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Here's Newt's 'deliverable' for Freddie Mac

Former House Speaker Newt Gingrich is surging in polls of Republican voters, but new questions are being raised about his role as a paid advisor during the Bush administration to Freddie Mac, the government-backed home mortgage giant. (AP Photo)It’s not news that former House Speaker Newt Gingrich was paid $1.6 million by Freddie Mac over a period of eight years spanning much of the immediate past decade.Nor is it news that Gingrich has denied the contention of critics that he was therefore a paid lobbyist for one of the two Government-Sponsored Entities (GSE) that sparked the housing bubble (Fannie mae being the other).Gingrich has said he simply provided strategic advice. That advice was aimed at persuading conservatives to back off of their then-mounting criticism of Fannie and Freddie due to fears that easy-lending policies aimed at increasing the number of home loans made to poorly qualified buyers would, sooner or late, cost taxpayers billions, thanks to the implicit guarantee of federal backing.It turned out to be sooner because it was only a few years after Gingrich signed up as a Freddie Mac advisor when the Great Recession of 2008 nearly brought down the U.S. economy. It was precipated in great part by the housing bubble encouraged by Freddie Mac and Fannie Mae.In the wake of that bubble bursting, the federal government took over Freddie and Fannie in an attempt to bail them out. Their bailouts have thus far cost taxpayers an estimated $130 billion, according to the Office of Management and Budget. The Congressional Budget Office pegs the cost roughly double that, $317 billion.Whatever the ultimate cost proves to be, there appears to be no end in sight to how long into the future taxpayers will remain on the hook for two organizations that Gingrich recomended as models for accomplishing worthwhile “public purposes.”Verum Serum’s Morgen Richmond spent some time on the Wayback Machine and found a 2007 FAQ on the Freddie web site that contains the transcript of an interview in which, according to the site, Gingrich “explains the unique role of the government-sponsored enterprise (GSE) model.”Here’s a passage from a document that every conservative who is thinking about backing the former House Speaker for president should read very closely:”Some activities of government – trash collection is a good example – can be efficiently contracted out to the private sector. Other functions – the military, police and fire protection – obviously must remain within government.”And then there are areas in which a public purpose would be best achieved by using market-based models. I think GSEs provide one of those models. I like the GSE model because it provides a more efficient, market-based alternative to taxpayer-funded government programs. It marries private enterprise to a public purpose.”We obviously don’t want to use GSEs for everything, but there are times when private enterprise alone is not sufficient to achieve a public purpose. I think private enterprise alone is not going to be able to help the Gulf region recover from the hurricanes, and government will not get the job done in a very effective or efficient manner.”We should be looking seriously at creating a GSE to help redevelop this region. We should be looking at whether and how the GSE model could help us address the problem of financing health care. I think a GSE for space exploration ought to be seriously considered – I’m convinced that if NASA were a GSE, we probably would be on Mars today.”Certainly there is a lot of debate today about the housing GSEs, but I think it is telling that there is strong bipartisan support for maintaining the GSE model in housing. There is not much support for the idea of removing the GSE charters from Freddie Mac and Fannie Mae. And I think it’s clear why. The housing GSEs have made an important contribution to homeownership and the housing finance system.”We have a much more liquid and stable housing finance system than we would have without the GSEs. And making homeownership more accessible and affordable is a policy goal I believe conservatives should embrace.”Millions of people have entered the middle class through building wealth in their homes, and there is a lot of evidence that homeownership contributes to stable families and communities. These are results I think conservatives should embrace and want to extend as widely as possible.”So while we need to improve the regulation of the GSEs, I would be very cautious about fundamentally changing their role or the model itself.”The obvious question here is why Gingrich thought Freddie Mac provided the “more liquid and stable housing finance system” when it was clear even then that, contrary to people like Rep. Barney Frank, D-MA, Freddie and Fannie desperately needed reforms that would lessen their role in the mortgate market, not expand it.Indeed, based on the timing, it appears Gingrich said the words above at least partially with aiding Freddie and Fannie turn back the Bush administration’s proposed reforms.This latest revelation is likely to fuel more discussion among GOP voters and conservative activists about Gingrich as a potential Republican presidential nominee. The Washington Examiner editorial on Wednesday provides additional details.Go here to read the entire document uncovered by Verum Serum.  

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