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FEC Staff Says McCain Bank Loans Legal

Updated 7:11 p.m.
By Matthew Mosk
Staff attorneys for the Federal Election Commission have recommended that the commissioners accept Sen. John McCain's position that he was legally entitled to withdraw from public matching funds during the primary, according to an 18 page memorandum made public today on the FEC website.

The commission is scheduled to meet next week to vote on the matter.

Questions first arose earlier this year about the legality of McCain's decision to withdraw from the federal matching program after he filed papers with the FEC showing he had taken out an unorthodox bank loan to help him stay afloat in the run-up to the decisive early primaries.

McCain's cash-strapped campaign borrowed $1 million from a Bethesda bank two weeks before the New Hampshire primary by pledging to enter the public financing system if his bid for the presidency faltered. That was on top of a $3 million bank loan in November, and another $1 million shortly before the Super Tuesday contests that pledged unprocessed contributions and other campaign assets as collateral.

The lending terms brought condemnation from Democrats and prompted questions from then-FEC Chairman David Mason, who wondered whether McCain may have inadvertently committed himself to entering the public financing system for the remainder of the primary season by holding out the prospect of taking public matching funds in exchange for the $1 million loan in December.

If McCain had been forced to remain in the matching system, it could have been catastrophic to his campaign, because he would have faced strict restrictions on how much money he could spend (limits he has now far exceeded).

"This whole area is uncharted," Lawrence H. Norton, a former general counsel of the FEC, said at the time.

McCain's attorneys and the Fidelity & Trust president said all along they believed the loan agreements were carefully scrutinized in advance to make sure they would pass muster with federal banking regulators and the FEC.

The recommendation sent by staff to the FEC members today suggests the commission's legal experts agree.

"We conclude that the Matching Payment Act permits withdrawal unless the candidate has actually received public funds or pledged them as security for private financing, and recommend that the Commission determine that Senator McCain may withdraw from the Matching Payment Program because he did not receive public funds nor pledge public funds as security for private financing," the memo says.

None of this effects McCain's use of public funds in the general election, which is a separate aspect of the system of a complex presidential public financing program set up after Watergate.

In a separate recommendation, the staff analysts said McCain would need the FEC to vote to allow him to withdraw from the federal matching system.

The McCain campaign issued a statement saying the candidate was "not surprised" with the assessment by FEC staff attorneys who said he was legally permitted to withdraw from federal funding system for the primaries.

"We are pleased but obviously not surprised with the FEC staff's recommendations to the Commission," said Brian Rogers, a campaign spokesman. "The staff largely recognized the points we have made all along -- that John McCain had a right to withdraw from the primary matching funds system, and that the campaign did not pledge any federal matching funds certifications as collateral for a bank loan. The campaign has at all times made clear that it carefully complied with all federal laws and FEC regulations, and it is gratifying that the professional FEC staff agrees with us."

Officials at the Democratic National Committee, who went to court to try and challenge McCain's hasty departure from the federal funding regime during the primaries, said yesterday they believe the FEC "owes the public and is required by law to conduct a full investigation" into the matter.

DNC spokeswoman Karen Finney noted that the commission will still need to vote affirmatively to release McCain from the system and, she believes they need to addressed the matter "with attention to the law and not in any way based on McCain's position and interests as his party's presidential nominee."

By Web Politics Editor  |  August 14, 2008; 5:07 PM ET
Categories:  John McCain , The Green Zone  
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Comments

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Posted by: 1icabdmwnz | August 16, 2008 7:04 PM | Report abuse

I, Barack Obama, promise that no one American company will be sold to foreign investors while I am president.

To do that, I will increase taxes on all these same companies, their owners, and stok holders and bleed them dry until they are so completely useless and innefective that no one in their right state of mind will EVER want to buy them.

I am Barack Obama and I approve this message.

Posted by: Barack Obama | August 15, 2008 5:08 PM | Report abuse

Republicans have us at war in two countries as a result of Republican lies and deceptions, and we might be in two more wars--Iran and Pakistan--by November. We have alienated the entire Muslim world and most of the rest.

The dollar has lost 60% of its value against the euro, and the once mighty dollar is losing its reserve currency role.

The Republicans' policies have driven up the price of both oil and gold by 400%.

Inflation is in double digits. Employment is falling.

The Republican economy in the 21st century has been unable to create net new jobs for Americans except for low wage domestic services such as waitresses, bartenders, retail clerks and hospital orderlies.

Republican deregulation brought about fraud in mortgage lending and dangerous financial instruments which have collapsed the housing market, leaving a million or more homeowners facing foreclosure. The financial system is in disarray and might collapse from insolvency.

The trade and budget deficits have exploded. The US trade deficit is larger than the combined trade deficits of every deficit country in the world.

The US can no longer finance its wars or its own government and relies on foreign loans to function day to day. To pay for its consumption, the US sells its existing assets--companies, real estate, toll roads, whatever it can offer--to foreigners.

Republicans have run roughshod over the US Constitution, Congress, the courts and civil liberties. Republicans have made it perfectly clear that they believe that our civil liberties make us unsafe--precisely the opposite view of our Founding Fathers. Yet, Republicans regard themselves as the Patriotic Party.

The Republicans have violated the Nuremberg prohibitions against war crimes, and they have violated the Geneva Conventions against torture and abuse of prisoners. Republican disregard for human rights ranks with that of history's great tyrants.

The Republicans have put in place the foundation for a police state, which they have no problem using against fellow citizens!

We must get the Republicans totally out of power, or we will have no country left for any of us!

Posted by: Anonymous | August 15, 2008 4:32 PM | Report abuse

where is the memo on the website?

Posted by: Anonymous | August 15, 2008 12:41 PM | Report abuse

where is the memo on the website?

Posted by: Anonymous | August 15, 2008 12:41 PM | Report abuse

where is the memo on the website?

Posted by: Anonymous | August 15, 2008 12:41 PM | Report abuse

Can we look at Obama renegging on his pledge to keep a publicly financed general election campaign without that chaff being thrown in the air to obscure his breaking of his word.
_______________________________________________________________

Obama's campaign is being funded by the people. The "little people." McCain's campaign is being funded by PAC money, bundler's and the wealthy.

Posted by: Hate crooked politicans | August 15, 2008 11:07 AM | Report abuse

Back in the Clinton administration "no controlling legal authority" was an excuse that held up just fine for Gore. When the FEC was understrength and could not rule, McCain's guilt became a mantra for the same people. Now the controlling legal authority has ruled and you look stupid.

Make excuses and other unfounded claims all you like. Obama has flouted his campaign finance promises. McCain has not and exposed his right flank to enact the campaign finance law as it exists in a bipartisan effort that Obama can only lay empty claims to.

Posted by: Ed | August 15, 2008 9:30 AM | Report abuse

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Posted by: HiwLatBIzFztWkXv | August 15, 2008 6:49 AM | Report abuse

I hear ya, man. Did you know that McCain married into an organized crime family?

The mainstream media won't report on it, but it's true.

http://www.phoenixnewtimes.com/2000-02-17/news/haunted-by-spirits/1

http://en.wikipedia.org/wiki/Jim_Hensley#Early_business_career.2C_legal_issues

http://en.wikipedia.org/wiki/Kerry_Committee_report#Kerry.27s_findings

And you wonder why Reagan - of Iran-Contra-Crack fame - and McCain were such great friends.

And you have to wonder exactly who McCain met with in Colombia.

These people are crooked. Big Oil, Big Tobacco, Big Wars, Big Drugs

Posted by: Corruption Anon | August 15, 2008 12:40 AM | Report abuse

Is anybody really surprised by this? If this would have been a Democratic candidate they would be in jail right now. These cons play by a different set of rules and everyone knows it. Just like the head of Justice says "breaking the law isn't always a crime". Unless you are a (D) then we will simply invent a law and call whatever you do a crime. What a joke! Only a (R) administration could get away with murder. literally.

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Posted by: f4bs8a7vz9 | August 14, 2008 10:23 PM | Report abuse

Given the politicization of state attorneys - and the fact that Tom DeLay's guy is the new FEC chair - this doesn't come as any surprise to me.

But the fact remains that McCain, in addition to getting the loan, also used the matching system to get on the ballots in many states.

Just like when he got money from Charles Keating but didn't report it, he broke the law and is going to get off scot-free.

Posted by: JR, Boston | August 14, 2008 8:13 PM | Report abuse

Now, can we go back through the acres of political blogs, articles and posts to correct those who stated that what McCain did was in violation of the law?

Can we look at Obama renegging on his pledge to keep a publicly financed general election campaign without that chaff being thrown in the air to obscure his breaking of his word.

Posted by: Ed | August 14, 2008 5:21 PM | Report abuse

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