Down to money
Iread with interest Frank Lockwood’s recent story describing how the Democratic Party of Arkansas has operated for years on unsecured loans from the First National Bank of Jonesboro and Simmons Bank of Pine Bluff.
It seems both institutions appear (from FEC records) to have been less than vigilant toward ensuring lower-interest loans they granted to the party were repaid on time.
Now before you accuse me of being a ranting, common-sense conservative, I should remind you some of my closet friends are Democrats, although probably cut from the mold of former U.S. Sens. J. William Fulbright and John L. McClellan, who were civil, rational, honorable members of the Democrat Party. And believe you me, I’d be expressing the same if this involved Republicans.
What captured my attention in Lockwood’s revealing article was the fact that, unlike you or me, as borrowers from any bank, the state’s Democrat Party has been allowed at different times to borrow a total of nearly $100,000 from the banks at less than
5 percent interest with no seeming urgency to have it repaid, and apparently without penalty, at least thus far.
It’s an enviable deal. I can’t fault the party for the banks’ remarkable generosities. Wish we all had such clout.
Lockwood did a fine job laying out questions surrounding the unresolved loans. For those who missed it, here’s some specifics from his enterprise reporting based on official records.
He wrote: “In debt and struggling to pay its bills, the Democratic Party of Arkansas has shored up its finances with the help of low-interest, unsecured loans from in-state lenders, according to filings with the Federal Election Commission. The state party cited $147,039 in debts and obligations and $14,121 cash on hand in its federal account as of Dec. 31.”
Much of that debt is owed to Simmons Bank, Lockwood reported, which gave the party an unsecured two-year $60,000 loan at an interest rate of 4.97 percent. The party reported it was able to repay $3,138 of that between Feb. 20 last year and Dec. 31. That left an outstanding balance with Simmons of $56,862.
It struck me as particularly, well, interesting that Lockwood also wrote that Simmons lent those funds in February 2019 even though the party had failed to pay off a previous unsecured loan from Jonesboro’s First National Bank. The party borrowed $39,647 from First National on May 1, 2012, which was supposed to be repaid at an interest rate of 4.95 percent by April 5, 2017. But more than 2½ years after the loan’s due date, the party still owed $9,693.
“Despite failing to make any payments during 2018 and 2019, there is no indication in the filings that interest is accruing on the loan. The amount owed has remained the same, month after month, on FEC filings, despite the lack of payment,” the news story continued.
“Under federal election law, it is illegal for ‘any national bank, or any corporation organized by authority of any law of Congress’ to make donations for federal elections. A bank loan, however, is not a political contribution to a candidate or political committee if it is ‘made in the ordinary course of business.’”
That means “the loan must bear ‘the usual and customary interest rate of the lending institution for the category of loan involved, and it must be ‘made on a basis that assures repayment,’” Lockwood wrote.
The party is supposed to report unpaid interest to the FEC. When a bank is the lender, it means unpaid interest “may be considered a prohibited inkind contribution,” an FEC official told Lockwood.
State Democratic Party Chairman Michael John Gray did not respond to Lockwood’s requests late in the week for information about the loans, but earlier, he had answered other questions about the party’s finances.
Donald Guinn, president and CEO of First National, said he couldn’t tell the reporter whether the information in the party’s FEC report is accurate as he couldn’t discuss a client’s loan with the media. “Anything I say or do would be divulging private information. We could not comment on any, any, any questions, issues or whatever because of those privacy regulations.”
Caroline Makris, public relations manager for Simmons Bank didn’t respond to Lockwood’s requests for comment.
“On its federal report,” Lockwood wrote, “the Democratic Party listed total receipts of $789,814 and total disbursements of $777,408 for 2019.”
State political parties are required to report expenditures made to assist presidential, House or Senate campaigns, as well as any other federal activity to the FEC, Lockwood wrote.
Now, valued readers, far be it for me to advise any bank how to manage its enterprise. I’m surely no financier.
Still, I suppose you and I could appreciate receiving a five-year, $40,000 unsecured loan at 4.9 percent then fail to make timely payments to the bank with no interest accruing or creditors calling. Alas, for us mere voters I suspect that fairy tale is only that.
Now go out into the world and treat everyone you meet exactly like you want them to treat you.