Freddie Mac hired Gingrich as it reshaped strategy

A sign on a street signifies the headquarters of Freddie Mac in McLean, Virginia, May 14, 2008.

WASHINGTON (Reuters) - Within months after taking over as chief lobbyist at mortgage lender Freddie Mac in 1999, Mitchell Delk hired a prominent Washington insider to advise him on how to build support among conservatives on Capitol Hill: Newt Gingrich, the former speaker of the House of Representatives.

A key part of Delk's strategy, as outlined in Federal Election Commission records, was to build goodwill in Congress by holding fundraising events for influential members of House and Senate committees that had oversight of Freddie Mac.

Gingrich had experience in such matters as an architect of GOPAC, one of the Republican Party's most important political action committees.

Gingrich's activity at Freddie Mac has been under scrutiny during his run for the 2012 Republican presidential nomination, as rivals have accused him of lobbying for Freddie Mac.

The former speaker has rejected such allegations, and his first $300,000-a-year contract with Freddie Mac, released this week by his campaign, states that he would not "engage in lobbying services of any kind."

But the contract, together with the FEC records describing Delk's revamping of Freddie Mac's lobbying shop, sheds light on how Gingrich could avoid the lobbyist label and still be valuable to the mortgage lender as a strategist.

Gingrich's contract says the former House speaker would work with Delk and other Freddie Mac officials on "strategic planning and public policy."

And, it calls on Gingrich to contribute to the lender's "corporate planning and business goals."

"He was a consultant for us, and ... not a lobbyist," Freddie Mac spokesman Doug Duvall said, declining to comment further on the lender's arrangement with Gingrich.

Gingrich's campaign has offered few specifics about his work for Freddie Mac, for which he earned as much as $1.8 million during two contract periods. It said late last year that part of his job was to help Freddie Mac build bridges to conservatives.

He has called himself a "historian" who advised the mortgage lender on issues such as its lending policies.

Gingrich joined Delk's government affairs shop at a time when the former Freddie Mac senior vice president was hiring several former members of Congress and congressional aides for his lobbying team.

At the time, conservative Republicans on Capitol Hill were seeking regulations to rein in the profits of government-sponsored lenders such as Freddie Mac.

Delk, who did not respond to phone calls seeking comment, successfully fought back against such legislation by hiring dozens of outside consultants and spending as much on lobbying as many major corporations.

FEC INVESTIGATION

However, his lobbying team came under investigation by the FEC in 2003.

The FEC probe found that under Delk's guidance, Freddie Mac improperly used corporate resources to put on 85 fundraising events that raised about $1.7 million for federal candidates.

The majority of the events were for Republicans, the FEC found.

FEC investigators concluded that at least one major contribution to a Republican entity came directly from Freddie Mac funds and that some fundraisers were held in Freddie Mac's offices - both violations of FEC rules.

In 2006, Freddie Mac agreed to a $3.8 million settlement for violating federal election rules, the largest civil fine the FEC had ever levied.

Delk, who resigned from Freddie Mac in 2004, was not charged in the case. Delk's lawyer in the case, Ken Gross, said Gingrich's name "never came up in connection with (the FEC) case."

Vin Weber, a former Republican representative from Minnesota who also was hired as a Freddie Mac consultant, said he never worked directly with Gingrich on Freddie Mac matters.

He said the mortgage lender did not want congressional arm-twisting but hoped to "create a positive buzz for Freddie Mac."

Weber said someone like Gingrich could provide an important service without lobbying.

"I wouldn't ask him to pick up the phone (to call a member of Congress), because that is really not necessary. He is circulating all the time with members of Congress," said Weber, who is supporting Mitt Romney in this year's race for the Republican presidential nomination.

Former New York Representative Susan Molinari, another Romney supporter, also was hired by Freddie Mac during Delk's tenure. She did not return phone calls or emails.

Republican Michael Oxley, who was House Financial Services Committee chairman and attended at least 19 Delk fundraisers, said that at the time he did not know Gingrich worked for Freddie Mac.

Oxley "may have seen him from time to time at a social thing," said Peggy Peterson, a spokeswoman for Oxley.

Gingrich signed a second contract with Freddie Mac in 2006. The lender ended its relationship with outside consultants in 2008, when the U.S. Treasury placed Freddie Mac and Fannie Mae in conservatorship.

Republicans have blamed the government-sponsored lenders, which sustained $14.9 billion in losses when the U.S. housing market crashed, for a major role in the subprime lending crisis.

(Additional reporting by Margaret Chadbourne; editing by David Lindsey and Mohammad Zargham)