Now that Newt’s candidacy is rising to the top, expect the brickbats to be aimed at his head. The first to fly is the charge that he was paid off by Freddie Mac to do their bidding as the company, in concert with Fannie Mae, flooded the world with funny money mortgages and brought on the global collapse of 2008.
(By the way, we have a petition to block the $13 million in bonuses Freddie and Fannie execs have voted themselves. Go here to sign the petition. We have gotten a large number of signatures and Congress is holding hearings leading to a possible roll back. Sign up!)
According to Bloomberg News, Newt got between $1.6 and $1.8 million in consulting fees from Freddie Mac over eight years – about $17,000 per month – a not unusual fee these days.
Newt’s consulting agreement specified that he would not lobby and the bylaws of his consulting firm bar lobbying by any of its employees. So if he didn’t lobby what did he do for the money?
Bear in mind that F and F were paying off everybody they could find. Jim Johnson, Mondale’s manager, Jamie Gorelick, Clinton’s Deputy AG, Rahm Emanuel, and dozens of others made a mint in consulting fees. Newt was not unique.
Doubtless Freddie hired him to show that it was not an arm of the Democratic Party and to buy some credibility on the right. His contract started after he left office and there is no evidence that he brought any concrete influence to bear on Freddie’s behalf.
But this scrutiny gives Newt an incredible opportunity. He can produce memos and e mails that show that he warned Freddie about its mortgage policies. In one of the presidential debates, Newt said that he warned Freddie that they were “creating a bubble” that would burst and have enormous implications when it did.
If Newt can show that he sounded the alarm and had the wisdom and foresight to raise hell about the mortgages, he can put himself in much rarified company. To be exact: alone. Nobody else had that kind of foresight.
This scandal can either hurt or help. But if Newt used his contacts at Freddie to warn them and to try to change the Titanic’s course before it hit the iceberg, it could be a good credential for his candidacy.