Last night, The New York Times dropped the “bombshell” that Sen. Ted Cruz (R-TX) didn’t disclose $1 million in loans from Goldman Sachs and Citibank during his 2012 senate election:
As Ted Cruz tells it, the story of how he financed his upstart campaign for the United States Senate four years ago is an endearing example of loyalty and shared sacrifice between a married couple.
“Sweetheart, I’d like us to liquidate our entire net worth, liquid net worth, and put it into the campaign,” he says he told his wife, Heidi, who readily agreed.
But the couple’s decision to pump more than $1 million into Mr. Cruz’s successful Tea Party-darling Senate bid in Texas was made easier by a large loan from Goldman Sachs, where Mrs. Cruz works. That loan was not disclosed in campaign finance reports.
Those reports show that in the critical weeks before the May 2012 Republican primary, Mr. Cruz — currently a leading contender for his party’s presidential nomination — put “personal funds” totaling $960,000 into his Senate campaign. Two months later, shortly before a scheduled runoff election, he added more, bringing the total to $1.2 million — “which is all we had saved,” as Mr. Cruz described it in an interview with The New York Times several years ago.
A review of personal financial disclosures that Mr. Cruz filed later with the Senate does not find a liquidation of assets that would have accounted for all the money he spent on his campaign. What it does show, however, is that in the first half of 2012, Ted and Heidi Cruz obtained the low-interest loan from Goldman Sachs, as well as another one from Citibank. The loans totaled as much as $750,000 and eventually increased to a maximum of $1 million before being paid down later that year. There is no explanation of their purpose.
Neither loan appears in reports the Ted Cruz for Senate Committee filed with the Federal Election Commission, in which candidates are required to disclose the source of money they borrow to finance their campaigns. Other campaigns have been investigated and fined for failing to make such disclosures, which are intended to inform voters and prevent candidates from receiving special treatment from lenders. There is no evidence that the Cruzes got a break on their loans.
Note how all the stories are written to give you the false impression this report was not filed until after the election.— Phil Kerpen (@kerpen) January 14, 2016
If you listen closely, you can hear the liberal media salivating at a chance to launch a multi-pronged attack against this hard core conservative, which would be eaten up by progressives who hate this man with every fiber of their being. This is liberal schadenfreude on display. Yet, is this a serious scandal, or another media misfire akin to Marco Rubio’s parking tickets and his fishing boat? For now, outlets, like Reuters, Politico, NBC News, The Guardian, and CBS News, are all running with the narrative that Cruz didn’t disclose this loan, except that he did. Phil Kerpen, president of the free market public policy group American Commitment, took to Twitter to offer a fact check.
Ted Cruz's primary runoff against Dewhurst was July 31, 2012. He publicly disclosed the margin loan July 9, 2012. pic.twitter.com/8yyV4zxrV9— Phil Kerpen (@kerpen) January 14, 2016
First, Cruz did disclose the loan on July 9, 2012; the runoff against then-Lt. Gov. David Dewhurst was on July 31. Now, the Cruz campaign did admit that there was a filing issue with the FEC, but to say this was “undisclosed” isn’t accurate. Moreover, this loan was reported in Roll Call on June 3, 2013:
In the first quarter of 2013, the Ted Cruz for Senate committee repaid Cruz the $298,000 maximum permitted on the loans. However, the committee is still carrying $545,000 on its books as a debt owed to Cruz. This includes $395,000 in loans for the primary and $150,000 in loans for the runoff election. Perhaps Cruz and his committee are hoping the law will change, or it will be struck down, or that his spouse may craft a new angle. Heidi Cruz is an investment banker and vice president with Goldman Sachs and previously worked at JPMorgan.
Cruz does list on his personal financial disclosure report as liabilities two loans received in 2012. One was a margin loan of $250,001 to $500,000 from Goldman Sachs. The other was a line of credit of $250,001 to $500,000 obtained from Citibank.
Additionally, in 2011, Cruz reported having borrowed between $100,000 and $250,000 from Goldman Sachs for a margin loan. In his 2012 report, the size of that loan had increased to between $250,000 and $500,000. In 2011, Cruz’s total net worth was, on average, $1.7 million.
So, will Cruz have to explain a little more about this discrepancy that really reported a few years back? Yes. Could things have been filed differently to avoid confusion? Of course. Is this truly the bombshell that will derail his campaign? Hardly. Cruz disclosed the loan on his personal financials, but not his campaign forms. Again, these are mistakes that should not be entirely surprising. They happen some times.
As Kaye put it succinctly in her post, “while the NYT story is technically accurate, it’s not a super secret exposed! piece by any stretch. It might appear so for those unaware of Cruz’s long-standing Wall Street connections, but that’s about it. And really, the only way this becomes a problem for Cruz is that it clashes with his self-portrait of independent outsider, beholden to no interest.”
In all, it's sloppy paper work, but there’s nothing truly pernicious or clandestine here; nice try, New York Times.
Should it have been on his FEC report too? Yes. Was ANYTHING concealed from the public before election? NO.— Phil Kerpen (@kerpen) January 14, 2016
Lesson from Cruz margin loan issue: FEC reporting is hard. Pay the obscene hourly rate for a real pro.— Phil Kerpen (@kerpen) January 14, 2016