A Profitable Investment
In 1998 Representative Grace Napolitano made a $150,000 loan to her own campaign. This is a fairly common practice, and you may remember Hillary Clinton making similar loans to her own campaign. It’s essentially a bet on your own success: money may be hard to raise now while your victory in unsure, but once you win and become powerful donors will pop out of the woodwork with offers to help you retire your debt.
What’s unique about Napolitano’s loan is that she opted to charge her campaign an 18% interest rate on the loan. Even more irregular is the fact that today, in 2009, she has yet to pay herself back:
During a decade in Congress, California Representative Grace Napolitano has pocketed more than $200,000 of political contributions by charging as much as 18 percent interest on money she loaned to her own campaign.
The suburban Los Angeles Democrat made the $150,000 loan in 1998, when she was first elected to the U.S. House of Representatives. Through Dec. 31, her campaign committee has used donations to pay Napolitano $221,780 of interest while reducing the principal by just $64,727, a review of her Federal Election Commission filings shows.
…
Napolitano cut the interest charge to 10 percent in July 2006. As of Dec. 31, the campaign owed $85,273 of principal and $5,549 of unpaid interest, according to FEC filings.
Of course, this shouldn’t be terribly surprising. As long as they’ve been tasked with dolling out public funds, congressmen have been searching for a way to personally profit for this public service. Now that the restrictions on lobbying are a bit more stringent, innovation like Ms. Napolitano’s may become more common.
Via Swampland.