Curious and Curiouser

I've been wondering about Kerry's $6 million home loan, we hear a great deal about GWB's special interests, but exactly how did Kerry obtain such a large loan without special consideration or undisclosed assets?

William F. Buckley wonders as well:

THE BEACON HILL NIGHTMARE

The story of Senator John Kerry's mortgaged home in Beacon Hill is worth looking at. What made the papers was the suggestion that his access to it, in usufruct, was threatened by the sheer size of the loan and the attendant obligations of financing it. All of this, of course, in the context of his need for money to finance the ongoing campaign for the presidency.

There are several perspectives one needs in order to evaluate the problem of Mr. Kerry's mortgage. The first, of course, is that if you own a house valuable enough to warrant a loan of $6 million, you are living, by common standards, in an economic stratosphere, the implications of which require adjusting to normal standards of evaluation.If you hock the Hope Diamond for $10 million, attention focuses on your owing $10 million whereas, properly, it should focus on your owning the Hope Diamond.

Senator Kerry's widely publicized point is that he has had to finance his campaign by using his own resources, which are limited. But of course that is Hope Diamond talk. If a bank lends you $6 million, it knows it's going to get the money back.

How? Well, Senator Kerry is not wealthy, but he does have undisclosed assets. That is, assets undisclosed to the public, but not to the bank. All the bank needs is approximately $200,000 per year in interest payments, which is a little more than Senator Kerry's income as a senator. This point is mentioned in the news stories.

This certainly seems like Kerry is pushing the envelope, as he cannot possibly service such a loan, is it a disguised loan from his spouse? The bankers in question or Democrat donors, i.e. special interests?

Now pity for Mr. Kerry is immediately evoked by the circumstances of the mortgage. It is not as if he was taking $6 million to buy himself a G-V jet. No, he was using $6 million to pay the staff of his campaign and take out ads, all of this in anticipation of the returns in Iowa and New Hampshire. It added up to this, that returns from his campaign weren't large enough to satisfy his inclination to advance the cause of the campaign by additional advertising.

Now if he had lost out in Iowa, he'd have needed to reduce spending, which would have given his most resolute backers a challenge, namely to continue to support John Kerry at least to the point of giving him back his home on Beacon Hill. But if he did well in Iowa, as indeed he did, everybody could assume that the flow of money would not only continue, but increase. The publicity attached to the mortgage can only have served the cause of alerting his donors to the need to save not only the nation, but the house.

This is because current law denies to a candidate the right to repay past loans from money that comes in after the operative political date (in this case, the national convention in late July). After that, you can use only $250,000 of campaign contributions to repay old debts, and $250,000 comes to only a little over one year's interest on the Beacon Hill loan.

So it has to be cleared up before then, Kerry supporters are being told.

Buckley closes with a poignant anecdote, perhaps Kerry will hand out tiny replicas of his $12 million house.

Posted by feste at February 18, 2004 01:21 PM | TrackBack