Saturday, February 02, 2008

McCain forced to buy life insurance to secure campaign funding

The San Francisco Chronicle reports that John McCain was forced to buy a life insurance policy on himself before banks would agree to extend a line of credit to his campaign. This appears to be the first time that financiers required life insurance from a candidate, which raises additional questions vis a vis McCain's health and life expectancy.

In November, John McCain's presidential campaign was broke.

To survive, he offered his fundraising lists as collateral for a $3 million line of credit from a bank. But obtaining the loan required an unusual extra step: He had to take out a special life insurance policy in case he did not survive the campaign.

At the time, the 71-year-old senator's campaign was more than $500,000 in the red, and the line of credit was a pivotal lifeline that allowed him to make a strong showing in New Hampshire and eventually vault into the Republican front-runner's position... Anthony Corrado, a campaign finance expert at Colby College, said he had never heard of a candidate having to secure a loan with a life insurance policy.

...McCain's finance reports provide new details about how desperate his financial situation was after his campaign suffered a seismic shakeup in the middle of the summer.

...According to a week-by-week analysis of contributions and spending, the campaign was $300,000 in debt by early June. Then it slowed its spending and nearly broke even over the summer. But by November, the campaign was in debt again, and it continued to lose money until McCain began drawing on the loan that month.

Further, the loan raises the spectre of ethical questions for McCain:

Cleta Mitchell, a Republican campaign finance lawyer who has been a critic of McCain, said she believes the arrangement raises some serious questions.

"Did they base this loan on the fact that, even if he lost, he would still be a sitting senator and able to raise money?" she asked. "In my mind, that raises questions about whether he complied with Senate ethics rules," which bar members from using their position to negotiate financial terms that an average citizen could not.

Why would the loan officers require life insurance on McCain?

The Astute Bloggers remind us that the 70-year old McCain has been operated on twice for malignant cancer: in 2000 and 2003.

Can you imagine a Hillary riposte to McCain if they're paired up in the general election? "Hey, old-timer, your bank wouldn't even extend a line of credit to you without a life insurance policy. I've got an idea for a life insurance policy for this election: me!"

Update: Commenter jpm100 asks an excellent question: "The fact I dislike McCain aside, what happens if he gets the nomination and dies before November?" Errr, we draw straws?

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