Mark Schmitt of Tapped on John McCain’s ‘loan’ arrangements:
(This first part is an actual clause from the bank document.)
Additional Requirement. Borrower and lender agree that if Borrower [McCain's campaign committee] withdraws from the public matching funds program, but John McCain then does not win the next primary or caucus in which he is active (which can be any primary or caucus held the same day) or does not place at least within 10 percentage points of the winner of that primary or caucus, Borrower will cause John McCain to remain an active political candidate and Borrower will, within thirty (3) days of said primary or caucus (i) reapply for public matching funds, (ii) grant to Lender, as additional collateral for the Loan, a first priority perfected security interest in and to all Borrower’s right, title and interest in and to the public matching funds program, and (iii) execute and deliver to Lender such documents, instruments and agreements as Lender may require with respect to the foregoing.
(Here’s the document:
http://query.nictusa.com/cgi-bin/fecimg/?_28039612468+0 From this link, you can read the document by page or produce a pdf. Much of it is blurry and boilerplate, until you get to the loan modification agreement starting page 21, which is legible.)
What does this mean? It means that rather than pledge his existing certification for matching funds as collateral for the loan, which would bind him to the system and thus the spending limits, McCain carefully pledged to seek to re-enter the system later, and to use a non-existent future certification as collateral. And while the system is “voluntary,” McCain essentially traded away for cash his right to choose whether to participate in the system, and even his right to drop out of the presidential race, allowing the bank to force McCain “to remain an active candidate” in order to reapply for and qualify for funds. He was betting the spread (10 points) on his own primary performance! I don’t think it’s an exaggeration to say this is a promise to perpetuate a fraud on the American taxpayers: if he no longer intended to seek the presidency, he made a legally-binding promise to pretend to remain in the race just long enough to collect public money to repay the loan.
Is this illegal? Who knows. Note that it took several days of discussion among top lawyers and former FEC commissioners to figure out whether it was even possible to opt out of the public financing system after opting in and qualifying for funds. No one’s ever done that. And therefore, no one’s ever opted back in, after opting out, after opting in. And therefore, no one’s ever borrowed on the basis of a promise to opt back in, after opting out, after opting in. Is your head exploding yet?