December 2, 2011

Newt Gingrich Loves Freddie Mac

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Newt Gingrich in November 2011, asked what he told Freddie Mac when he was consulting for them in 2006-07:

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. This is impossible.

Newt Gingrich in April 2007, during an in-house interview promoting the virtues of Freddie Mac, uncovered today by Morgen Richmond of the blog Verum Serum:

I think it is telling that there is strong bipartisan support for maintaining the GSE model in housing. There is not much support for the idea of removing the GSE charters from Freddie Mac and Fannie Mae. And I think it’s clear why. The housing GSEs have made an important contribution to homeownership and the housing finance system.

….Millions of people have entered the middle class through building wealth in their homes, and there is a lot of evidence that homeownership contributes to stable families and communities. These are results I think conservatives should embrace and want to extend as widely as possible. So while we need to improve the regulation of the GSEs, I would be very cautious about fundamentally changing their role or the model itself.

Hmmm. He seemed much more….upbeat….back when he was getting paid $1.6 million for his historical advice, didn’t he? I guess the “insane” part must have been delivered only in private. Richmond comments:

Either he knew Freddie Mac’s lending practices were contributing to an unsustainable housing bubble headed for collapse, as he now claims, and yet accepted money to publicly defend them anyway. On their web site. Or he is now stretching the truth about his assessment of Freddie Mac’s problems at the time, and the advice he privately gave to their management.

Roger that. Newt’s defense is (surprise!) that he’s changed his mind since 2007. I’ll bet you didn’t see that one coming.

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