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February 1, 2008
Presidential fundraising and intangibles
In its last season, the storyline of the TV series The West Wing revolved around the election of President Bartlet’s successor. One episode featured the candidate who ultimately won agonizing over whether to take out a large loan back by his house in order to continue his faltering campaign. Part of the issue was whether a loser could raise enough post-election money to pay off the debt or whether he was simply signing away the family’s home.
The West Wing was always praised for its realistic portrayal of politics. Former White House and Congressional aides served as writers and consultants to the show. The idea of a political candidate taking out second mortgages is not uncommon—just as hopeful entrepreneurs often hock their houses for start up cash.
Now comes a new twist: taking out a loan using your donor list as collateral. According to a story in this morning’s Washington Post - With Crucial Loan, McCain Put His Bid Back in the Black, Senator John McCain took out a $3 million line of credit from the Fidelity & Trust Bank in the DC suburb of Bethesda, Maryland. The chief asset pledged as collateral according to the story was the fundraising list. But:
Because McCain would have to be alive to give the fundraising lists their value, [the McCain campaign's lawyer Trevor] Potter said, the campaign took out the insurance policy on him.
So in part the loan was backed by the calculation of the Senator’s fundraising prowess. This is a good example of how the value of intangible assets is link with other assets. But, as the West Wing episode pointed out, losers can have a tough time raising money – even if you are still a Senator. The donor list may have been the most valuable asset in the package even as a stand-alone asset.
The November loan came at a critical time in the campaign, when McCain was failing behind and running out of money. The infusion of funds allowed McCain to not only carry on but put enough resources in to the key New Hampshire primary to become the front runner. Bottom line: if John McCain becomes the 44th President of the United States, it will because of the monetization of an intangible asset. Think about that.
Posted by Ken Jarboe at February 1, 2008 8:56 AM
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