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McCain's Bankers Weigh In

By Matthew Mosk
Lawyers for the bank that lent presidential candidate Sen. John McCain $4 million as he headed into the Republican primaries wrote a letter today defending the arrangement.

Two Fidelity & Trust Bank attorneys, in a letter addressed to McCain's lawyer, laid out their reasoning for why the terms of the loan should not prevent McCain from exiting the public financing system. The question is a crucial one for McCain in light of a recent letter from Federal Election Commission Chairman David M. Mason, who said the matter would likely be the subject of a review by the commission as soon as it has a quorum.

McCain entered the public financing system last year when his campaign was starved for cash. But the public financing program has drawbacks -- including stiff limits on campaign spending. In February, after doing well in the early primaries, he sought to exit the program. Federal rules permit him to do that, so long as he has not used any federal funds or used the promise of those funds as collateral with a bank.

McCain's loan from Fidelity involves what experts termed a highly unusual arrangement: He pledged that if he left the public financing system and started to lose the election, he would reenter it and use the federal funds to repay the loan.

"The loan terms were carefully drafted to exclude from the bank's collateral any matching funds," to ensure that McCain would have the "flexibility to withdraw from the program," said the letter from lawyers Matthew S. Bergman and Scott E. Thomas. Thomas, a Democrat, is a former FEC chairman.

Only "future certifications of matching funds" were pledged as collateral, the letter says -- and that would have occurred only if McCain had started to lose, which he never did.

By Post Editor  |  February 25, 2008; 9:57 PM ET
Categories:  John McCain  
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My problem with this is McCain bypassing the "signatures" needed to get on a ballot (everyone else must do this), because he was entering the public financing system. This alone saved him countless dollars and headaches - and now he can just 'walk away' and say Opps?? I guess everyone should do this and never have to get one signature again!!!!!!!!

Posted by: skimom27 | February 26, 2008 3:13 PM | Report abuse

Where is the surprise? McCain has been talking out of both sides of his mouth for years. He skated on the "Keating Five" fiasco and nothing has changed since then. He continues to get free passes no matter how duplicitous he becomes. Example: No water boarding then supporting water boarding. Or: The surge is working as evidenced by he and Lindsey Graham "shopping" in Baghdad bazaar. Doesn't everybody go shopping in body armor escorted by armed guards, light armor, and helicopters overhead. McCain, the straight talking sham.

Posted by: jgrecco | February 26, 2008 11:41 AM | Report abuse

calboxer:

Neither McCain nor Obama were committed to public financing during the PRIMARY season -- Obama is the one already giving signs of backing out of public financing for the GENERAL election while McCain has never waivered on that -- see the difference?

Posted by: JakeD | February 26, 2008 10:59 AM | Report abuse

So it may or may not be against the law for him to back out of a commitment that he made publicly and proudly.

The other problem in terms of messaging for the campaing seems to be that while McCain was talking one way about his commitment to public financing and bashing Obama for not following through on his supposed commitment, McCain had a backdoor built in so that he could withdraw the whole time.

Straight talk? This really feels like an instance of a thrid grader with their fingers crossed behind their back. no?

Posted by: calboxer | February 26, 2008 9:36 AM | Report abuse

Did Matthew Mosk write the headline too? I sense a play on "Anchors Away".

Posted by: JakeD | February 26, 2008 8:28 AM | Report abuse

LOL! I guess you guys missed the part above where the BANK's lawyers defended the arrangement -- if the BANK does not consider the promise of federal funds as collateral, that's all she wrote -- even if the FEC eventually fines President McCain on this, big deal.

Posted by: JakeD | February 26, 2008 6:17 AM | Report abuse

I thought he was so against Ear Marks now we find out that he uses the public treasure as collateral for money he doesn't have. It appears that the straight talk express speaks with forked tongue.

Posted by: mgibbosh | February 26, 2008 2:37 AM | Report abuse

McCain's FEC Problems:
1.) A footnote: "3 The certification of funds must not be pledged as security for private financing." This means he cannot withdraw. Also, if this footnote did not apply he would have to obtain permission to do so, albeit routine.

2.) Von Spakovsky in combo with the Republican Senators is the second problem; most likely this crew will blink, Von Spakovsky is not worth it! The down ballot races come into play! This would resolve the quorum issue, but not McCain's problems.

3.) McCain the straight shooter forever tainted. Short term disaster, long term slap with major financial penalty, severely lessened chances in general election; the public slime tolerance has long been reached.

4.) Forget about any agreement with Obama; suspect his team has an aversion to hemlock.

5. Republicans will run with the speed of light away from this one; the F.E.C. may defer a final decision until after the election but not overturn the existing rules. In short as one noted his folks were to smart by one half; at best he is a one term lame duck president, and at worst he leaves the Senate in disgrace.
Posted by: ADLEED | February 25, 2008 12:58 AM

Posted by: ADLEED | February 25, 2008 11:02 PM | Report abuse

The only collateral that McCain provided for a 4 million dollar loan was his "pledged" ? Wow! No need to raise an eyebrow about this situation.

So, does that mean that it's just a gift until it's paid off?

Posted by: spencer_ridd | February 25, 2008 11:01 PM | Report abuse

Wow! You can use Federal Matching Funds as a hedge against failure.

("He pledged that if he left the public financing system and started to lose the election, he would reenter it and use the federal funds to repay the loan.")

There's something in need of reform!

Posted by: citizenjklm | February 25, 2008 10:42 PM | Report abuse

The paragraph that I have read and posted here and at the "Fix" is executory in nature and surely unenforceable. I continue to think that this is "Much Ado About Nothing".

Posted by: mark_in_austin | February 25, 2008 10:13 PM | Report abuse

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