Monday, February 18, 2008

Complicated Law

So, according to this, John McCain took out a loan to run his campaign. The collateral on the loan was not money or equity, but something really really strange; the collateral on the loan was the public financing to which McCain is eligible for the general election. Which means that should he use some of the borrowed money, the lender expects to be repaid with public funds. In fact, read this:

"Additional Requirement. Borrower and lender agree that if Borrower [McCain's campaign commitee] 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."

Did you understand what it says? It says if he withdraws from the public financing program and uses the loan money instead and then loses the next primary/caucus, the Lender can force him to stay in the race and reapply for public funds in order to pay off the loan.


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