Ted Cruz, a frontrunner for the GOP presidential nomination and a Tea Party darling, is under fire for allegedly failing to disclose a bank loan made out to him for his 2012 Senate campaign. According to the New York Times, Cruz claimed to have liquidated his assets in order to fund the campaign, but actually received a huge loan from Goldman Sachs where his wife, Heidi, works as a managing director.
Candidates are allowed to fund their campaigns with bank loans. But they must disclose the source of the loan, the terms of the loan, and a copy of the loan document to the Federal Elections Commission. This is what Cruz failed to do.
Cruz claims to have spent some $1.2 million of his own money to cover his campaign. The way Cruz tells the story, he and his wife self-financed a huge portion of Cruz’s Senate bid by liquidating their assets.
Rather than “liquidate assets,” however, Cruz actually took out low-interest loans against them, totaling as much as $750,000 from Goldman Sachs and Citigroup, increasing to $1 million as the campaign dragged on. None of Cruz’s FEC filings disclosed the loan, nor did a review of his personal financial disclosures filed with the Senate “find a liquidation of assets that would have accounted for all the money he spent on his campaign,” according to the Times.
A spokeswoman for the Cruz campaign, Catherine Frazier, denies any wrongdoing. Frazier addressed the controversy Wednesday night at a Cruz rally in South Carolina, Politico reports. According to Frazier, the loans from the banks were taken out against his own assets, meaning Cruz technically was putting his own assets up as collateral.
“This has all been out in the open; it’s simply an issue of semantics,” Frazier said. “This was all of his own personal money.”
This, however, is not the same thing as liquidating his assets. But Cruz insists the issue is overblown and really a matter of “an inadvertent filing question.”
“If it was the case that [the loans] were not filed exactly as the FEC requires, then we’ll amend the filings,” Cruz said. “But all of the information has been public and transparent for many years. And that’s the end of that.”
The Tea Party, for whom Cruz is something of a golden boy, generally holds stances that are opposed to big banks and, in particular, the bailouts. In a March interview on the program With All Due Respect, Cruz called out Goldman Sachs as a beneficiary of crony capitalism. Frazier denied that Cruz muddied the transparency of his campaign financing out of fear that the loan coming from Goldman Sachs would harm his populist image.
Cruz’s reporting chicanery was exposed shortly after he went on the offensive against his wealthy opponent in the GOP primary, Donald Trump. Perhaps playing further on the Tea Party’s resentment of big banks, Cruz encouraged voters in Iowa to consider what they’d be getting if they voted for Trump and his “New York values.”
“The rest of the country knows exactly what ‘New York values’ are, and I got to say they’re not Iowa values and they’re not New Hampshire values,” Cruz said in an interview with Megyn Kelly of FOX News.
How big of a liability the Goldman Sachs loan will be for Cruz remains to be seen. The Washington Post highlights 10 reasons it could end up being a very big issue. Among their reasons are that Cruz is still indebted to Goldman Sachs, and that it compromises Cruz’s image as an honest, populist politician.
“He didn’t simply ‘forget’ to file the disclosure; he made up a self-reverential story to go with it … This is precisely the sort of slick, dishonest conduct he accuses professional politicians of undertaking.”
Cruz will go on stage tonight with his GOP rivals and the loan story is likely to come up. It will be a challenge for Cruz to maintain he’s a populist defender of the little guy – never mind an opponent of “New York values” – in the face of his million-dollar loan from a major bank.
[Photo by Rainier Ehrhardt/AP]