Before the Republican National Convention, Mitt Romney was the Republican nominee in all but name. By law, however, he could only spend primary donations until he officially became nominee. To increase cash flow during the interregnum, the Romney campaign borrowed $20 million.
“We realized that we could collateralize this debt with $20 million of general-election funds that were already sitting in our bank account,” a senior Romney aide says, speaking exclusively with National Review Online.
“This is permitted by Federal Election Commission rules,” the aide explains. “In the past, the FEC has specifically contemplated candidates putting up their public financing payments as collateral.” Since Romney is not taking public funds, his finance team found another option.
In order to compete with President Obama, the senior aide continues, Romney’s advisers could not sit on their hands until they were able to use general-election funds.
So far, $9 million has been paid back. Five million was paid back before the end of August and an additional $4 million has been paid back in September.
When federal election reports are released later this week, they’ll show debt of $15 million, but the campaign’s actual debt is roughly $11 million. The campaign will soon begin fundraising to pay off the remainder.
The Romney campaign borrowed the money in August from the Bank of Georgetown, just as many of its primary dollars were drying up.
“We took advantage of the law as it exists to secure this line of credit,” the aide says. “We were able to stay competitive in a period when we were looking at a tilted playing field.”