McCain may withdraw from public financing

WASHINGTON — Sen. John McCain's presidential campaign told federal regulators Monday that he does not need their approval to withdraw from the public finance system for the primaries.

The campaign, in a letter to Federal Election Commission Chairman David Mason, also said McCain did not encumber his potential share of public matching funds as collateral for a crucial $4 million loan he obtained late last year.

McCain lawyer Trevor Potter said the Supreme Court concluded that public financing for campaigns is constitutional because it is voluntary. "As a result, candidates have a constitutional right to withdraw from the program," Potter, a former FEC chairman, wrote Mason.

McCain's loan, from Fidelity & Trust Bank, has become a central issue in the Arizona senator's attempt to bypass the public financing system and the strict spending caps that come with it. Mason told McCain last week that the commission's approval was required and that he needed to explain the terms of his loan.

"The campaign did not use its federal matching fund certifications as security for the campaign's bank loan," Potter wrote.

Lawyers for the bank said in their own letter Monday that the loan agreement was carefully drafted to give McCain the opportunity to withdraw from public financing during the primary elections. They said the loan terms specifically excluded from the collateral any potential share of public matching funds McCain was entitled to receive.

Potter, a Republican appointee to the commission, submitted the bank lawyers' letter to Mason. One of those lawyers, Scott E. Thomas, is also a former FEC chairman and Democratic appointee to the panel.

The flurry of correspondence came the same day the Democratic Party filed a complaint against McCain, calling on the FEC to investigate whether the likely Republican presidential nominee can legally bypass public financing for the primary and the strict spending limits that come with it. The FEC also has asked McCain to explain the loan terms.

Staying in the public financing system could be devastating for McCain because he would have to live within spending limits that he is already on the verge of surpassing.

The FEC last year approved, or certified, McCain to receive up to $5.8 million in public matching funds. McCain did not collect any of the money. To withdraw once such funds have been certified, a candidate must not have received any of the money nor encumbered it as collateral for a loan.