A Sweet Deal

Ouch.

What is your point? You say it is legal and the donors had knowledge and are okay with it.
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This combined with the fine reporting on former Senator Coleman being investigated by the FBI for serious financial issues, oh wait that topic isn’t discussed. Sorry.

P-NNTO: Okay, my point is that the law allows a bunch of corporate interests to fatten the personal bank account of someone who chairs a committee that deals with their very issues.
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As has often been pointed out, the real scandal in Washington is what’s legal.
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Is that clear?

Very clear. A smear.

Looks like another cranky commenter day here in the Swamp.

KT- as Dirks said, ouch.
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P-NNTO – After eight long years of IOKIYAR, I don’t want eight years of IOKIYAD. “Fair and Balanced” that ain’t.

KT – today and everyday.

K Tizzle
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Here is the thing though, she DID loan the money to her PAC correct? Now I suppose she could just write it off as a loss but she did follow the rules in terms of not just writing a check ala Mitt Romney so that the richest can win the elections. Now on the other hand I agree that it looks bad that some of the contributors to retire the debt fall under her purview. However what does Fannie Mae or the Pharmacists have to do with her subcomittee? And what were their levels of giving before she needed to retire the debt. 18 percent is a hefty interest rate on a loan but it doesn’t rival many credit card companies. Now to tie this all in, did she grant any of the people who contributed any special favors? The article doesn’t address that point at all.
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Now on the other hand this part of the article would tend at least in my opinion to show that she really didn’t do anything wrong. Especially the part where the FEC RULED that she didnt do anything wrong.
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Napolitano gave the money to her campaign in March 1998 and began charging 18 percent interest on May 3, 1998, after the deadline passed for moving the funds into another retirement account without early withdrawal penalties, according to FEC records.
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Napolitano cut the interest charge to 10 percent in July 2006. As of Dec. 31, the campaign owed $85,273 of principal and $5,549 of unpaid interest, according to FEC filings.
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When the FEC investigated her opponent’s 1998 complaint about the loan, Napolitano’s lawyer, Diane Fishburn, said the 18 percent interest rate was “not out of line with the rates on other unsecured loan transactions.” The FEC concluded that the interest rate, while “high,” was allowable.
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FEC Ruling
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“It does not appear that the 18 percent interest rate for the $150,000 loan amounts to a conversion of campaign funds to the candidate’s personal use or that the $150,000 loan was made on commercially unreasonable terms,” the commission ruled.
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Napolitano didn’t charge interest on an additional $70,000 of loans to her 1998 campaign. FEC records show that the campaign repaid at least $59,000 of the interest-free loans by August 1999. The interest-free loans aren’t listed on campaign filings after early 2000.

K-Teezie, if this is legal, I find it hard to believe it’s isolated. If it’s not isolated, who else? How much? This seems egregious in a vacuum, and is really, but do we have any context as to the extent of this behavior?

BTW the woman is 72 years old and she used her pension funds to loan to her campaign. I might be a bad guy for saying this but i don’t see anything wrong with her getting paid back for the money she put in. Sue me.

SG: She could also just pay herself back. Personally, I don’t think the law should allow politicians to pay themselves ANY interest on money they loan themselves. It’s self-dealing and a huge loophole. And it shows how completely toothless the law and the FEC are. You should see some of the expenditures that slide by on these reports. Many years ago, I wrote about one California congressman who was paying his cleaning lady with campaign funds.

That wasn’t my point at all billiecat. Legal, clearly transparent, and donors were aware. Not exactly Duke Cunningham stuff.
A post about the need to change the law might make sense but this is just smear.

Let me go on record as noting that self-dealing scumbags are self-dealing scumbags no matter what party they belong to.
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I’m not going to waste a single neuron defending this arrangment.

2cute: that’s a very good question. i suspect it happens, but this looks pretty flagrant. i don’t, for instance, recall hillary clinton making any profit off the money she loaned her presidential campaign. i’m not in the office today, and heading for the airport, but i’ll try to remember to check into that when i get back from my week off.

KT – I’m not with you on the “no interest” bit. If she had to personally borrow the money (the implication from sg is that it was a loan from her pension fund) she’d have to pay interest on it as she paid it back and should be able to recoup that cost. Even if not, she should be able to get something for the time value of her money. But it should be a reasonable, market rate. 18% is pretty steep. In the old days we’d call it usurious.

K Tizzle
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I think thats a throw the baby out with the bath water stance. In what part of America does it make sense to not have a ROI when you make a loan? And the truth is in my mind that if people gave the money back faster she wouldn’t be getting paid interest for all these years. The FEC rules may be flawed but in certain cases they are necessary so we don’t just have rich people winning elections because they can out spend their opponents. From the article it doesn’t appear that this is a wealthy woman living high on the hog. Now she may be a crook, there is certainly that possibility. But the problem is the article doesn’t really get into anything other than presenting some facts that could be questionable on their face. For all we know everything about the transactions were totally legit. They don’t talk about her having frivilous expenses on her financial reports. They don’t talk about her living lavish off of the money she has been paid in interest. They just basically say “Hey look at all this money” then “Hey look at these contributors” and hope that you make the tangential connection. But the real question is, if these companies were truly breaking her off why is there still a debt running on the loan? I am all for campaign finance reform and I don’t like the appearance of pay to play but I fail to see how that has been established at all in that story. It reminds me of the stories about the levels that Wall Street was giving to Obama and the implication that he would turn around and scratch their back with no factual basis for those claims. If you know more about this particular woman I am surely open to hearing it. But I just don’t feel that there is any there there.

billie:

but she isn’t bothering to pay back the loan. also, it appears that she is getting to decide how much interest she is charging herself. not a bad deal. i’d love to be able to decide that my 401(k) had to pay me 10% this year.

SG:

Like I said, she gets to decide how much interest to pay herself. Much better than leaving that money in her retirement fund, don’t you think?

P-NNTO – A smear in my book is a false story, or one that omits or overemphasizes facts to bring the reader to a false conclusion. Please give me your definition or point to the false statements, omitted or overemphasized facts in what KT wrote.

And also, she’s not paying the interest — her campaign contributors are. And she gets to decide how much to charge.

what part of America does it make sense to not have a ROI when you make a loan?
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That would be when you make a loan to yourself. It’s a flagrant case of intermingling funds. And allowing 18% interest on consumer debt is one of the major reasons that our economy is currently tanking.

If the FEC explicitly ruled on the interest rate in the fact situation and found it high but allowable, I’m not sure I get what elevates this case beyond what must be other instances in the hundreds.

KT- I’m just disagreeing with your statement in the comments that politicians should not be allowed to pay themselves ANY interest. I’m not arguing with your central point from your story, just the length to which you’d take it in the comments.
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If I loan your campaign for Commerce Secretary the total in my 401(k), will you pay me 18% on it? And keep it for me at that rate until I retire? Might help me make back the losses I suffered last year . . .

K Tizzle
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Let me ask you a question that you may not be aware of. What do you think the historical average is for ROI on investments in the market over a 20 year period? Keep in mind that she made the loan in 1998 when the stock market was BOOMING. Also keep in mind that she lowered the rate 2 years ago when the market was BOOMING. Its easy to look at the DOW today and say man she got a really sweet deal. But if you call any money manager right now they will tell you that on average you would pull a 20% return over 20 years in the market. And again you have credit card companies charging double that 18 percent. Now as for paying herself back, how do you know she is financially able to do that? If you can show me that she could afford paying herself back after taken that money out of her retirement when she is 72 years old and not likely to reenter the private sector to work, again I am open to hearing about that. But if not then I think you might be making a broad generalization about someone who might not fit into the mold of what you are describing.
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Of course I could always just go back to the fact that the FEC already ruled on it and absolved her. But I am willing to set that aside if you can show me she is a fat cat who has the money to pay herself back.

billie: that’s brilliant! it works for you and it works for me. plus, i’ll make you undersecretary for spring.
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i do need a campaign slogan, though. i’m thinking: tumulty for commerce secretary. i mean, how hard can the job be?

pourme – you are possibly right. Everybody may be doing it, which is a scandal, or only she’s doing it, which is a scandal. Either way, it’s a good story to dig into.

sg – I’m sorry, I don’t see how allowing a politician to treat campaign finances like they are the stock market is a good thing. You sound like you are on the side of the plutocrats on this one.

When I bought my very first computer, I borrowed money from myself and paid it back with interest at the rate a bank would have charged if I had borrowed from it. Nobody cared, but it seems to me her doing this is sort of the same thing. The fault I would find is that 18% seems really high, particularly in a public context. She might have a case if that is what she would be earning on the money if it were still in her account. If hers is earning 18% now, I need her phone number.
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Have a great vacation KT – wish I were going to SA rather than being here in the windy chilly northeast!

KT – I still want winter. I’ve always wanted to be the Snow Miser.
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How about “Tumulty: She Can’t BE Any Worse Than The Other Guys You’ve Picked!”

Let’s put somthing in perspective. She has pocketted $286,000 having put up only 150K and she’s still showing an open balance of 86K in principle.
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There is no circumstance by which that can be justified. Give it up.

What a minute — I just read KT’s reply to billiecat offering to make her undersecretary for spring in return for the huge contribution to KT’s campaign. Foul – I asked for spring last night. KT is buying contributions. Humph.
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It could be chilly in SA too, you know.

My position on these things is to hold the regulators accountable for clarity and oversight. I don’t see any use in wagging a finger at someone who weighs in at the 95th percentile of some kind of regulatory framework. Create and enforce measurable standards. It’s pure folly to apply individual meaningless notions of “fairness” onto complex fact situations such as these.

Of course I could always just go back to the fact that the FEC already ruled on it and absolved her. But I am willing to set that aside if you can show me she is a fat cat who has the money to pay herself back.

According to her latest FEC filing, she has $238,000 cash on hand in her campaign account–quite ample to repay the principal on the loan. (Total debt is under $100,000.)
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http://query.nictusa.com/cgi-bin/cancomsrs/
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And the story addresses the fact that this loan has far outperformed the stock market over this period.

Lets put it this way. Yes it’s 18% a year. It’s also 11 years. She could have paid down the principle at any time she chose but realized that letting it ride was significantly more lucrative.

biliecat
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The woman took her pension funds to loan her campaign those funds. So in order for her to have a “sweet deal” would mean that otherwise she wouldn’t be getting the same kind of ROI had she left the funds where they were. If historically she could have pulled the same amount of ROI in her retirement funds that she is pulling from the inerest on the loan then its not such a “sweet deal” after all is it. I hope that clears it up for you. Especially since KT said
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i’d love to be able to decide that my 401(k) had to pay me 10% this year.

ivb – the difference is you owned the computer, you owned the funds, you owed no duty to anyone else to avoid self-dealing. She doesn’t own the funds in her campaign treasury – they belong to her campaign. She owes a duty to the public to avoid self-dealing and graft. This may be legal, but it ain’t pretty.

Thanks, KT. I think it’s worth looking into. If the FEC absolved her, and this behavior is somewhat common, then I don’t think she is the story. I think the laws allowing it are the story.

SG:
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Are you truly OK with what happened here?
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Would you be OK if all Congressional representatives made money from their campaigns like this?
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I’m not asking you to tell us whether or not this fits the current legal definition of corruption, but is this not any common person’s definition of venality in action?

sg – she could have put the money back into her pension fund twice over in the past 11 years – for all we know, that’s where the interest went. She ain’t out a dime – she’s up by a quarter million. And the risk was de minimis (only faced token opposition last year). Sweet deal.

ivb: now you know how tony zinni is feeling.
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http://blogs.abcnews.com/politicalpunch/2009/02/dissing-general.html

She doesn’t own the funds in her campaign treasury – they belong to her campaign.
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Yes, billiecat, but the campaign finance laws are pretty bad (I think that was one of KT’s points) and the money can even be used to defend in lawsuits. Hillary Clinton could have done this too, although she didn’t. I do agree with your conclusion – This may be legal, but it ain’t pretty.

K Tizzle
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If you are talking about this
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Over the same period, an investment in the Standard & Poor’s 500 stocks, with reinvested dividends, would have lost more than 7 percent, according to Bloomberg data.

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I would point out to you at the time that she put the money in the market was BOOMING and she couldn’t have had any idea that 9-11 would happen nor that the market would have collapsed last year. I could also point out that a retirement account would never just have standard and poors 500 stocks with reinvested dividends. If they did the manager of the account would be fired and or sued. Now answer me this, how many people would complain that she “raided” her campaign funds if she told them to write her a check right now for the full amount. Damn ed if you do…
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SZ
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Yes I am ok with what happened here because I don’t have enough evidence to NOT be ok with it. You tell me how this fits in a common person’s definition of venality. Of course I would ask that you read the full article first and not just what’s blockquoted here. Like I said, if there is more to the story its definitely NOT in the article. But the blockquotes surely do paint an ominous picture don’t they?

ivb: now you know how tony zinni is feeling.
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Maybe I can have a beer with him and we can cry into them.

Also, following on ivb at (#41), candidates don’t exactly have arms’ length relationships with their campaign treasuries. they decide how the money gets spent.

billiecat
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You are wrong, read the article. She already was hit with penalties and taxes for taking the funds out early. When you do that literally you could end up paying damn near 50% in taxes and penalties on the amount you took out. Again go to a investment website or ask a money manager what are the penalites and taxes you have to pay when you take an early dispersment from your retirement account and don’t return the funds in a timely fashion.
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Like I said before and I will say again, she is 72 years old. If she is in fact living high off the hog then show me that. If she threw projects at the companies who helped pay down her debt then show me that. If not I am not predisposed to give much of a sh*t and I don’t think its that big of a deal. I guess we should just say phuck the FEC ruling, lets get our torches and pitchforks. But I am not really wired that way.

Look, in all seriousness, this is appalling. For too long politicians have looked at “public service” as the public trough. They ask not what they can do for their country but “what’s in it for me?” This just Blago with pearls and a better legal case. This may be only one example, it may not even be the most egregious example, but how anyone can be okay with stuff like this – regardless of the political party the perp belongs to – is beyond me.

SG:

I think someone with a generous spirit like yours should really consider a contribution to my campaign to become commerce secretary.

sg – so if she did pay a 50% penalty, she made only $200k instead of $250. Sweet deal.
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You keep trying to make this sound like she’s just some little old lady who joined the Beardstown Ladies’ Investment Club. she’s a public servant, fer cryin’ out loud. Hold her to a higher standard.

sg – By the way, I have had to dip into my 401(k) of late and after reading this I’m considering running for office to make up the difference, if this deal with KT doesn’t work out. Glad to know you’re okay with that.

billie
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Just to go by your calculations if she is alleged to have made $250,000 off the deal then half of her intial loan would be $75,000 which would knock it down to $175,000. Not really making a point here because like I said I am not pressed at all about it.

billie
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If you had to dip into your 401k recently then I am sorry to hear that because that would speak to your situation which is probably much like mine as I have had to do somewhat the same thing. If you could run for office AND win AND win reelection several times to make up the difference then I say have at it. You have my full endorsement!

sg – you’re right. Math’s not my strong suit. So assuming she paid a 50% penalty (which she may not have) she “only” made a profit of $175k on a risk-free investment of $150k. Sweeeeeeeeet deal.

sg – I’m fortunate. It was a short-term thing, and I’m no worse off than many and better off than most, but I still think Napolitano’s gig is a sweet deal.

i’m heading out now for a week in texas, where i will be preparing for my confirmation hearings.

On another topic, remember when I said President Obama and nem were going to throw Gregg under the bus? I think this will be a wake up call to the rethugs that Homie don’t play that!

SG:
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The suburban Los Angeles Democrat made the $150,000 loan in 1998, when she was first elected to the U.S. House of Representatives. Through Dec. 31, her campaign committee has used donations to pay Napolitano $221,780 of interest while reducing the principal by just $64,727

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So she made $71,780.00 over ten years.
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That’s an investment.
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The Federal Election Commission in 1999…agreed with Napolitano’s explanation that the interest charges were justified because Napolitano had to pay penalties for taking the money from a retirement account.

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Right.
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They were OK with it in 1999 because of the penalties she would have paid in 1999. Other than that slight inconvenience, she’s making money clear and away for ten years.
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..the campaign IOU has been a profitable asset, far outperforming stocks since the loan started accruing interest in May 1998. Over the same period, an investment in the Standard & Poor’s 500 stocks, with reinvested dividends, would have lost more than 7 percent, according to Bloomberg data.

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The debt is the biggest asset listed in Napolitano’s financial-disclosure filings, which don’t include personal residences.

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Should a loan to one’s own campaign ever be an asset, except maybe in the accounting sense of the word (and then only for the period it takes to quickly pay it off)?
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Napolitano cut the interest charge to 10 percent in July 2006. As of Dec. 31, the campaign owed $85,273 of principal and $5,549 of unpaid interest, according to FEC filings

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Oh super! How magnanimous of her! She decided to pay herself less money by only taking ten percent interest, while interest rates for valuing lump sum payments for the month of August, 2006 were 3.50%.
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Last year, when Napolitano faced only token opposition for a sixth term, her campaign sought $500 from individuals and $1,500 from political action committees at a June 25 Washington fundraiser. The money was to go at least in part for “1998 primary debt retirement,” according to her campaign Web site.

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So…she then raises money during a largely uncontested primary in 2008 to “retire her debt” to herself?…Debt that she could have easily paid off with the money she’d made over the past ten years?
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From May 15 to Aug. 4, 2008, Napolitano’s FEC filing says she collected money from five political action committees that designated the funds for the 1998 primary. Contributors included PACs associated with Edison International, the owner of California’s largest electric utility; Parsons Corp., an engineering and construction company in Pasadena, California; and the American Road & Transportation Builders Association. Other donors included Fannie Mae and the National Community Pharmacists Association.

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Great. I’m sure that these corporate donors were just sincerely interested in the welfare of the campaign, which had been in debt and paying usurious interest for the past decade. I wonder if she ever told them that they were paying down her debt to herself? Do you think that the generous, civic-minded folks at Edison International would really have cared?
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Napolitano won almost 82 percent of the vote in last year’s general election, where she was opposed by a third-party candidate who spent no money on the campaign.

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So she didn’t need her campaign to raise money in order to actually…run a campaign. She didn’t need money to retire her debt (to herself), because she had already made enough money (charging herself interest) to pay the rest of the principle she owed (to herself) off completely. There’s no conceivable reason to raise money for her campaign, except having enough cash around to be absolutely assured that attorney’s fees could be covered in the event of legal problems with the campaign and its contribution handling. Why then did she go the route of soliciting money from corporate contributors (some interested in projects that may come under her purview), when she could have wiped the whole thing out herself, and still “won” her campaign with almost no effort?
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The common person’s definition of “venal” is:
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1: capable of being bought or obtained for money or other valuable consideration
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: purchasable ; especially : open to corrupt influence and especially bribery
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: mercenary (“a venal legislator”)

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Is there anything about this situation that doesn’t scream “venality”, SG?

I am surprised at the “legal” arguments in defense of this lady’s actions. It looks too sweet to me. I guess the indignation will boil over when it is revealed that Hillary is collecting x% on her $6m loan to her campaign.

Sometime ago on a visit to Africa I got into a discussion about corruption. The MP’s replied: here we take bribes, we call them bribes and we deliver to get more bribes. In your country you pass laws to make bribes legal. We admit what we do. You get it okayed by your elections’ commission. Who is the hypocrite?

“It is legal” is too simple an answer. By the way I can’t access my pension to give me a loan and get voluntary contributions to pay off the loan plus interest to myself. Can you? And we wonder why our Congress folks are held in such low esteem.

What has always really irked me about this legal practice is that it means when a candidate is pursuing office with “her own” money what she is really doing is lending money to her campaign. Then, once she wins her Senate seat, she solicits money that goes into her own bank account. Aside from this being indistinguishable from a bribe, it means that these deep-pocketed rich people don’t really have to put their money at risk (unless, of course, they lose).
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I use the feminine pronoun here because Maria Cantwell’s campaign raised my consciousness about this.

…That number “$71,780.00″ is the best case scenario, in which we deduct the loan amount of $150,000.00 from the amount of interest earned on the loan $221,780 (profit).
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Because she loaned that money to herself, and was “out” that 150k, a very, very generous interpretation might suggest that the $221,780 in profit was not “pure”. To dispose of that interpretation, I deducted the principle from all earned interest.
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Others may have a different profit number, given that this is a very, very generous interpretation.

I’d like to thank all the commenters who provided information for comparable interest rates that the Bloomberg article did not seem fit to print.
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after the deadline passed for moving the funds into another retirement account without early withdrawal penalties

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Isn’t the early withdrawal fee for an IRA only 10%? (FYI for anyone planning for retirement.)

bitter
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I am consistent with this. I didn’t give a damn about Hillary’s campaign debt either. Actually I get more pissed when someone like Romney “loans” himself funds that he knows is really a gift just so he can try to outspend his opponent. But hey thats just me

stuart – She’s not “out” anything on the loan itself, only if we assume other circumstances – costs to her to obtain the initial $150,000 – is she “out” anything. She’s been paid $221,780 in interest. Interest is all profit. She’s also been paid back $64,727 in principle, so she’s not “out” that. She is still owed $85,273 in principle, on which she is still earning interest. The campaign has plenty of assets to cover that debt of $85,273, so there is no risk to her of losing it.
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Sweeeeeeeeeeet deal.

I’m just dropping by to say hello. I have decided to take a bit of a break from Swampland; I’ve been incredibly busy lately and the atmosphere around here recently has been almost as tension-inducing as my real work! But I’ll definitely keep reading and I’ll post if I feel I can add some relevant information.
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And I want to be head of the Census Bureau. Seriously, I’d love it. I’m addicted to statistics. I will however need a 10% annual interest payment on the wardrobe that I’ll be lending the Bureau so their chief (me!) can look appropriately stylish for those meetings with statisticians. I’m guessing my wardrobe is worth… $150,000. It’s a synergy thing, like AOL-Time Warner; separately my wardrobe may be worth several hundred dollars but when it’s all combined together it’s priceless. Or $150,000.

Let us disagree on this: sgw. I think making cosy deals into lawful ways of self enrichment or self compensation does not pass my smell test. Elections are costly; but no one is compelled to run for office. If one cannot garner support and campaign funds and has to resort to self financing at very beneficial personal terms then it may be legal; but it is not ethical. So let is agree to disagree.

Rose:
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Thank you so much for gracing this blog with your written presence.
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I very much look forward to reading your contributions; you’re a very good writer.
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You and I may have our disagreements ideologically, but honesty compels me to note that Swampland is much, much richer for your continued commentary, Rose.
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Welcome back.

rose83: am sending off a recommendation that you be appointed the Head of the Census Bureau. You shall be judged not by statistics but by the way you are dressed!!! I needed a laugh today.

Rose, as several said in the Gregg is out post, we miss your regular contributions, but look forward to whatever you have to say – agree or not.
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You might want to see if KT can finance your wardrobe from her campaign funds — she will have a lot since she seems to be selling undersecretary positions. (Still sulking about losing spring.)

Karen, interesting story and she’s hard to defend. However, recently it was discovered that the SEC colluded w/ IndyMac to cover up it’s true financial situation from shareholders and depositors, an SEC regulator even went so far as to offer to falsify documents. THIS story seems much, much bigger than the one you just reported on. Could you tell us, not as a media critic, but as a journalist, why you chose to cover this story, but not the IndyMac one? I think I have an idea, but I’d like to get your story. The greater import of the IndyMac story seems to me to be obvious.
http://online.wsj.com/article/SB122998621544328009.html

Man, politicians are sleazy.

bitter
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Here is my thing, maybe and I emphasize MAYBE along the way she decided to make some money off of the deal. I will grant you that. But unless she had a crystal ball there is no way she could have known at the time of the loan that
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1. She would win the election.
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2. She would go on to win reelection several times.
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3. That she would ever recoup the principle on the loan.
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4. That the stock market would tank.
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So yeah maybe you could wag your finger at her after all that we know now. And maybe she actually DID decide to get paid off of the loan in an exhorbitant fashion. But you won’t be able to convince me personally that it was her intent from the get go. Nor that she had those bad intentions through out. Maybe I just have a soft spot for little old ladies. But thats it in a nutshell for me. Like I said we won’t agree on this and thats fine but thats the way I look at the situation.

cincy: I watch CNBC from time to time and get the sense that “bad” stories don’t go far. Similar SEC stories have been out and about and never walk far into general reporting. They simply gain no traction because reporters, or most of them, just don’t understand the machinations of The Street. The one Karen refers to is easy: juicy, straight and chuckle worthy when seen with a right/wrong filter. It is another part of the money machine that is Congress: only I got to know this for the first time.

Sgw: I don’t question her motives. I concede she went into politics to serve. Along the way someone showed her how the system works; and she worked it to advantage. She broke no laws, as far as I can see. So I am with you up to here. But does it “smell” right? I also note she is not a unique case. Financing elections and getting reimbursed is SOP.

“The one Karen refers to is easy: juicy, straight and chuckle worthy when seen with a right/wrong filter. ”
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No, no it’s not. It’s actually much more complex than the IndyMac story which is straight up fraud, covering up an institution’s financial situation in order to reap the benefits. One story allows Karen to do some navel gazing, one story hits someone she might meet at a cocktail party. One story has significant effects on the populace at large and involves billions of dollars, the other story doesn’t even involve a criminal act, though perhaps it should be criminal. One story allows Karen to sell a well defined Beltway media narrative, the other threatens the Beltway status quo that Karen has built her life and career around. This country won’t collapse as a result of a Congresswoman’s loaning her own campaign money. This country probably will collapse as a result of the type of actions committed by the SEC in this matter. Karen Tumulty would rather protect her own, than inform us about issues that affect real people. She is Cindy Adams.

I admit that I read just the first comments on the 1st page before tiring of this. My sense is that politician creativity in stealing money is only exceeded by that of their supporters in defending them. I mean, come on. Even if the concept were not outright dishonest in construction, the 18% deal sends it over the cliff.

“But unless she had a crystal ball there is no way she could have known at the time of the loan that
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1. She would win the election.
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2. She would go on to win reelection several times.
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3. That she would ever recoup the principle on the loan.
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4. That the stock market would tank.”

I don’t see what much of this has to do with what the risk was that her loan would get paid back, but . . .
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1. Let’s see – the 38th California District was gerrymandered into existence in 2000 as part of the co-operative redistricting exercise that kept California’s delegation “status-quo,” so once Napolitano won the primary, she knew she was going to get elected.
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http://en.wikipedia.org/wiki/California%27s_38th_congressional_district
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2. See above. Her only risk thereafter was that she’d decide to retire or eff up so bad she’d lose the primary to an insurgent. Safe seat. So she knew this, too.
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3. Once she got contributions equal to or exceeding the principle of the loan, given she is in a safe seat, there was no risk that she would not be paid back. So she knew that.
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4. Ahhh, here’s one she couldn’t know. But she did know that once she attracted enough campaign donations to cover her initial loan, she had a 100% chance of getting her principle back, and anything above that was gravy. So whether or not the stock market would tank, she knew she had a safe investment that would pay a return until she decided to take it out.
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A risk-free investment for 11 years. Sweeeeeeet.

[...] Via Swampland. [...]

cee: being unduly hard on KT?
What happened on Wall St was a massive cover-up: Greenspan looked the other way as did the SEC.

Madoff pulled his stunt, Enron… Worldcom….Wall Street money was in every politician’s pocket. Where was the incentive to expose them?
The Village failed. I don’t think KT gave much thought to Wall Street.

The 3 hours from collapse statements from Kanjorski received no coverage. The SEC colluded w/ IndyMac to defraud investors, shareholders and depositors story got no coverage. 2 judges took 2.6 million in kickbacks to fill a private prison w/ juveniles and sentenced kids to jail for minor first time offenses…no coverage outside Pennsylvania. All of these stories combined received less coverage in the MSM than Jessica Simpson’s weight gain.

cinci, I see your point and agree, although I did hear and read in the dark corners of the MSM this story of outrageous corruption. I guess, the MSM just doesn’t see it as we do, and makes the ongoing commerce scy intrigue The Story. I hope those judges live a long and miserable life in prison, and are routinely visited and taunted by the juvenile victims. Same for the private prisons thieves.

billie
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This is an easy one. The lady made the loan to her campaign in 1998. 1998. 1998. You see where I am going with this right?

sg – you’re going to say “where can I put my $150k nest egg for the next 11 years and earn a level of interest that I determine at zero risk,” right? Right?
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See where I’m going here? No? Then perhaps it’s best dropped.

sg, as KT said on top, Sweet Deal. I would grab some of that action in a second if I could. And if I were a thief.

billie
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No, you said the district was gerrymandered in 2000. I guess she saw that in her crystal ball too since she made the loan in 1998. Im just sayin

sg – Even if you had a point (which you don’t) it only affects the first two years of Ms. Napolitano’s investment. However, prior to 2000, the 34th District was a safe democratic seat held by Al Franken lookalike Esteban Edward Torres. He chose not to run in 1998, thus, my analysis still stands.
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http://en.wikipedia.org/wiki/Esteban_Edward_Torres
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So where can I invest $150k for 11 years at a rate of interest I determine? I want that sweeeeeeeet deal.

I’ve looked further into this. Ms. Napolitano did have a squeaker of a primary in 1998, and she loaned her campaign the money prior to the primary. So at that time, the money was at risk. But after June 3, 1998, this money was safe as houses. (Wait, I got to get a new phrase to denote “really, really, safe investment”). Had she paid off the loan in 1999, I’d have no beef. 18% might even be a rational rate for so risky a venture. But, having kept it alive for another 11 years, it looks like this became a nice way to funnel $221k out of her campaign and into her pocket. I don’t see how this is defensible.

billiecat, amen.

For those of you who really want to read a blog on all this Wall Street stuff and regulatory failures, I highly recommend our brother/sister blog, the Curious Capitalist. You’ll find some terrific discussions over there.
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http://curiouscapitalist.blogs.time.com/