Posted by Leonard Steinberg on November 19, 2011

Republican presidential candidate Newt Gingrich, certainly one of the most eloquent, informed and intelligent of all the Republican candidates, is now embroiled in a rather major embarrassment: After consistently and repeatedly blaming Freddie Mac and Fannie Mae for the Housing Bust that still wreaks havoc on our economy, it has been revealed that he and his firm acted as an advisor to both entities, raking in fees estimated to be somewhere between $ 1,5 and 1,8million. Oops!

Before Gingrich was hired, Freddie Mac paid $2 million to a Republican consulting firm in the hopes of killing legislation that would have regulated and
trimmed both companies. The legislation died without coming to a vote in the Senate. But the danger of regulation wasn’t dead, so Freddie Mac hired more consultants, Gingrich among them. Fannie Mae and Freddie Mac had traditionally purchased a small number of subprime mortgage loans, which involved borrowers with credit problems who could  not qualify for cheaper prime loans. But starting in the late 1990s many firms started purchasing subprime loans, and Fannie and Freddie followed suit.

Some argue that it wasn’t Fannie’s and Freddie’s fault that a bubble formed around mortgage values, then burst; some even argue that it wasn’t the banks’ fault either…..although that is extremely hard to believe. Many lay the biggest blame on the U.S. Congress, both sides of the aisle, that pressured these and other institutions to make credit easily available to anybody for purposes of purchasing a home, regardless of actual credit worthiness. This availability of absurdly easy credit inflated markets and property values to bubble proportions, indebted a large proportion of American households beyond their capacity to ever recover, and set the stage for the inevitable explosion. It also allowed the politicians to claim to their constituencies that they were actually doing something besides collecting a paycheck, and thereby increased their chances of re-election.

It is not and never was the legitimate role of government to manipulate credit markets to increase home ownership levels. I will however say that the blame for the housing crisis is shared by many:  Freddie Mac, Fannie Mae, the US Congress (all of them!), the banks that encouraged loans to highly unqualified buyers, the banks that made loans that were designed to make buyers default by excessive rising interest rates, the bankers that sold loans knowing they were junk and betting against them then, the Federal reserve, presidents Clinton, Bush and Obama, mortgage brokers for forcing up the purchasing power of buyers, appraisers for over-valueing properties artificially, real estate brokers for encouraging buyers to over-extend themselves, buyers who speculated, buyers who used their homes as ATM machines drawing funds from their home equity for vacations and Ferrari’s, buyers who knew they could not afford what they were buying but bet they would earn more in a few years, our education system (and parents)for not educating people to be more responsible with their money…..the list goes on. And now back to Newt….

Mr. Gingrich, for someone as intelligent and informed as you are, it is simply not believeable that you were unaware of what you were doing as part of this meltdown, and worse, it’s really hypocritical of you to lambast all the other guilty parties while not admitting your share of the blame.  Unlike some of your couterparts, we simply don’t believe the facts are twirling around in your head…..you are smart, and have an outstanding memory. The US voters don’t (which could work to your benefit considering Conservatism does not only apply to fiscal policy).

During the 2008 campaign, Gingrich suggested in a Fox News interview that presidential candidate Obama should return contributions he had received from executives of Fannie and Freddie……that was good advice then, and its good advice now. Just come clean: admit you thrived off this dirty ‘system’ too and repent. The truth may set you free and maybe you can inspire all other guilty parties, and there are many, to do the same. Lord knows the world has forgiven you of a host of worse sins, although self righteousness is way up there.