Wash. Post equated Santorum and Casey mortgage deals, ignoring Santorum's possible ethics violations

››› ››› BEN ARMBRUSTER

In an article covering the Pennsylvania U.S. Senate race between Sen. Rick Santorum (R) and likely Democratic nominee Robert P. Casey Jr., The Washington Post mischaracterized issues surrounding mortgage deals each candidate made. By reporting that each candidate had received a loan from a bank whose board members had made campaign contributions to him, the Post falsely suggested that their transactions were comparable when, in fact, Santorum's deal may have violated Senate ethics rules.

In a February 26 article covering the Pennsylvania U.S. Senate race between Sen. Rick Santorum (R) and likely Democratic nominee Robert P. Casey Jr., Washington Post staff writers Charles Babington and Jonathan Weisman mischaracterized the issues surrounding the candidates' mortgage deals and ignored Santorum's possible ethics violations. By reporting that each candidate had received a loan from a bank whose board members had made campaign contributions to him, Babington and Weisman suggested that the transactions were comparable. In fact, Santorum's deal may have violated Senate ethics rules -- the bank gave him the mortgage even though its stated policy is to lend only to its investors, which Santorum was not -- a point raised in earlier investigative reporting by Will Bunch, a staff writer for the Philadelphia Daily News.

In mentioning Santorum's 2002 mortgage, Babington and Weisman highlighted only the fact that the Philadelphia Trust Co., the bank that gave Santorum the loan, "is run by major donors of Santorum's campaigns" and that the bank caters exclusively to affluent investors while Santorum has said that he lives "paycheck to paycheck." Furthermore, while Babington and Weisman correctly reported that Casey also received a mortgage from a bank with board members who have contributed to his campaigns, they suggested without basis that Casey's loan raised ethics concerns similar to those provoked by Santorum's mortgage.

As Senate ethics rules state, senators may accept loans from banks and other institutions on terms that are "generally available to the public." Bunch's reporting shows that Santorum's loan may have been made despite his apparent failure to meet the requirements that the bank purports to apply to every mortgage customer. By contrast, there have been no reports of evidence suggesting that Casey's mortgage deal did not meet the criteria normally applied by his lender to other clients.

According to Babington and Weisman's article, the Santorum loan "was made in 2002 by an obscure private bank, the Philadelphia Trust Co., which is run by major donors to Santorum's campaigns. And the company says it caters only to 'affluent investors,' not run-of-the-mill homebuyers" even though Santorum "said he lives 'paycheck to paycheck' and sometimes receives money from his retired parents."

They also wrote:

Democrats thought they smelled favoritism. But their hopes diminished when Santorum released details of the mortgage: a five-year, interest-only balloon loan at 5 percent, which were not unusual terms in 2002.

The potential partisan implications of the controversy were further dulled when likely Democratic nominee Robert P. Casey Jr., the state treasurer, revealed that his $120,000 mortgage is from First National Community Bank, whose politically active board members have contributed to his campaigns.

The Post suggested that Casey's loan raised ethics concerns similar to those provoked by Santorum's mortgage, since both involved supporters. But, as Bunch reported in the February 21 edition of the Philadelphia Daily News (and a subsequent longer version in the March 10 edition of The American Prospect), there was more to the Santorum loan than the fact that it was made by a bank with board members who support him politically. Bunch found that Santorum and his wife were awarded the loan -- a $500,000 five-year mortgage for their Leesburg, Virginia, home -- despite the Philadelphia Trust Co.'s stated policy of making loans only to the bank's clients. The Philadelphia Trust Co. offers its banking services only "to investment advisory clients whose portfolios [they] manage, oversee or administer." But as Bunch noted, "According to a review of the annual financial-disclosure forms that Santorum files, he has never held an investment portfolio with Philadelphia Trust."

In addition, Bunch reported that Philadelphia Trust Co. markets itself as a private bank for "affluent investors," with liquid assets of at least $250,000. In 2002, when Santorum obtained the mortgage, "the value range he gave [on his Senate financial disclosure form] for his small number of investments could not have exceeded $140,000."

Citizens for Responsibility and Ethics in Washington (CREW), an organization that says its mission is to target "government officials who sacrifice the common good to special interests," recently filed a complaint with the Senate Ethics Committee against Santorum. From CREW's press release announcing the complaint:

Rule 35 of the Senate Code of Official Conduct bans Senators from accepting gifts and specifically includes "loans" within the definition of 'gifts.' The Gift Rule also provides that Senators can accept loans from banks and other financial institutions on terms 'generally available to the public.'

From Babington and Weisman's February 26 article in The Washington Post:

In Pennsylvania's fiercely contested Senate race, Democrats last week thought they had received a gift courtesy of the Philadelphia Daily News. The newspaper reported that embattled Republican incumbent Rick Santorum's mortgage on his Leesburg, Va., home looked suspicious.

The loan was made in 2002 by an obscure private bank, the Philadelphia Trust Co., which is run by major donors to Santorum's campaigns. And the company says it caters only to "affluent investors," not run-of-the-mill homebuyers. Santorum, the father of six, has said he lives "paycheck to paycheck" and sometimes receives money from his retired parents.

Democrats thought they smelled favoritism. But their hopes diminished when Santorum released details of the mortgage: a five-year, interest-only balloon loan at 5 percent, which were not unusual terms in 2002.

The potential partisan implications of the controversy were further dulled when likely Democratic nominee Robert P. Casey Jr., the state treasurer, revealed that his $120,000 mortgage is from First National Community Bank, whose politically active board members have contributed to his campaigns.

"It doesn't sound like either of them got a particularly good deal," Keith Gumbinger, vice president of mortgage information publisher HSH Associates, told the Philadelphia Inquirer.

Polls show Casey, whose father was a governor of Pennsylvania, leading Santorum, who is seeking a third term.

From the February 21 article in the Philadelphia Daily News:

Sen. Rick Santorum and his wife received a $500,000, five-year mortgage for their Leesburg, Va., home from a small, private Philadelphia bank run by a major campaign donor -- even though its stated policy is to make loans only to its "affluent" investors, which the senator is not.

[...]

Philadelphia Trust advertises itself as an independent private bank for "affluent investors" -- who have liquid assets of at least $250,000 -- and for institutions. On its Web site, it states that its "[b]anking services are available only to investment advisory clients whose portfolios we manage, oversee or administer."

[...]

According to a review of the annual financial-disclosure forms that Santorum files, he has never held an investment portfolio with Philadelphia Trust. And in 2002, the year he obtained the mortgage, the value range he gave for his small number of investments could not have exceeded $140,000.

Posted In
Government, Ethics
Network/Outlet
The Washington Post
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