Rep. Moran is Proof of Failure of Congressional Ethics Regime

James MoranRep. James Moran (D-VA), whose son is seen on an undercover video providing instructions on how to engage in vote fraud, has a long history of ethical problems. The fact that he is still in Congress is confirmation of the ineffectiveness of three bodies tasked with enforcing ethics, the U.S. Justice Department, the Federal Election Commission (FEC) and the House Ethics Committee.

Moran’s most egregious misconduct took place in the context of the PMA scandal. The PMA Group, a lobbying firm, funneled hundreds of thousands of dollars in illegal campaign contributions to lawmakers who obtained earmarks for PMA clients. The Justice Department failed to prosecute the PMA gang that included Reps. James Moran (D-VA), Peter Visclosky (D-OH), Norm Dicks (D-WA), Marcy Kaptur (D-OH) and Bill Young (R-FL). Rep. John Murtha (D-PA), the ringleader, passed away in February 2010.

The Department argued that its conviction of former PMA lobbyist and former Murtha aide Paul Magliocchetti in September 2010 was evidence that it did not back down from the case. Fall guy Magliocchetti will sit in Federal Correctional Institution Williamsburg in South Carolina until March 2013.

In 2002, Moran was the center of controversy because of a sweetheart $477,500 loan he received from a company whose legislative interests he boosted on Capitol Hill. The home refinance loan, made in January 1998 from MBNA, the nation’s largest issuer of credit cards, was on highly favorable terms to Moran. At the same time, Moran became the lead Democratic sponsor of a bill to reform bankruptcy laws, favored by MBNA.

Moran was allowed to borrow 97% of his home’s value when MBNA normally doesn’t lend more than 80% of a home’s appraised value. The appraisal on which the loan was based was itself suspect. In March 2001, Moran sold the property for $9,000 less than the 1997 MBNA appraisal, after prices of homes in the area had jumped an average 32%.

The fact that Moran was $700,000 in debt and juggling two dozen credit cards apparently served as no impediment to MBNA making the loan. In fact, Moran’s loan was the largest single loan extended to any homeowner in the country by MBNA that year, even as the company had classified him as a “delinquent borrower.”

The interest rate was 10.5%. The Washington Post, which first disclosed the loan, reported that the average interest rate for other loans as risky as Moran’s in early 1998 was 12.84%. MBNA initially offered Moran a below-market rate of 12%. Eventually, Moran, negotiated his interest rate down to 10.5%, saving himself $800 a month in loan repayments.

Four days later his loan became final, Moran became the leading Democratic supporter of the bankruptcy bill. A month later, Moran spoke passionately before a congressional committee considering the bill. “The time-honored principle of moral responsibility and personal obligation to pay one’s debts has been eroded by the convenience and ease with which one can discharge his or her obligations,” he said.

Moran also denounced deadbeats on the House floor, “Some people are taking these credit cards in, they sign up, they max out, whatever they can charge. They pile up debt, and then they get themselves relieved from paying off the debt, and oftentimes they can go right back to doing it all over again. It needs to be fixed.”

Moran might have been talking about himself. When Moran sold his house, MBNA had already sold the loan as part of a larger portfolio to Household International. That company agreed to swallow a $40,000 loss to avoid the costs and hassle of foreclosure. In 2000, Moran was forgiven credit card debts totaling thousands of dollars by First USA Bank and The GM Card.

The MBNA loan fiasco led the Washington Post to editorialize that Moran was “unfit for office.” U. S. Senate candidate Tim Kaine, a liberal Democrat, who was Virginia’s Lt. Governor at the time, joined Republicans in calling for a House Ethics Committee investigation, which of course, went nowhere.  (Maybe the two have made up. In the undercover video, Patrick Moran sports a Kaine/Moran button.)

Members of Congress do not have to disclose mortgage debt on the official disclosure forms. The loan only came to light in the course of Moran’s divorce proceeding.

NLPC filed a formal Complaint with the FEC alleging that the loan was a violation of the Federal Election Campaign Act, which limits contributions by individuals to candidates for federal office to $1,000. The law also counts loans as contributions if those loans are not extended “in the ordinary course of business,” come with a below-market interest rate and/or carry little chance of repayment.

According to NLPC Chairman Ken Boehm, “Nothing about this loan was ordinary, consistent with the market, or carried a reasonable chance of full repayment.” Nonetheless, the FEC eventually dismissed the Complaint, marking the second time that it came to Moran’s rescue.

In 2000, NLPC filed an FEC Complaint regarding a $25,000 loan Moran received from Terry Lierman, at the time a lobbyist for Schering-Plough. Five days after receiving the loan, also with below-market interest rates, Moran came out in support of a bill extending the company’s patent on its allergy drug, Claritin. The Complaint was eventually dismissed.