GOP presidential candidate Newt Gingrich answered questions about this Bloomberg News story for about three minutes this morning. Gingrich called it a fee for “strategic advice.” Here is the key part of the exchange with reporters:
Bloomberg’s John McCormick: “Bipartisan commissions have sort of found that ‘influentials’ were sometimes put on Fannie & Freddie just to have them friendly. Is this is a case of that?
Gingrich: “I have no idea…I was approached to give strategic advice. I was glad to offer strategic advice and we did it for a number of companies and Gingrich Group was very successful.”
McCormick: Do you think you were sort of being bought to just be there and be a friendly voice?”
Gingrich: “No, I don’t think that anymore than your institution is being bought by the people who advertise in it.”
The New York Time’s Trip Gabriel: “Do you recall any of the strategic advice you did give?…Expanding housing for low-income Hispanic communities, for example?”
Gingrich: “Well, first of all, if you can do it in a way that is financially sound, every American should be interested in expanding housing opportunities for people whether they’re African American, or Latino or of any background so the idea that you’re thinking about how can we help people learn how to budget, how can we help people learn how to save, how could you help them learn how to maintain a house on a low income would strike me, for more people, would be good things to do, not bad things to do and I’m happy to say I made public speeches to the National Association of Home Builders. I’m in favor of the largest possible home ownership. This is all public knowledge. I’m in favor of doing the right kind of things and you can go talk to Rick Lazio about the support I gave him as speaker on housing reform which he pushed through despite opposition of some of the people like Barney Frank and others, so I think the record there is one of I’m pretty consistent and frankly, I tend to give the same strategic advice in private I give in public.”
….AP’s Tom Beaumont: “Does this remind you that your background comes from being a Washington insider?”
Gingrich: “It reminds people that I know a great deal about Washington and if you want to change Washington, we just tried four years of amateur ignorance and it didn’t work very well, so having somebody who knows Washington might be a really good thing.”
AUDIO of entire exchange. (Gingrich spoke with reporters after headlining a state legislative candidate’s fundraiser at The Machine Shed restaurant in Urbandale, Iowa.)
About O.Kay Henderson
Kay is a founding member of the Radio Iowa network newsroom. In 1994, she became the network’s news director. She’s a featured reporter and commentator on Iowa Public Television’s “Iowa Press,” and the 2002 recipient of the Shelley Award.
Gingrich: “It reminds people that I know a great deal about Washington and if you want to change Washington, we just tried four years of amateur ignorance and it didn’t work very well, so having somebody who knows Washington might be a really good thing.”
Yeah, all his “advice” really helped Fanny and Freddie. $1.6 million well spent. Now why again was it so much money for just talk? Oh yeah, he is a Washington Insider AKA Lobbyist.
I was a management consultant for almost 20 years prior to retirement. We billed clients for our time, of course, and worked hard to help them make the right decisions about their future direction. Most of the time our involvement DID influence their thinking and much of the time our jointly-derived recommendations were acted on.
But not always. Politics in the client organization often intruded, turf issues arose, people in key jobs changed, and so on.
So I would submit: The fact that the Gingrinch Group served as a “consultant” to Freddie/Fannie doesn’t tell us very much about what his/their recommendations were. If he was indeed hired to do lobbying, that DOES tell us he was advancing the prevailing views of agency management.
We need to know more about the substance (or at least I do) before getting all worked up about this — except to the extent that paying ANYONE $1.6 million for advice is a questionable way to spend (our) money.
Also, keep in mind how freely government “public servants” spend (our) money. As I indicated earlier, $1.6 million is a lot to pay for advice, no matter what amount, quality, and significance to the client. But to the government $1.6 million is virtually a “tip”; nothing to think twice about no matter what value has or has not been delivered via goods or services.
Case in point: How much money would you expect Freddie and Fannie to pay for consulting services in connection with determining the appropriate pay for their top executives? Well, according to a Senate study released recently, “the Enterprises paid outside compensation consultants $655,000 in 2008 and $560,000 in 2009 to determine their own pay structure. To arrive at salary levels, the consultants assisted the Enterprises in identifying compensation at ‘comparable’ firms.”
Presumably Newt wasn’t acting in the role of a compensation consultant — but he probably WISHES he had.