Moving to meet new political and regulatory challenges, Freddie Mac has hired Newt Gingrich, the controversial former speaker of the House, as a consultant.
Mr. Gingrich and his consulting firm, Gingrich Group, with offices in Atlanta and Washington, began working for Freddie in May "to provide strategic counsel on a range of issues that we're facing related to policy and the industry," a Freddie spokeswoman said. Mr. Gingrich, who is forbidden to lobby his former colleagues in the House until next January, was not available for comment.
The former speaker is one of a growing number of political heavyweights hired recently by Freddie and its rival government-sponsored enterprise, Fannie Mae.
Freddie and Fannie, already known for their clout in Washington, face new challenges, including a proposed risk-based capital guideline; a new trade group, FM Watch, formed by other groups from the financial services and mortgage industries who share concerns about expansion of the GSEs' influence; and deteriorating relationships with some lenders, who are competing with the enterprises for brand recognition and control over underwriting technology.
Both companies are also said to be exploring electronic lobbying: harnessing e-mail and the Internet to sway Congress with public opinion.
Fannie Mae has "a long tradition of hiring former officials," said Charles Lewis, executive director of the Center for Public Integrity in Washington. "Fannie Mae has got Capitol Hill as wired as anyone in Washington."
Franklin D. Raines, chairman and chief executive of Fannie Mae, was the director of the Office of Management and Budget before rejoining Fannie late last year. And Jamie S. Gorelick, vice chairman of Fannie Mae, signed on in May 1997 after serving as deputy attorney general.
Mr. Lewis said the movement of officials into such jobs blurs the line between public service and private enterprise. The recent hirings by Fannie and Freddie are an example of how "incestuous these quasi-governmental entities are with the people that ostensibly regulate them or have oversight over them."
Fannie Mae hired Mr. Gingrich's chief of staff, Arne L. Christenson, this year as senior vice president for regulatory policy.
Fannie also just hired Richard Maurano, who left as deputy Democratic staff director of the House Banking Committee this month, to be Fannie's director of government relations.
Freddie Mac's recent hires also include Kimberly Kranys Cobb, a strategic consultant who was a Banking Committee aide to Sen. Connie Mack, R-Fla., and Angela Garcia, former counsel to the House Banking Housing subcommittee, who is working in Freddie's industry relations and issues management group.
It remains to be seen how Mr. Gingrich, a lightning rod for controversy, will benefit Freddie Mac in its mission of fostering mortgage lending to low- and moderate-income Americans.
"He's not going to be representing us externally or lobbying on our behalf," a Freddie spokeswoman said. "Aside from his politics, many people respect his expertise in the policymaking arena," she added.
Both Fannie and Freddie "have had a very hefty and healthy government relations and lobbying staff," said Bob O'Toole, senior vice president of the Mortgage Bankers Association. "They tend to pick people up when they become available, not necessarily when there is an opening."
A spokeswoman for FM Watch said that "many of those hired by Fannie Mae and Freddie Mac are specifically assigned to oppose any legitimate debate on Capitol Hill, in the administration, in the White House and the industry, about Fannie Mae's and Freddie Mac's role."
Meanwhile, Fannie and Freddie are also said to be trying to use technology for political leverage on Capitol Hill. One program Fannie and Freddie are said to be exploring is the Juno Advocacy Network in Washington, part of Juno Online Services.
Clients of the network can tap into the pool of seven million subscribers, who can then be rallied to contact Congress or state legislatures via telephone or e-mail.
