Most of us struggle to decide how to invest our money. Stock Market? Bonds? Money market accounts? What to do—what do? Politicians don’t have that problem. Remember when Stacy Abrams “loaned” her campaign $50,000 in her run to become Georgia’s governor? (There was some talk that she hadn’t paid her taxes, but instead loaned her campaign that money. I don’t know about that.) But for politicians this is an easy way to get a nice return on their money by charring their campaign interest on the “loan.”
Congressman Paul Broun of GA loaned his campaign $$309,000 but instead of taking that money back out of the campaign he charged his campaign interest and collected $29,000 in “interest” payments in the 2010 election cycle. (He originally told the Federal Election Commission that he wouldn’t charge any interest—but he lied. What a surprise!)
There are no strict rules on this practice and politicians can carry these “loans” on the books for years generating a steady cash flow. The FEC doesn’t put a requirement for the interest rate (some politicians charge as much as 20%) nor do they put a cap on how long these loans can be kept in place. At least fourteen other members of congress do the same thing. Collen Hanabusa of Hawaii loaned her campaign $125,000 and pocketed over $31,000 in interest during the 2008-2010 election cycle,
One of the most egregious practitioners of this boondoggle is Grace Napolitano of CA. Back in 1998 she ran for congress and loaned her campaign $150,000. She never asked for the money back but she charged the campaign a whopping 18% interest for twenty (20) years never paying off the loan. She pocketed $200,000 during the first 10 years of the loan. In 2006 she dropped the interest rate to 10% but kept paying herself interest. In the 2008-2010 election cycle good old Grace pocketed an additional $94,245 in interest. This provides a nice hidden way to convert campaign contributions into personal cash.
Candidates continue e to carry these loans when they have the cash to pay themselves back. But why would they? Who wouldn’t want to lend themselves money and get a double-digit guaranteed interest rate in return? Now, don’t you wish you were a politician?