretation: Gingrich actually believes them.

UPDATE: My reader offers another eye-popping anecdote of the culture at Freddie Mac:

I was there when the stuff hit the fan and the “unusual accounting practices” came to light. Price Waterhouse got the independent audit job after Arthur Andersen went down the tubes. They took one look at the way that Freddie was recognizing review and forced a re-audit of the last five years of financial statements. All of the paper shredders were collected and locked away, the delete key on their email system was deactivated, and you walked down the hallways past boxes stacked to the ceiling labeled “dispose after re audit”. That was how your trash was collected every day and retained every day. I am not joking. I saw this . . .

Tags: Freddie Mac , Newt Gingrich


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