Today’s Must Read

It’s a free country, damn it, and the FEC ought to quit hasslin’ John McCain.

That, at least, is the shorter version of the letter the McCain campaign’s lawyer Trevor Potter (a former FEC chairman himself) sent the FEC yesterday. In the letter, Potter argued that the campaign didn’t need the FEC’s say-so to opt out of the public financing system. As the AP reports:

…Potter said the Supreme Court concluded that public financing for campaigns is constitutional because it is voluntary. “As a result, candidates have a constitutional right to withdraw from the program.”

To recall the stakes: the public financing system for the primaries entails a $54 million spending limit, an amount that McCain has pretty much already spent. If the FEC were to decide that he could not leave the program, it would be an incredible problem for his campaign.

Of course, the chances of the FEC of doing anything are zilch right now, because David Mason, the Republican chairman, is one of only two commissioners. Four nominees are stuck in the Senate because of the fight over Hans von Spakovsky. But Mason has written the McCain campaign to tell them that McCain cannot withdraw from the program without the FEC’s say-so, since McCain effectively entered into a contract when he opted in to the program last year.

Potter, as you can see above, doesn’t think much of that argument. But then there’s the other problem: the McCain campaign’s creative financing, the very clever $1 million bank loan last December. The burning question for Mason is whether the loan was just clever enough or too clever by half.

We outlined the deal in detail here. But the basic idea is that McCain’s lawyers knew he could not use the $5.8 million in public matching funds the FEC had certified for his campaign as collateral for the loan, since that would have effectively locked him into the program. So the campaign promised the bank that if he lost the primary, he’d opt out of public financing, but stick in the race, and then opt back in, get those matching funds, and then pay off the bank. That way, voila! he wasn’t using that prior certification as collateral. If you’re confused, you’re not the only one.

The bank’s lawyers (one of them another former FEC chairman) laid it out in a letter which also made its way to the FEC:

“The bank does not now have, nor did it ever receive from (McCain’s campaign) committee, a security interest in any certification of matching funds,” [Scott] Thomas and lawyer Matthew S. Bergman wrote….

The loan documents specifically state that the collateral did not include McCain’s right to the public funds. But the agreement with Fidelity & Trust Bank of Bethesda, Md., required him to reapply for matching funds if he withdrew from public financing and lost early primary contests.

“It is our understanding that, to date, none of those events have occurred,” the bank lawyers wrote.

Very clever.

So now we’ll see if the FEC’s current chairman buys all this. And no matter what he says, it seems likely this issue is far from resolved.