According to the New York Times, contrary to his campaign narrative about funding his successful 2012 Senate run by liquidating personal assets, Ted Cruz and his wife Heidi took out a loan for up to $500,000 from Goldman Sachs, where Mrs. Cruz worked.
The loan was not disclosed on campaign finance reports for the 2012 Cruz Senate campaign, although it appeared in subsequent filings.
The Times says that Cruz reported that he put a total of about $1.2 million in “personal funds” into the 2012 Texas campaign, which represented the bulk of the couple’s liquid assets. He has described cleaning out his savings to fund the campaign in interviews.
However, a review of later financial forms showed that in the first half of 2012, the Cruzes took out the loan from Goldman Sachs, plus another, smaller loan from Citibank. The Times reports that neither of these loans appeared in the filings from Ted Cruz for Senate with the Federal Election Commission.
The Times relates the explanation provided by Cruz campaign staff:
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.
The report concedes there appears to be nothing improper about the loans, no evidence the Cruzes received any special treatment from either bank, and no clear indication that the Citibank loan was used to finance the 2012 Senate campaign. The Goldman Sachs loan was paid later in the year it was taken.
The only issue is the campaign’s failure to disclose the loan to the FEC—an omission the Times speculates Cruz deliberately made because “such a disclosure might have conveyed the wrong impression for his candidacy.” The report notes that other campaigns have been investigated and fined for failure to make such disclosures.
The paper goes on to note that Cruz campaigned as a “populist firebrand who criticized Wall Street bailouts and the influence of big banks in Washington,” and has singled Goldman Sachs out for criticism as one of the big Wall Street players that “seek out and get special favors from government.”
The Times then performs a deep dive into the Cruz finances to challenge the Senator’s narrative that he and his wife threw all of their personal savings into his long-shot Senate bid:
The ethics reports that candidates file with the Senate require them to list all assets they held at the close of the year or that generated income during the year. Assets are reported in broad categories of value, such as $1,001 to $15,000 and $100,001 to $250,000.
Mr. Cruz’s filings show that at the close of 2011, he and his wife had cash and securities in bank, brokerage and retirement accounts worth $1.3 million to $3.4 million. They also had mortgages and a loan against Mr. Cruz’s partnership equity in his law firm. During 2012, they sold securities worth $82,000 to $355,000, and the value of other holdings was reduced by, at most, $155,000.
However, they also added a money-market account with $250,000 to $500,000 in it, and the value of other holdings increased by as much as $435,000. All told, the value of their cash and securities in 2012 saw a net increase of as much as $400,000 — even as the Cruzes were supposedly liquidating everything to finance Mr. Cruz’s Senate campaign.
The Texas Tribune quotes Cruz spokeswoman Catherine Frazier saying, “We’re reaching out to the FEC and asking them their recommendation on anything we need to do to update or amend that report.”
Update: Columnist Phil Kerpen asserts the New York Times story is old news, noting that both the Goldman Sachs and Citibank loans appear on a financial disclosure form Cruz filed weeks before his primary runoff election, and the loans were discussed by the media years ago:
— Phil Kerpen (@kerpen) January 14, 2016
Ted Cruz’s primary runoff against Dewhurst was July 31, 2012. He publicly disclosed the margin loan July 9, 2012. pic.twitter.com/8yyV4zxrV9
— Phil Kerpen (@kerpen) January 14, 2016
The bulk of the New York Times article is devoted to accusing Cruz of deliberately hiding the Goldman Sachs loan for political reasons. That accusation is very difficult to sustain, given that the loan was divulged before the 2012 election and has been discussed in public several times since then. At worst, Cruz might be criticized for neglecting to mention that he took out a margin loan when he talks about putting his personal money on the line during the 2012 Senate race.
The only “news” here is the FEC filing, which the Cruz campaign promptly acknowledged as an error they need to address. It is rather small on the scale of campaign finance issues, and the case that it was anything but the mistake Cruz’s team described it as would appear to be thin.
It’s notable that the New York Times piece does not include the dates of the loans, or the dates of the campaign expenditures they insinuate the loans were taken to cover, leaving readers to draw their own conclusions about timing and motivation.
Senator Cruz addressed the story personally on Wednesday, repeating what his campaign said about the omission from the FEC report as a mistake he would correct as quickly as possible: