“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, November 18, 2011

Regarding Newt Gingrich's Freddie Mac Consulting

I caught Newt on Greta Van Sustern's Fox News program last night defending his consulting firm's $1.6MM from Freddie Mac. According to Gingrich, he didn't lobby members of Congress. Rather, he and his firm allegedly 'provided ideas and solutions' to problems posed by Freddie's management. Elsewhere, I believe in the Wall Street Journal, it was reported that one of those 'problems' was how to posture Fannie to conservatives in order to curry favor with them and avoid constraints, if not wholesale destruction.

My problem with Newt's consulting in this matter was that it's inconceivable that he would have needed all the billable hours required to amount to $1.6MM to tell Freddie's management they were pissing up a rope, and that there was no way of doing what they envisioned.

That conservatives would never see a benefit from a poorly-regulated, vote- and protection-buying bonus machine which crowded out saner, more explicitly risk-priced alternatives for securitizing US residential mortgages.

Sadly, in response to Greta, Newt began to place great emphasis on the pricing levels of his consultancy work, insisting they were below-average to average among other competitors.

But that's hardly the point. The point is a conservative of Gingrich's stripe should never have had that much to offer Freddie. And Newt should have had the good sense, as a former Speaker of the House, to understand how it would look, in retrospect, when someone discovered how much his firm earned from essentially consorting with the enemy.

This is more about a serious lapse in political judgement, which seems to be Newt's salient liability as a candidate.

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