Law Firm Linked to McCain PAC, Campaign Loan

When Sen. John McCain (R-AZ) got a loan to bail out his presidential campaign, the lending bank issued a letter from its outside counsel — giving the all-clear sign. That law firm, it turns out, had just recently done work for McCain's political action committee.

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Republican John McCain's campaign fundraising remained flat last month. The reports show he collected $11 million in February. That's about one-third as much as Hillary Clinton raised, about as one-fifth as much as Clinton's Democratic rival Barack Obama. Throughout the race, McCain has been dogged by fundraising trouble. Last fall he got a bank loan to keep his campaign afloat -that loan raised a lot of questions.

As NPR's Peter Overby reports, now, there is another one about the lawyer for that bank.

PETER OVERBY: Fidelity & Trust Bank in Maryland gave McCain's campaign a $4-million line of credit - later expanded to 5 million. Questions arose, and the bank tried to calm the waters with a reassuring letter from its outside council. This lawyer for the bank was Scott Thomas, a former chairman of the Federal Election Commission who left in 2006.

Public records show that just weeks before the bank made the loan, Thomas had been doing legal work for McCain's political operation, not for the presidential campaign itself but for a political action committee connected to McCain. That committee, Straight Talk America, was what's called a leadership PAC. He raised money for McCain to use, supporting other candidates and traveling around the country before he announced for president.

Straight Talk America paid Thomas's law firm $7,700 last November 16th, two days after the date of the loan to McCain's campaign. A campaign spokesman said Thomas's work for Straight Talk America was completely unrelated to the presidential campaign or to the loan. Straight Talk America itself is no longer functioning.

Barry Watkins, president of Fidelity & Trust, said in an e-mail that the bank knew about Thomas's work for Straight Talk America and wasn't concerned about it. He said the bank has had a long-term relationship with Thomas's firm.

Thomas and his firm declined a comment on their relationships with clients. In legal terms, there appears to be no conflict here. Straight Talk America and the McCain presidential campaign are considered two separate entities, never mind that they benefit the same politician. And Thomas's work for McCain's PAC was apparently finished before McCain's campaign came to the bank seeking a loan.

But legal terms aren't the only terms on which Washington operates. Melanie Sloan is director of Citizens for Responsibility and Ethics in Washington, a liberal watchdog group.

Ms. MELANIE SLOAN (Executive Director, Citizens for Responsibility and Ethics in Washington): That's an appearance problem. Considering that John McCain is the guy who spearheaded campaign finance reform, he is not there for the guy who can then seem to be gaming the system in any way.

OVERBY: And there were already plenty of other questions about the campaign loan, in particular whether the bank gave McCain a better deal, because he had met legal requirements to qualify for federal matching funds. McCain says the bank didn't do that and so he can opt out of the public financing system.

Federal Election Commission Chairman David Mason says that's for the commission to decide. The only trouble is, the commission hasn't got a quorum, and it won't until the Senate breaks a deadlock on approving nominees. If there were a commission and it decided McCain had used matching funds to get the loan then he would be in trouble. The system has a spending cap that runs through August, and McCain's already exceeded it.

Peter Overby, NPR News, Washington.

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