It must be old campaign oppo dump day in America. Earlier today, an old, deceptively edited campaign ad from Marco Rubio’s Senate run floated to the surface of the internet.
This evening, the New York Times thinks they have a hot scoop with a story about Ted Cruz’s Goldman Sachs loans. The New York Times is about four years late to the “exclusive” party though. Cruz’s Goldman Sachs loans are old news.
According to their 2012 personal filings, the Cruz’s took loans from both Goldman Sachs and Citibank. His wife, Heidi Cruz, works for Goldman Sachs, but is currently on leave. These loans were not, however, disclosed in the FEC filings for Cruz’s campaign, Ted Cruz for Senate Committee.
First, the NYT story:
Ted Cruz Didn’t Disclose Loan From Goldman Sachs for His First Senate Campaign
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.
A spokeswoman for Mr. Cruz’s presidential campaign, Catherine Frazier, acknowledged that the loan from Goldman Sachs, drawn against the value of the Cruzes’ brokerage account, was a source of money for the Senate race. Ms. Frazier added that Mr. Cruz also sold stocks and liquidated savings, but she did not address whether the Citibank loan was used.
The failure to report the Goldman Sachs loan, for as much as $500,000, was “inadvertent,” she said, adding that the campaign would file corrected reports as necessary. Ms. Frazier said there had been no attempt to hide anything.
“These transactions have been reported in one way or another on his many public financial disclosures and the Senate campaign’s F.E.C. filings,” she said.
Open Secrets reported in 2013:
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 networth was, on average, $1.7 million.
Also from 2013, Roll Call noted the reporting issue:
As of the end of 2012, Cruz listed a “Loan to Ted Cruz For Senate” as an asset valued at $500,001 to $1 million. However, because of the 2002 changes to campaign finance law, the committee is limited to making loan repayments to the candidate (1) from funds received before an election, or (2) $250,000 from funds received after an election. Because of earlier loan repayments, as of the end of 2012, the committee could only legally repay the candidate $298,000. This includes $48,000 for his outstanding primary election loans, and $250,000 for his outstanding runoff election loans. 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.
Rosie Gray, BuzzFeed Politics reporter currently (at the time this was penned and published) at a Ted Cruz event was able to obtain comment from Catherine Frazier, Cruz’s Presidential campaign spokeswoman.
That Cruz noted the loans on his personal disclosures in 2012 suggests there was no nefarious attempt to hide them. Far more likely that as Frazier claims, this was a simple reporting error. No special loan terms were granted, so it’s not as though Cruz was given special concessions because of his wife’s job. Further, as the NYT reports, the loans have been paid down.
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. There’s also the possibility this story forces a conversation about the similarities between Cruz and Clinton financial backers.
Lastly, with reports surfacing on the discrepancy as early 2013, we have to wonder why those filings were never amended to reflect the loans. That aside? Meh.
Regurgitated News Story as Smoking Gun Attack Rating: Like Rubio’s Luxury Speed Boat, Only Less Boaty
Text version here:
[We’ve also reached out to Ms. Frazier for comment and will update should she respond.]
Follow Kemberlee on Twitter @kemberleekaye
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