Now that former Pennsylvania Sen. Rick Santorum has proved he’s a serious candidate for president with his near-tie for first in the Iowa caucus Tuesday night, ethics watchdogs are renewing their criticism of a mortgage he received from a bank run by campaign donors.
Before Mr. Santorum lost his Senate re-election in 2006, he was hit with ethics allegations, accusing him of accepting a below-market rate on the $500,000 mortgage of the Virginia home he and his wife purchased for $643,361 and sold for $850,000 in 2007 when he left office.
ABC News ran a Wednesday story on the mortgage loan, noting its relevance considering the recent searing scrutiny over former Speaker Newt Gingrich’s $1.6 million in consulting work for Freddie Mac, the subject for a series of negative ads in the last month pummeling Mr. Gingrich.
“[Santorum] violated Senate gift rules by accepting a mortgage from a bank in which he had no interest and which otherwise made loans only to its own investors,” Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, told ABC News.
The Philadelphia Daily News in 2006 reported extensively about the loan from the Philadelphia Trust Company, which back then was a relatively new private bank whose officers had contributed $24,000 to Mr. Santorum’s political action committees and re-election campaign.
In the bank’s advertising, it said it offered rates to borrowers who also used its investment services. Mr. Santorum’s financial disclosure forms, which he was required to file with the Senate at the time, did not show the required $250,000 in liquid assets nor did it say that he was an investor with Philadelphia Trust. Members of Congress are prohibited from accepting loans from financial institutions that are below market rates or unavailable to the public.
Mr. Santorum’s campaign spokesman did not immediately respond to a request for comment and further explanation of the loan terms.
Back in 2006, Mr. Santorum’s spokeswoman told the Daily News that the mortgage terms were at “market rates,” but declined to provide further detail or produce the mortgage paperwork.
The Senate Ethics Committee, which operates mostly in secret, appears to have never looked into propriety of the loan, and after Mr. Santorum lost his election, it no longer had jurisdiction over the matter.
Later, after the financial crisis, the committee spent nearly a year investigating then-Democratic Sens. Chris Dodd of Connecticut and Kent Conrad of North Dakota over their participation in Countrywide Financial Corp.’s VIP lending program.
The Senate Ethics Committee eventually dismissed the complaints against them, but cautioned the senators that they should have “exercised more vigilance” in their dealings with the mortgage giant to avoid an appearance of preferential treatment.