Critical Eyes Focus on Terms of Gingrich Loan

Democratic lawmakers and independent legal experts began focusing Friday on the fine print of House Speaker Newt Gingrich’s $300,000 loan from Republican ally Bob Dole, questioning whether the unusual arrangement will pass muster with the House Ethics Committee.

And that decision now appears to rest with two members of the panel--Republican James V. Hansen of Utah and Democrat Howard L. Berman of Mission Hills--making them the focal point of intense congressional attention.

The other 10 committee members who dealt with the Gingrich case in 1995 and 1996 have been released from service. A new panel will not be named until sometime next month, after a special reform group recommends an overhaul of existing ethics procedures.

While Republican leaders hailed the deal as the best way for Gingrich to pay his outstanding penalty and put his ethics problems behind him, Democrats cautioned that the loan could run afoul of a law restricting gifts to members of Congress.

Under an arrangement announced by Gingrich on Thursday, the speaker would pay off the penalty imposed by the House ethics panel with proceeds of a personal loan from Dole, the former Senate majority leader and 1996 GOP presidential nominee.

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The Georgia Republican would be obligated to pay 10% interest to Dole, but no payments of either interest or principal would be due for eight years. One financial expert characterized the arrangement as the equivalent of a “zero-coupon” bond.

Gingrich announced the deal before it could be reviewed by the Ethics Committee. Although the panel already has endorsed the use of a personal loan to pay Gingrich’s penalty, it has not determined whether the Gingrich-Dole agreement is acceptable.

“There are so many questions left to be answered surrounding Speaker Gingrich’s ethics troubles,” said Rep. David E. Bonior (D-Mich.), one of Gingrich’s leading critics in Congress. “We owe it to the American people to get all the facts,” he said.

Democrats indicated that they are keeping an ear cocked for potential public outrage at the loan arrangement as they try to determine whether they should press the ethics panel to reject the transaction.

The $300,000 penalty was imposed by the Ethics Committee to recover costs associated with the lengthy inquiry into the tax-exempt status of a college course taught by Gingrich.

Independent legal experts said that Dole’s loan to Gingrich appears to violate a provision of the 1995 congressional gift ban, which allows lawmakers to receive bank loans only if the terms are comparable to those generally available to the public.

Personal loans are not permitted under the gift ban unless specifically exempted by the ethics panel. While the committee already has endorsed the concept of Gingrich paying his penalty with a personal loan, it has reserved the right to review the terms of any transaction.

“As far as I can tell, this arrangement does not comply with the gift rule unless the committee specifically exempts it,” said Ellen Weintraub, who served as an Ethics Committee counsel from 1990 to 1996. “It’s a done deal only if Jim Hansen and Howard Berman say it is. They are the Ethics Committee. They are clearly on the spot.”

Berman said that the panel would consider the loan, but declined to offer an early opinion. “It would not be appropriate and I have no intention of talking about the nature of our review,” he said Friday during a telephone interview from his Mission Hills office. “I’m convinced the committee will make its judgment divorced from any external pressures.”

Top Gingrich aides expressed confidence that the deal would win the committee’s approval.

The aides said that Gingrich himself did not learn of Dole’s offer until late Monday.

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Now that the deal has been announced, some Americans appear to be questioning whether Gingrich has obtained a sweetheart loan whose provisions are more generous than those within the reach of ordinary citizens.

“People are not too happy with this,” said Diane Rehm, host of a nationwide talk-radio program broadcast by National Public Radio. “There is a perception that, as one caller put it, ‘Newt isn’t going to suffer with this.’ Another caller wanted to know: ‘If he makes $170,000, why can’t he put aside $30,000 a year and pay it off that way? Why does he have to have this special . . . arrangement?’ ”

Similar views were expressed by several Californians Friday.

At his cafe seat on the Third Street Promenade in Santa Monica, 25-year-old Glenn Barrack put down his John Steinbeck novel and sounded off about the Dole loan.

“The people with the money always find a way to land safely, while I’ve got to struggle to make ends meet,” said Barrack, who works as a waiter. “But those guys are on a different plane, a different level. The same rules don’t apply.”

Added Jose Ruiz: “When you make as much money as these guys, what’s $300,000? You have to put it to scale. It’s like me lending a buddy 300 bucks. It’s no sweat.”

Sitting at the bar of a trendy Santa Monica eatery, Jeannine Angelique said that she has no problems with the loan. “Newt has the friends to make things happen,” she said. “The rest of us only dream of having that kind of edge on life. He has the mind, the market and the willpower to dig his way out of a scrape.”

Sitting on a street-side Santa Monica bench, Richard Neuhaus said that nothing politicians do surprises him. “Let me put it this way,” he said. “It doesn’t bother me as much as some of the things Bill and Hillary Clinton are getting away with.”

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Times staff writers Edwin Chen in Washington and John Glionna in Los Angeles contributed to this story.