In Florida, Gingrich’s Freddie Mac Link Matters – Ask Romney

If New Gingrich’s consulting ties to troubled mortgage giant Freddie Mac is going to have traction for rival Mitt Romney, the topic would resonate farther in Florida, one of the states most mired in the foreclosure crisis.
Florida is living up to its battleground reputation with the two co-frontrunners for the Republican presidential nomination raising the housing market meltdown as a key topic on this week’s campaign trail.
In a new TV ad today, Romney is  reminding Florida Republicans about Gingrich’s $1.6 million in consultancy payments from the government-backed, mortgage financing firm Freddie Mac.
“While Florida families lost everything in the housing crisis, Newt Gingrich cashed in,” the TV ad says. “Gingrich resigned from Congress in disgrace and then cashed in as a D.C. insider.”
Gingrich called Romney’s claims “desperate baloney.”
Gingrich has denied that he worked as a lobbyist for Freddie since stepping down as speaker in 1999. Gingrich said he was retained by Freddie Mac as a historian, but later added that he’d received consulting fees for providing “strategic advice.”
In attacking Gingrich, Romney hopes to deflect some attention from the topic of his federal tax returns, which the former Massachusetts governor said he would release on Tuesday.
But the beleaguered housing market promises to become an issue that packs a bigger punch before Florida’s primary Jan. 31.
Gingrich’s Freddie Mac connection has hurt the former House speaker somewhat before his convincing win in South Carolina.
But it’s an issue deeply felt in Florida, the state with the second highest number of foreclosure properties in 2011 (24,576) – after California. And few U.S. regions have seen home prices plummet more than South Florida over the past four years.
Freddie Mac and bigger corporate sibling Fannie Mae have drawn about $170 billion in bailout funds from the U.S. Treasury since the two firms were made wards of the U.S. government in September 2008.
Republicans – and many Democrats – have called for the phasing out of Fannie and Freddie and shifting most of mortgage financing to the private sector. The Obama Administration has struggled to strike a balance between overhauling the troubled firms and the need to maintain a stable housing financing structure.
Fannie and Freddie were taken over after massive losses tied to acquisitions of private-label and subprime-mortgage backed securities. Those faltering mortgages backed by Fannie and Freddie fueled the housing bubble and subsequent financial crisis.
But Congressional mission of both companies is to maintain liquidity for the vital housing industry, ensuring the lenders can continue to finance mortgage loans. Fannie and Freddie hold more than half of all U.S. mortgages.
Last month, the Securities and Exchange Commission charged six former top executives of Fannie Mae and Freddie Mac with securities fraud tied to allegedly misleading statements on the firms’ exposure to faltering subprime mortgages.

Leave a Reply

Your email address will not be published. Required fields are marked *