Former Speaker of the United States House of Representatives, Newt Gingrich was paid huge amounts in consulting fees by Freddie Mac, the Federal Home Loan Mortgage Corporation (FHLMC); Gingrich never questioned their business model or their lending practices, and never brought up the housing bubble. “What he did was provide counsel on public policy issues,” Mitchell Delk said, Freddie Mac’s chief lobbyist. [See Endnote.] Gingrich stated he didn’t recall exactly how much he was compensated, but a person familiar with the employment practices asserted it was over a million and a half dollars for consulting agreements stretching from 2000 to early 2008, the whole time period of the festering sub prime debacle which Freddie Mac and its larger sister institution, Fannie Mae – the Federal National Mortgage Association  (FNMA) – commenced. Long criticized by fiscal conservatives, there is now some general consensus that these two parastatal establishments accelerated the housing bubble which caused the Financial Crisis, helped drive the US economy deep into a recession and whose debt is still hindering its recuperation. Gingrich has said he provided ‘strategic advice for a long period of time’ after he resigned as House Speaker following his party’s losses in the 1998 elections. He defended Freddie Mac’s role in the housing finance: ‘Every American should be interested in expanding housing opportunities.’ That’s nice of him. You have to love him and everyone like him for this kind of sentiment; maybe he'll return the millions he took from Freddie Mac and help the people who are out of homes today because of him and other politicians’ lobbying efforts. The state grew under his Contract With America just as it did under the Reagan Administration. He aided and abetted political parasites like James A. Johnson (former CEO of Fannie Mae with executive bonuses over 200 million dollars) bring our civilization to the edge of an economic abyss.
Johnson aggressively hid the real risks to the taxpayers from regulators of what he was doing at Fannie Mae. It was a company with a relentless desire to lobby, attack critics, whip into compliance its regulators, and aggressively protect its rich government subsidy. They created a financial defensive game-plan which extended far beyond government-back banks they ran, into mortgage lenders, homebuilders and Wall Street. In the interim, he took tens of millions of dollars in executive wages as the bubble grew. Politicians like Newt Gingrich facilitated him, but Newt wasn’t the biggest political beneficiary, not at all! And Fannie Mae wasn’t alone, not even by a close margin! And this isn’t an anomaly in the relationship between Washington and Wall Street, not by a stretch. As I have remarked for many years, the market and the state are now fused at the hips and lips. They must be forcefully separated like in an intervention with two teenage cousins who have become lovers while addicted to crack-cocaine. If not, the handmaiden state which they’ve spawned won’t be able to be saved from its addiction. It will destroy all liberty in the Western World. We are in the eleventh hour; state spending to GNP is everywhere in the West frighteningly out of hand. I fear it is too late but I’m keeping my fingers crossed.
When they got into trouble in the credit crisis of 2008, Fannie and Freddie, and many of their cohorts in these areas who followed their leads were bailed out by taxpayers: BUT, we haven’t liquidated their debts or freed the taxpayer of their obligation. They are now the accumulated federal deficit, see  Debt. We have created a whole new generation of government sponsored enterprises with federal guarantees. The disease is not gone, indeed it has spread to the whole body politic: the cancer is metastasizing
I Want to Explain How This has Occurred
It was casino betting. Here's a quote from the Wealth of Nations, 1775: "Though the principles of the banking trade may appear abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from these rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it." Banks gamble in the financial markets because people’s savings—the money they hold—are guaranteed by the state. All the regulation in the universe won’t prevent a re-occurrence of the financial crisis. We socialized money nearly a hundred years ago. We think that if we create a happy truly democratic soviet that it will have all the benefits of the USSR without the downside of the state-run gulag or the KGB terror. We forget to our peril that, simply as a purely economic experiment, was where it really failed.
If you’ve read the books All the Devils are Here,  The Smartest Guys in the RoomBoomerangThe FamilyWhat It TakesGhost WarsWeb of DeceitSleeping with the Devil, Inevitable Revolutions, The Political Economy of Media, The Greatest Trade Ever or Reckless Endangerment you know that we have come to an impasse between Left and Right: despite their intentions, the needy creature which they have created over the last six decades (known now as the Deep State), is too obese and corrupted to do anyone any good; it has too many tentacles to be controlled by either party’s ideas; it is the ideology.
This is how things work in Washington – paraphrased from Reckless Endangerment – . . . on February 4, 2003, Armando Falcon, the head of OFHEO (Office of Federal Housing Enterprise Oversight) sent a letter to the Senate Banking Committee and House Financial Services Committee which accompanied a newly published paper entitled 'Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO', It stated in part: “A financial institution’s direct interdependencies exist through explicit contractual arrangements with other parties—loans, financial derivatives, or credit insurance, for example—that expose the institution to counter party risk,” the paper stated. “If a significant number of interdependent institutions incur losses or fail simultaneously, uncertainty about the prospects of the remaining firms, even the solvent ones, and about the likely responses of other investors in those firms, will also increase. This may make it difficult for the remaining solvent institutions to issue debt.”
Falcon’s letter made clear that this view was his alone but the head of OFHEO had not simply attacked Fannie and Freddie, he had also directly threatened the fastest-growing business on Wall Street: the sale and trading of derivatives, including credit default swaps. 2003; imagine! Less than twenty-four hours later, The Bush White House demanded Falcon's resignation and threatened to replace him with Mark C. Brickell, who ironically had been the managing director at J. P. Morgan. It never happened, but the point wasn’t lost on the independent accountant who as far back as 1996 had uncovered the Ponzi Scheme at Fannie and Freddie; you don’t get it better than a letter to the president.
This was what was being sold to banks around the world: "A decade after Mr Potts had given his opinion on those newly established collateralised debt obligations, Fabrice Tourre was selling synthetic CDOs (you don’t really want to know) based on sub-prime mortgages to the clients of Goldman Sachs. He described the securities – called Abacus – to a girlfriend: 'I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself ‘Well, what if we created a “thing”, which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?'" Quoted in John Kay's Other People's Money, from the source: Money and Power, W D Cohan.
Why Was Nothing Done?
Call it human nature. Politics, and for that matter, the market itself, isn’t often rational, see  Bureausclerosis and Demomatosis. The state must be small to be well managed. I have suggested in Separation of Market and State governments around the world can referee their markets but must never be players, that lobbyists must be curtailed or at least be completely transparent, and that when the market place picks up the bill to the political election process, they own it, which in a state with comparatively small government might be okay but in a state with a socialized Wall-Street-like economy is outright foolish.
"Here’s a surprising fact: it was the government, not Wall Street, that first securitized modern mortgages. Ginnie Mae came first, selling securities beginning in 1970 that consisted of FHA and VA loans, and guaranteeing the payment of principal and interest. A year later, Freddie Mac issued the first mortgage-backed securities using conventional mortgages, also with principal and interest guaranteed. In doing so, it was taking on the risk that the borrower might default, while transferring the interest rate risk from the S&Ls to a third party: investors. Soon, Freddie was using Wall Street to market its securities. Volume grew slowly." (All the Devils are Here).
Efforts to shorten the election cycles in democratic countries with moderate rules on financing elections should help eliminate undue market influence in the future. Institutions like the US Federal Reserve have socialized the money supply; banks must be independent from governments, as must medicine, doctors and all professionals, education, all businesses, all unions, and every sort of thing the state now does except the courts, police and defense. How to bring this about? It will be a long hard process. People are today addicted to the state. As clerical influence has subsided in pluralistic societies, people turn to government to regulate their lives. But we must not allow this to happen. Life is hard. Everyone will agree. But it will be harder still with a lethargic handmaiden state planning  your future: a state which no longer works; it can’t make out who its constituents are; it doesn’t remember the better days; it longs for the morals of conformity; and it wants to tell you what to do with your life even while mismanaging its own.
Newt Gingrich is neither the worse example of the trend of hypocrisy in our bloated body politic, nor the most corrupted politician to hold office. He's probably a small fry. Why I pick on him is not to single him out by way of good and evil but as a kind of analogy. He is the stereotypical nanny-state conservative who preaches against the Left, but who is in reality, a “Big Government” politician not so much unlike them. Indeed, according to a 2000 report by The Cato Institute the combined budgets of the 95 major programs that the Contract with America promised to eliminate increased spending by 13 percent. He is a symbol of our modern malaise. He called for President Clinton’s impeachment while having an affair on his then current wife. Moreover, I have gay friends who have had sex with less partners then Newt Gingrich; yet he still speaks for cultural conservatives, then as Speaker of the House, he was reprimanded and penalized $300,000 in 1997: it was the first time in the history of the House that a speaker was disciplined for an ethics violation. He had his snout up to his eyeballs at Freddie Mac for ten years. He himself criticized President Obama in 2008 for accepting contributions from Fannie Mae and Freddie Mac. He directly helped enable the two companies to become the vehicle which conveyed us to the current Global Recession affecting billions of people throughout the world. Yet, Newt endurs as a policical force which the oligarch of the political class (described in The New Ancien Régime), prefers over any solution which might end the gravy train they’ve been riding for decades but which is rapidly destroying the West. And he calls Ron Paul dangerous, what an idiot wind.
ENDNOTE
This public government sponsored enterprise (GSE), had lobbyists and plenty of them greasing both sides of the aisles To Quote from Other People's Money again: "The finance sector spends more on lobbying than any other industry. In the USA its expenditures in the 2012–14 election cycle totalled $800 million, with another $400 million spent on campaign contributions. There are about 2,000 registered finance industry lobbyists in Washington: about four for each member of Congress.: Source: Americans for Financial Reform, December 11, 2014.