The Wall Street Journal-20080214-McCain-s Donor List

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McCain's Donor List

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Banks have made loans against some dubious collateral lately, but John McCain's fund-raising list? That was the security the candidate put down when he took out a $3 million loan in November to get his then-struggling campaign through the primaries. There's a lesson here about campaign finance reform.

Mr. McCain's candidacy was by last fall in serious trouble, his campaign coffers having drained away. Desperate for cash, the McCain campaign went to the bank for a loan -- in this case Fidelity & Trust Bank of Maryland, which lent $3 million on the strength of Mr. McCain's willingness to document his fund-raising prowess.

The Arizonan is one of the most influential members of the Senate Commerce Committee, which regulates much of American business, and he would remain powerful even if he lost his Presidential bid. With industries lining up to pay protection money to committee Members, Mr. McCain would not be short of donors to help retire his Presidential campaign debt. Subprime he is not.

According to Federal Election Commission regulations, loans to candidates must be made "in the ordinary course of business." That means market interest rates and the same repayment terms that a similarly situated non-politician borrower would face. Along with a donor list, Mr. McCain also put up a life insurance policy and other campaign assets. Though the bank could have conceivably sold or rented the donor list if Mr. McCain failed to repay the loan, the market value would have been significantly less than with the Senator throwing his political weight behind it.

The Senate has strict ethical rules about mixing the powers of office with re-election tactics. Cleta Mitchell, a lawyer who specializes in campaign finance law, says that by pledging his fundraising lists as collateral, Mr. McCain "used his position in the Senate to receive treatment not available to others." Other experts disagree that this crossed an ethical line. However, there's no doubt the November cash infusion helped Mr. McCain survive long enough to compete and win in New Hampshire, and ultimately to become the GOP's presumptive nominee.

The McCain campaign argues that there is nothing illegal here, and that this has become fairly common practice. But this was not Mr. McCain's line in his moralizing heyday while trying to pass the McCain-Feingold reform bill in 2002. During his last run for President in 2000, he targeted corporate giving and called the system "little more than an elaborate influence-peddling scheme in which both parties conspire to stay in office by selling the country to the highest bidder."

We'll assume none of Mr. McCain's fund raising is "influence peddling." But imagine how much more open and transparent campaign finance would be if reformers like Mr. McCain hadn't built our current maze of fund-raising and spending limits.

Let Americans donate what they want as long as it's disclosed promptly so voters can see who's giving what to whom. Under that system the Senator might have been able to call on a few friends and allies to keep him going, rather than invoke his ability to tap all of those high bidders who beseech the Commerce Committee. Our readers can decide which system is more, or less, corrupt.