McCain Got Loan by Pledging to Seek Federal Funds

Cleta Mitchell, a veteran campaign finance lawyer and a McCain critic, said she has never encountered a similar agreement.

"They've clearly got a sweetheart deal with this bank," Mitchell said. "This bank is just a cash register for them."

Watkins, the bank president, said the terms of the McCain loans were novel, but only because the campaign finance rules have changed over the years. He said he and the other bank trustees have a long history of lending to political committees of both parties, including loans to the presidential campaigns of Democrat Walter F. Mondale and Republican Robert J. Dole.

"Over the years, we developed an expertise on ways to meet federal banking regulations and FEC requirements," Watkins said. "We've done everything in accordance with all the standards." Members of the bank's board of directors have made campaign contributions to candidates in both parties but none to McCain.

McCain's victories in the early primaries meant he never had to enter the public financing system. He formally returned his certification to the FEC on Feb. 6.

That decision has not stopped McCain from pushing for an agreement with Sen. Barack Obama (D-Ill.) that, if the two became their parties' nominees, they would return to public financing for the general election.

Last spring, an Obama spokesman said that the Illinois Democrat would "aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election," and McCain told reporters yesterday that Obama should "keep his word to the American people."

"If Senator Obama goes back on his commitment to the American people, then obviously we have to rethink our position" on public financing, McCain said in Oshkosh, Wis.

Under the federal campaign finance system, after a political party nominates a presidential candidate at its convention, the nominee becomes eligible for $85 million from a fund provided by taxpayers but would be barred from raising additional money.

Candidates have abided by these limits in the past, but no campaign has created the kind of fundraising machine that Obama has.

Obama said in Milwaukee: "If I am the nominee, then I will make sure that our people talk to John McCain's people to find out if we are willing to abide by the same rules and regulations in respect to the general election." But, he added, "it would be presumptuous of me to start saying now that I'm locking myself into something when I don't even know if the other side is going to agree to it, and I'm not the nominee."

Staff writer Perry Bacon Jr. contributed to this report.