Could Newt Gingrich’s Ties to Freddie Mac Come Back to Haunt Him?
Update: Results of South Carolina Primary: Newt Gingrich wins South Carolina; Romney takes second, Santorum third, and Paul fourth.
Welcome to the 2012 Republican Party presidential sweepstakes, where former U.S. House Speaker Newt Gingrich is looking to beat front-runner Mitt Romney in Saturday’s South Carolina primary.
Gone from the GOP race are Michele Bachmann, Jon Huntsman and, as of today, Texas Gov. Rick Perry, who announced his departure while endorsing Gingrich over White House hopefuls Ron Paul, Rick Santorum and Romney.
What makes this fast-evolving dynamic in the GOP especially fascinating is that less than a month ago, before the Jan. 3 Iowa Caucus kicked off the presidential election season, Gingrich’s chances against Romney were deemed a long-shot in large part because of Gingrich’s high-paying stint as a consultant with Freddie Mac.
In a country where a housing bubble was burst by a series of colliding banking, lending and economic factors, the role of Government Sponsored Enterprises (GSEs) — Freddie Mac and Fannie Mae — has been a hot-button topic. How much of the housing market turmoil was caused by relaxed mortgage qualification standards due to a national policy push to get as many people into their own homes?
A year ago, President Barack Obama called for the end of Freddie and Fannie. This week, Housing and Urban Development Secretary Shaun Donovan said the administration is close to a deal where up to a million homeowners could get write-downs on their mortgages due to shady foreclosure practices.
In Republican policy debates, where there’s a renewed push to scale back government across the board, Gingrich could not escape his past as an advocate for government-backed mortgage lending, or his participation in a huge government agency where executives have been criminally charged for underestimating by billions the amount of sub-prime loans held by the agencies.
Dating back to Ronald Reagan’s first term, Gingrich pushed a conservative “Opportunity Society” platform that encouraged the ownership of property — particularly houses and corporate stocks — to promote individual responsibility and social progress.
In his 1995 book, “To Renew America,” Gingrich wrote:
“We want to ensure that, from day one, people who work hard can see their work pay off. Part of this process involves giving people control over their own housing. Poor people ought to be given a chance to buy the property they live in.”
Gingrich resigned from Congress in 1998 and a year later, he was hired as a consultant for Freddie Mac. And as he gained momentum in late 2011 as a GOP primary contender, Gingrich was found to have collected upwards of $1.8 million in fees from Freddie Mac.
In a fascinating look at Gingrich’s role at Freddie Mac, the Huffington Post reports that:
During this period, President George W. Bush was promoting a platform to expand the conservative base dubbed the “Ownership Society,” an effort that Jackie Colmes of the Wall Street Journal noted, at the time, was related to Gingrich’s long efforts to promote home ownership. Bush and Republican political strategists hoped to use home ownership to convert more middle-class and low-income voters into consistent Republicans. Owning a home, after all, comes with a host of tax liabilities — most notably property taxes and capital gains, if the home is sold. Making more voters wary of such tax rates would likely help enlist them in the conservative cause.
Now, however, in addition to the issue of Gingrich’s role in promoting home ownership for potentially under- or unqualified buyers, Gingrich faces other issues. In an interview scheduled to air tonight, Gingrich’s ex-wife, Marianne, alleges that Gingrich asked for an open marriage prior to asking for a divorce.
Not that Newt Gingrich’s past is a secret. The good thing about being a career politician, there’s plenty of information about the surging Gingrich for curious Republican voters to brush up on as they prepare to decide who to make the GOP nominee in 2012.