Posted on 08/09/2002 6:21:05 AM PDT by Donald Stone
Bankruptcy Bill Opponents Criticize Loan
By PHILIP SHENON
ASHINGTON, Aug. 8 In an effort to block a bill sought by credit card companies to overhaul the nation's bankruptcy laws, opponents are pressing for an investigation into the relationship between a major credit card issuer and an important House sponsor who received a $447,500 loan from the company on what appeared to be highly favorable terms.
The recent disclosure of the 1998 loan to Representative James P. Moran, a six-term Democrat who represents the northern Virginia suburbs of Washington and who has had personal financial problems, is threatening to complicate the lobbying campaign on behalf of the bill, its supporters acknowledge. The disclosure has also complicated Mr. Moran's re-election campaign this November.
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The loan was made by the MBNA Corporation of Delaware, which describes itself as the world's largest independent credit card company and which has lobbied aggressively for the bankruptcy bill. The loan was made in January 1998, a month before Mr. Moran signed on as the lead Democratic sponsor of an earlier version of the bill.
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Mr. Moran and MBNA have denied that there was anything unusual about the loan, which consolidated Mr. Moran's other debts when he owed tens of thousands of dollars in credit card bills and faced the prospect of bankruptcy.
"The timing of my loan was wholly coincidental with the co-sponsorship of bankruptcy reform," Mr. Moran said.
The bankruptcy bill, which MBNA and the nation's credit card industry and banks have pursued for years, has never been so close to passage. The bill, which would make it harder for people to erase their debts in bankruptcy, was approved by a House-Senate conference committee last month. The bill's supporters say it would end abuses by high-income borrowers who file for bankruptcy to escape debts they are able to pay.
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But the bill's opponents, including major consumer groups, say that in their campaign to block the bill, they intend to invoke Mr. Moran's name in questioning the motivation of the bill's sponsors, and to urge further investigation of the loan by the House ethics committee, the election commission and other federal agencies.
They say that while it might be impossible to stop the bill, its passage will come at a serious public-relations cost to Mr. Moran and MBNA.
"Absolutely, we intend to raise this," said Frank Torres, legislative counsel for Consumers Union, the national consumer rights group. "We've got a questionable loan being made to Congressman Moran at the same time he is agreeing to support this industry-sponsored bill. He was an early Democratic supporter, which gave it an air of bipartisanship."
Travis B. Plunkett, legislative director of the Consumer Federation of America, said: "We've got a well-timed loan to a key politician on a high- profile issue that he played a major role in. If that doesn't warrant an ethics investigation, what does?"
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Mr. Moran's loan from MBNA, which was a first and second mortgage on his home, consolidated other debts, some from cancer treatments for his daughter, some from losses in the stock market.
Credit analysts who have reviewed the circumstances of Mr. Moran's loan said that the interest rate, 10.5 percent a year, and the loan's size were generous to the lawmaker, given his debt load at the time. He was allowed to borrow more than 97 percent of the value of his home, a larger percentage than would have been permitted by other lenders. Federal records show it was the largest mortgage package given by MBNA to any single debtor that year.
Mr. Moran declined to be interviewed for this article. In a statement, he said there was no connection between the loan and his sponsorship of the bankruptcy bill, and the terms of the loan were not generous.
"I sponsor or co-sponsor dozens, if not hundreds of pieces of legislation every year," Mr. Moran said. "I supported bankruptcy reform legislation because of its merits."
Some community leaders and news organizations have discounted Mr. Moran's explanations. The Washington Post, which serves as a hometown newspaper for many of Mr. Moran's constituents and which first reported the loan last month, said in an editorial that it could see "no favorable interpretation of Mr. Moran's behavior" and that his acceptance of the loan "suggests impropriety."
Last month, a fellow Virginia Democrat, Lieutenant Governor Kaine, said that Mr. Moran had committed "an error in judgment" by accepting the loan, and that the issue should be investigated by the House ethics committee, known formally as the Committee on Standards of Official Conduct.
A spokesman for the committee, which has tended to pursue cases in recent years only when they were forwarded by prosecutors or were the result of a criminal conviction, would not comment when asked if the panel had opened an inquiry.
Mr. Moran has been criticized before over his personal finances. In 1999, he took a $25,000 loan from a pharmaceutical company lobbyist shortly before he signed on as a sponsor of a bill to help the company maintain its patent on an allergy drug. In June, he reported that he had accepted a $50,000 loan from the chairman emeritus of America Online, a major employer in northern Virginia.
The National Legal and Policy Center of Falls Church, Va., a conservative legal group, filed its complaint last month with the Federal Election Commission, charging that the MBNA loan amounted to an illegal campaign gift and needed to be investigated. The election commission has said in a letter to the group that the complaint is under review.
A spokesman for MBNA, Brian Dalphon, said the company's loan officers had apparently offered the mortgage package to Mr. Moran without realizing that he was a member of Congress and might be involved in the bankruptcy bill.
The loan, Mr. Dalphon said, "made good business sense" because with a mortgage loan, "we improved our position by getting security for an unsecured loan.
"He had credit cards with us, he was having financial difficulties," Mr. Dalphon said. "This put him in a better position to be able to pay us back from a cash- flow standpoint."
In urging colleagues to support the bill, Mr. Moran said in Congressional testimony in March 1998 that "the current bankruptcy system is broken" and that "the time-honored principle of moral responsibility and personal obligation to pay one's debts has been eroded by the convenience and ease with which one can discharge his or her obligations."
(Excerpt) Read more at nytimes.com ...
Nothing to see here,as Director of the FBI, Louis Freeh has already investigated this matter and found no criminal wrong doing in exchange for a lucrative job over at MNBA.
It's a 'Rat, nothing to see here, move along. ;^)
This is really unbelievable. They either have very ignorant people working in their loan department or this spokesman is so arrogant that he thinks anything he says will be accepted as the absolute truth. And it probably will be by a lot of people. This should be investigated even more vigorously that Traficant was but I'm not holding my breath. After all, Moran has always been in lock step with the party elite.
Yeah right. This is a bribe, pure and simple.
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