Republican Presidential candidate Newt Gingrich is facing a storm of criticism after it was revealed that he earned at least $1.6 million in consultancy fees from Freddie Mac, a figure which was said to be way above the norm, and which Mr. Gingrich himself has yet to acknowledge.
Yet despite the furor, Mr. Gingrich, an ex-House of Representatives speaker, has reportedly defended his ties to the government-owned lender, which was a major protagonist alongside Fannie Mae in the housing meltdown that kicked off the recession back in 2008 and has been a long-time target of conservative criticism.
Bloomberg reported earlier this week that Freddie Mac had paid Gingrich somewhere between $1.6 million and $1.8 million for consultancy services rendered to them from 1999 until 2008.
During a GOP debate last week, Gingrich responded to a question about exactly what work he had performed for Freddie Mac in return for his payment, which was initially reported to be just $300,000. Gingrich, who explained that Freddie Mac was just one of many companies on the books of his Gingrich Group firm, stated that he had told the lender to do precisely what they didn’t do:
"My advice as a historian, when they walked in and said to me, 'We are now making loans to people who have no credit history and have no record of paying back anything, but that's what the government wants us to do.' As I said to them at the time, 'This is a bubble. This is insane',"
However, Gingrich’s account was disputed by a number of individuals who were apparently familiar with the Presidential candidate’s work for Freddie Mac, who said that Gingrich’s main job was to secure Republican support for the lender.
Michelle Bachmann, a rival candidate for the GOP’s Presidential nomination, said that Gingrich was basically “shilling” for Freddie Mac”
"Fannie and Freddie, as you know, have been the epicenter of the financial meltdown in this country. Whether former Speaker Gingrich made $300,000 or whether he made $2 million, the point is that he took money to influence senior Republicans to be favorable toward Fannie and Freddie.”
She pointed out that Gingrich was accepting money from the lenders, she herself was fighting against them for their mismanagement in the financial crisis.
The storm over Freddie Mac payments arises just as Mr. Gingrich carved out a lead as frontrunner in the Republican nomination campaign, a position which is sure to attract more scrutiny of his previous business dealings and background.
Gingrich, who had at one time appeared to be out of the race, has suddenly forced his way back into the reckoning in recent weeks, as conservatives seem unable to settle on their favorite choice to take on Obama in next year’s elections. But while Gingrich has exploited the unwillingness of Republicans to give their full support to Mitt Romney, it’s believed that with all the scandals surrounding other candidates, the ex-Massachusetts governor will eventually come out on top in the race.