I suppose there’s not a lot to be said about the fact that Newt Gingrich got paid $1.6 million by Freddie Mac beyond simply observing that Newt Gingrich got paid $1.6 million by Freddie Mac. Paul Krugman notes, however, that people should try to wrap their heads around the fact that even as it’s true that “Freddie Mac was a deeply corrupt institution,” it’s also true that Fannie/Freddie are not responsible for the housing bubble or the subsequent financial crisis.
What the Newtsters involvement in this mess does remind me of, however, is the strange and slightly distressing post-2008 ideological polarization of the Fannie/Freddie issue. The way this used to work is that informed people generally acknowledged that kludgy loan subsidies for homeownership were a bad idea, but political elites across the board liked it. See, for example, Newt Gingrich’s 7-figure payday. Then after the crisis hit, a lot of conservatives started wildly over-blaming Fannie/Freddie for things and in response progressives started perversely positioning themselves as Fannie/Freddie defenders. This is a very counterproductive dynamic. The federal government should not be creating weird off-books lending entities. The policy objectives of the GSEs were somewhat dubious in my view, but even beyond that there was no legitimate reason to pursue those goals in this way.