Newt And Freddie

It’s amazing that Newt Gingrich has been able to depict himself as a “Reagan conservative” and surge to the top of the Republican field.  After all, soon after he left public office he began to do “consulting” work for Freddie Mac, the mortgage giant at the center of the housing crisis that crippled our economy.  Freddie Mac paid Gingrich’s consulting firm at least $1.6 million from 1999 to 2008.  It’s not the kind of resume that you would expect to find in a Tea Party favorite, given the Tea Party’s disdain for the cash-soaked, insiders culture of Washington, D.C.

Gingrich’s firm has now released one, but only one, of its contracts with Freddie Mac.  The contract covers only one year, which is curious.  Has the Gingrich Group really misplaced the other lucrative contracts?  If so, what does that tell you about Gingrich’s managerial abilities?  And if he really has misplaced the other contracts, why not just get copies of them from Freddie Mac and produce them all, so we can see what the entirety of the arrangement was?

The article linked above reprints the one contract that Gingrich’s firm produced.  It’s not scintillating reading — few contracts are — but it reveals that Gingrich’s firm reported to the Freddie Mac Public Policy Director, whom the Post article identifies as a registered lobbyist.  The firm was paid a retainer of $25,000 a month, which means its compensation wasn’t tied to how much work it actually did.  The description of what Gingrich’s firm was supposed to do is found in Exhibit 2, which states only that the firm was to provide “consulting and related services, as requested by Freddie Mac’s Director, Public Policy.”

However, Section 2(b) of the contract says that Gingrich’s group was to submit “an invoice that includes a detailed description of the Services performed” in order to get paid.  I hope a reporter somewhere is using public records requests and other methods to try to get those invoices, which might shed light on whether Gingrich really acted as a historian, as he states, or as a lobbyist and influence-peddler, as his opponents contend.  Interviewing the people that Gingrich reported to, and who requested the “consulting and related services,” would be a good idea, too.

I suppose it is possible that Freddie Mac paid more than $1.6 million for Gingrich to serve as a kind of historian.  After all, Freddie Mac was not exactly a paragon of fiscal responsibility, so it may well have spent $25,000 a month for unspecified historian duties even though its business involved mortgages, not histories.  Or, perhaps, Freddie Mac paid the former Speaker of the House to do other things.  It would be nice to know where the truth lies.

Your Landlord, Uncle Sam

Here’s a discouraging follow-up to a post about Fannie Mae’s enormous roster of foreclosed homes that require millions of dollars in upkeep: our government now owns so many homes it is thinking of getting into the rental business.

According to AP, the government owns 248,000 homes, about 70,000 of which are for sale.  What’s more, officials are expecting even more homes to fall into that category as foreclosures pick up after a brief lull.  So, what to do with so many government-owned houses?  One option is to turn them into rental units.  The acting head of the agency that oversees Fannie Mae and Freddie Mac says changing the homes into rentals may reduce “credit losses and help stabilize neighborhoods and home values,”  because sales of foreclosed homes are, on average, at a 20 percent discount, thereby depressing the prices of surrounding homes.

I think turning foreclosed homes into rental properties would be a ludicrous mistake.  It’s bad enough that the federal government lost its shirt in the mortgage guarantee business and owns hundreds of thousands of unwanted properties — now we are going to hire countless people to try to rent and manage the properties and collect rent checks and security deposits?  And while the below-market sale of a foreclosed home isn’t great for a neighborhood, often living next to a rental home is worse because the renters could care less about upkeep on the property.  Speaking as someone who once lived next to a rental home, I think it is far better to sell the property to someone who will live there and take care of it, even if the sale is at a discount.

Renting just defers the problem.  I’d rather the federal government do whatever it takes to sell its inventory of homes, get out of the home ownership and upkeep business once and for all, and get back to focusing on doing what federal governments are supposed to do — like, say, providing for our national defense.