August 1, 2002
The Federal Election Commission (FEC) will review a complaint by an ethics watchdog group that a $447,500 loan to U.S. Rep. Jim Moran (D-8th) from a major credit card company violated federal campaign finance law.
In the meantime, the House Ethics Committee has not launched any investigation into the matter, saying the mortgages of House members are exempt from disclosure.
The National Legal and Policy Center filed its complaint with the FEC on July 9, following press accounts that Moran received favorable loan terms in 1998 from MBNA while he was promoting a bankruptcy bill that was a top priority of the credit card company.
In a July 16 letter the FEC agreed to review the loan.
The complaint pointed out that Moran was a candidate for Congress at the time of the loan and that federal election law forbids loans to candidates from financial institutions over the contribution limit of $1,000 unless they meet a number of conditions ensuring that the candidate is not receiving special treatment.
The complaint alleged that the loan was the largest mortgage package offered by MBNA to any borrower that year and that the interest rate paid was significantly below the usual and customary rate for such loans. The complaint further claims that Moran's property was worth less than the appraisal price used in the loan and Moran was allowed to borrow 97.2 percent of the property's value despite MBNA's usual policy of lending only up to 80 percent of a property's value.
"FEDERAL CAMPAIGN finance law requires that any bank loan to a candidate or committee must bear the bank's usual and customary interest rate and must be made on a basis that assures repayment,” said Ken Boehm, chair of the National Legal and Policy Center. “The Moran loan clearly fails both tests. The fact that Moran was doing very important political favors for the company at the time of the loan certainly makes it look like a corrupt politician selling his influence to get out of financial trouble.”
The FEC notified Moran of the investigation late last week.
“It is their job to investigate all complaints, and our attorney is preparing a response,” said Dan Drummond, a spokesperson for Moran. “This is the same right-wing group that came out of the woodwork and demanded an investigation of the Terry Lierman loan [$25,000 in 1999].
"Both the FEC and the House Ethics Committee found that Congressman Moran had done nothing wrong,” Drummond said. “I am sure that the FEC will find the same thing in this case. These are just a group of want-to-be lawyers who should go back to law school because they clearly don’t understand the law that they believe has been violated.”
MORAN SAID, July 11, that he did nothing illegal, noting, "We had two credit cards with MBNA that were maxed out, and they offered us the loan as a way to collect that debt. We negotiated a rate of 10.5 percent at a time when the going mortgage rate was about 7 percent."
Moran said he didn't see that as a low interest rate and "didn't feel I owed MBNA anything except repayment of the loan."