The Trail

The campaign put the report on its FightTheSmears.com Web site, which counters what it considers the false allegations and wild rumors about the candidate that have proliferated online.

-- Perry Bacon Jr.

PUBLIC FINANCING

McCain Gets Boost From the FEC

Staff attorneys for the Federal Election Commission have recommended that the commissioners accept John McCain's position that he was legally entitled to withdraw from public matching funds during the Republican primaries, according to an 18-page memorandum made public Thursday on the FEC Web site. The commission is scheduled to vote on the matter next week.

Questions first arose about the legality of McCain's decision to withdraw from the federal matching program after he filed papers with the FEC showing he had taken out an unorthodox bank loan to help his campaign stay afloat.

McCain's cash-strapped campaign borrowed $1 million from a Bethesda bank two weeks before the New Hampshire primary by pledging to enter the public financing system if his bid for the presidency faltered. That was on top of a $3 million bank loan in November, and another $1 million loan shortly before the Super Tuesday contests that pledged unprocessed contributions and other campaign assets as collateral.

The lending terms brought condemnation from Democrats and prompted questions from then-FEC Chairman David Mason. He questioned whether McCain may have inadvertently committed himself to entering the public financing system for the remainder of the primary season by holding out the prospect of taking public matching funds in exchange for the $1 million loan in December.

McCain's attorneys and a Fidelity & Trust president said all along they thought the loan agreements were carefully scrutinized in advance to make sure they would pass muster with federal banking regulators and the FEC.

The recommendation sent by staff to the FEC members suggests that the commission's legal experts agree.

-- Matthew Mosk