RALEIGH, N.C. — The State Board of Elections wants campaign finance reform following the $100,000 penalty it handed the Mike Easley campaign committee for unreported flights.

Right now, the board can only penalize campaign committees for violations, not the candidate him or herself.

So in former Governor Mike Easley’s case, he is not personally responsible for the recent forefeiture and fine against his campaign committee.

The State Board of Elections unanimously approved an order asking the General Assembly to consider holding a candidate responsible for any penalties the candidate’s campaign committee can not cover.

Representative Deborah Ross, Vice Chair of the North Carolina House Election Law and Campaign Finance Committee, said “I can not imagine this would not be something that committee would look at closely.”

Fellow committee member Rep. Skip Stam (R – House Minority Leader) said he thinks changes in the law could happen during the short session.

“The candidate should be, if not aware of everything happening in the campaign, should be willing to take responsibility for everything that happens in the campaign,” said Stam.

To hear more from members of the Senate as well as Governor Bev Perdue, click on the video monitor above.

During her run for governor last year, Bev Perdue often talked about the need for campaign-finance reform.

She said the state needs to find an alternative to the current system, in which candidates for the state’s top offices raise many millions of dollars through private contributions.

Perdue even made the issue the subject of her first official act as governor. On Jan. 13, the new governor issued her first executive order. It established a task force charged with setting up an endowment that would be used to finance future gubernatorial campaigns.

But seven months later, that task force has not been appointed, and there has been virtually no work done on the proposed endowment, which is an extremely ambitious and untested idea.

A spokeswoman for Perdue said that the governor remains committed to the goal of campaign-finance reform. But the economic recession makes it difficult to try to build a large endowment right now, the spokeswoman said. And Perdue has devoted most of her attention so far to the immediate task of balancing the state budget.

“Given the economic challenges we are currently facing, it is difficult to put a timeline on the creation of the endowment,” the spokeswoman, Chrissy Pearson, said in an e-mail.
“Those who would financially support the endowment are struggling with the same economic downturn that has afflicted all of North Carolina and the country.”

Major campaign-finance reform will be difficult to achieve, especially in gubernatorial campaigns, which are traditionally the most expensive statewide races. En route to winning the governorship last year, Perdue raised or borrowed more than $18 million.

To replace the need for all that fundraising, Perdue wants to establish an endowment fund, which theoretically would be financed by donations from philanthropists, corporations and others. Future candidates for governor would get money from the endowment to run their campaigns, as long as they promised to run positive campaigns.

It’s unclear how “positive” would be defined, or what the consequences would be if a candidate receiving endowment money began running negative ads.
Executive Order No. 1, which Perdue issued just two days after her inauguration as governor, outlines the proposal and named Tom Lambeth of Winston-Salem to lead a special task force to establish the endowment.

Lambeth, the former head of the Z. Smith Reynolds Foundation, said that he has had a few informal conversations with people interested in campaign-finance reform.
But little has been done beyond that. Perdue is responsible for appointing the members of the task force, and she has not yet made any of those appointments.
Lambeth said he believes it was a wise decision for the governor to delay the start of the task force so that she could focus on the state’s recession-fueled budget gap.

“In the beginning, there were folks who had questioned whether or not this was simply a campaign statement or whatever, but I am convinced of her conviction that something ought to be done” on campaign-finance reform, Lambeth said.

He added that trying to solicit donations for a new endowment would be difficult during a recession.

No one knows whether enough money could be raised through donations to finance an endowment sufficiently large enough to pay for robust gubernatorial campaigns. Perdue said during her campaign that her long-term target for the endowment fund would be $50 million.

The endowment idea differs from other campaign-reform efforts in North Carolina, which have focused mainly on public financing. A new public-financing program took effect last year and was available to candidates for state insurance commission, state auditor, and state superintendent of public instruction. A bill in the General Assembly seeks to expand the program to the state treasurer.

According to some reform advocates, the advantage of a true public-financing system is that the state could designate a reliable revenue stream, with the money being distributed to candidates who meet certain thresholds.

An endowment financed through donations could be a less reliable source of cash.

“The risk is that the endowment may not accumulate enough money,” said Bob Hall, a veteran advocate for campaign reform and the executive director of Democracy North Carolina.

Still, Hall said that he sees the public-financing effort and Perdue’s proposal as complementing each other. Both are aimed at giving candidates a way to finance their campaigns other than soliciting donations from interest groups.

“They’re going to rely on special interests and wealthy donors unless we the public create an alternative,” Hall said.

WASHINGTON – John Edwards’ mistress received $100,000 from his political action committee in an 18-week span in 2006, payments that raise this question: Can politicians use PACs as their own personal piggy banks?

From staging fundraisers in Las Vegas to financing ski trips, current and former lawmakers have spent PAC money on a broad range of seemingly personal activities over the years, all the while maintaining they are doing so for strictly political purposes.

In the wake of the disclosure of Edwards’ affair with videographer Rielle Hunter, Edwards has acknowledged a federal criminal investigation is under way into his presidential campaign fund.

But it was the former senator’s PAC – which is separate from the campaign – that paid $114,000 in 2006 and early 2007 to Hunter’s Midline Groove Productions. Hunter shot videos of Edwards as he spread the populist message he subsequently would adopt in his presidential campaign.

PACs like Edwards’ One America Committee have legal flexibility that campaign committees do not.

It is illegal under federal election law to convert campaign funds to personal use. But that prohibition doesn’t extend to PACs in most cases, according to the Federal Election Commission, which in March asked Congress to tighten the law.

The FEC “has seen a substantial number of instances where individuals with access to the funds received by political committees have used such funds to make unauthorized disbursements to pay for their own personal expenses,” the FEC said in its legislative recommendation to Congress.

Leadership PACs are “a form of giant slush fund; they should be banned,” said Fred Wertheimer, president of Democracy 21, a campaign money watchdog group.

Their political purpose enables PACs to receive tax-exempt status.

“If a politician uses a PAC as a piggy bank for personal expenses he better make sure to accurately disclose the payments on FEC forms and pay taxes on the income,” says Jan Baran, a top campaign finance lawyer in Washington and a partner at Wiley Rein LLP.

Edwards could face a number of issues in the criminal investigation, whose existence he confirmed on May 3.

Was the purpose of the PAC money to Hunter to pay for a handful of online videos on Edwards’ travels? That would seem to be the case based on the PAC’s reports to the FEC. The money to Hunter’s production company was for “Website/Internet Services,” the reports state.

But if the money were for some other purpose, that could amount to a criminal act by those who caused incorrect information to be filed with the FEC.

Another issue surrounds the final $14,000 PAC payment to Hunter on April 1, 2007, from One America, which didn’t have enough money on hand at the start of the day to make the payment, according to records filed with the FEC.

The Edwards presidential campaign injected $14,034.61 into the PAC that day for a “furniture purchase,” the records state. That put enough money in the political action committee account to pay Hunter $14,086.50 the same day.

The Edwards camp has said the money from the PAC was exchanged for 100 hours of unused videotape Hunter shot.

It could be a criminal act if the real purpose was something else, such as an effort to keep the videographer quiet about the affair.

When Edwards disclosed the existence of the criminal investigation early this month, he said in a statement that he was “confident that no funds from my campaign were used improperly.”

This week, Elizabeth Edwards seconded her husband’s assertion, saying that “it’s just not possible” that campaign funds were paid to Hunter.

“The way campaign funds are distributed is all a matter of record,” Elizabeth Edwards said on NBC’s “Today.”

The Justice Department prosecutes the personal use of campaign funds.

Among high-profile politicians who have gotten into legal trouble over personal use of campaign funds are former House Ways and Means Chairman Dan Rostenkowski, D-Ill., and former Rep. James Traficant, D-Ohio. Rostenkowski ultimately pleaded guilty to mail fraud; Traficant was convicted of taking bribes and kickbacks from businessmen and his own staff.

More recently, a former congressional candidate in Kansas pleaded guilty to misusing campaign funds to cover a check for the down payment on a home.

In her new book, Elizabeth Edwards describes her understanding of the first meeting between her husband and Hunter, writing that Hunter greeted Edwards with the come-on line, “You are so hot,” after waiting for him outside a New York hotel.

That was followed within months by Edwards going on the road, with Hunter accompanying him to key primary states. One America paid the videographer $100,000 from July to November 2006, seven weeks before Edwards declared his candidacy.

WASHINGTON – The head of the Senate Banking Committee on Tuesday asked regulators to report frequently to the panel on their progress to improve fraud detection after their failure to discover the multibillion-dollar pyramid scheme allegedly hatched by disgraced financier Bernard Madoff.

At a hearing, Sen. Christopher Dodd, the Connecticut Democrat who is the committee’s chairman, closely questioned the enforcement director of the Securities and Exchange Commission and another SEC official as well as the interim chief executive of the Financial Industry Regulatory Authority, the securities industry’s self-policing organization.

“What’s happened here?” Dodd asked. He said he wanted action “very quickly in this area.” He asked the regulators to report every three months to the committee on improvements they were making.
  
Linda Thomsen, the SEC’s enforcement director, said the agency is committed to finding ways to bolster fraud detection after its breakdown in the Madoff case. While the agency needs to improve its internal processes for pursuing cases, she said the SEC also needs authority to regulate parts of the financial system that escape oversight and more funding to carry out more investigations.

“While we always do our utmost to do more with less, if we had more resources, we could clearly do more,” Thomsen testified at the hearing, which was Congress’ first opportunity to question federal regulators responsible for inspecting investment firms and taking enforcement action against fraud.

Lori Richards, who heads the SEC’s inspections office, said agency officials are thinking “expansively and creatively” about changes that could improve the detection of fraud.

But Sen. Richard Shelby of Alabama, the banking panel’s senior Republican, said that generally in cases of failure, regulators’ natural reaction “is to cry lack of resources.”
 
The SEC has faced heavy criticism over its failure to discover the $50 billion Ponzi scheme allegedly run by Madoff, the prominent Wall Street figure and money manager now fallen into disgrace – despite credible allegations against him that were brought to the agency over the course of a decade. Against the backdrop of the worst financial crisis since the 1930s, the SEC also is accused of contributing to that disaster with lax oversight of Wall Street and the markets. Lawmakers of both parties are calling for a shake-up of the agency to help restore investor confidence.

Also appearing before the banking panel Tuesday was Stephen Luparello, the interim chief executive of the Financial Industry Regulatory Authority, the securities industry’s self-policing organization.
  
Dodd recently asked Mary Schapiro – President Barack Obama’s newly confirmed chairman of the SEC – about the failure of the industry regulatory organization to detect the alleged Madoff fraud in its inspections of his brokerage operation. Schapiro, who has led FINRA since 2006, said that the matter went undiscovered because the scheme was carried out through Madoff’s investment business and FINRA was empowered to inspect only the brokerage operation.

Christopher Cox, then the chairman of the SEC, last month pinned the blame on the agency’s career staff for the failure since at least 1999 to detect what Madoff was doing. He ordered the SEC’s inspector general, H. David Kotz, to determine what went wrong. Kotz told a House hearing recently that he was expanding the inquiry to examine the operations of the divisions led by Thomsen, who has been the enforcement chief since mid-2005, and Richards, who has held that position since mid-1995.
 
Kotz has also been examining the relationship between a former SEC attorney, Eric Swanson, and Madoff’s niece, Shana, who are now married. As an SEC attorney, Swanson was part of a team that examined Madoff’s brokerage operation in 1999 and 2004. Neither review resulted in any action against Madoff, a former chairman of the Nasdaq Stock Market who was a member of SEC advisory committees.
  
Lawmakers say Madoff’s alleged fraud, which caused massive damage to investors large and small around the world and may be the largest pyramid scam in history, reflects deep, systemic problems at the SEC.

Six weeks after Madoff’s arrest in New York, thousands of victims who lost money investing with him have been identified – including ordinary people and Hollywood celebrities – as well as big hedge funds, international banks and charities in the U.S., Europe and Asia.

WASHINGTON – Barack Obama, who rewrote the book on presidential fundraising, amassed more than $745 million during his marathon campaign, more than twice the amount obtained by his rival, Republican John McCain.In his latest finance report, Obama reported raising $104 million in more than five weeks immediately before and after Election Day. It was his second biggest fundraising period and a fitting coda to a successful presidential bid that shattered fundraising records.

In the end, Obama still had $30 million left over. Overall, Obama exceeded the combined finances of the two major parties’ nominees four years ago. George W. Bush and John Kerry pulled in a total of $653 million in the 2004 primary and general election campaigns, including federal public financing money.

Obama’s prowess at attracting money, one of the many characteristics that defined his campaign, could well spell the end of a 30-year experiment in public financing of presidential contests.

After initially vowing to take public funds if McCain did, Obama became the first presidential candidate since the campaign finance reforms of the 1970s to raise private donations during the general election.

The final numbers underscore how pivotal the two candidates’ strategies were for funding their general election campaigns: McCain accepted $84 million in taxpayer money through the public financing system; Obama gambled that he could raise far more from private money.

The two campaigns spent identical amounts in June, $25.6 million each. But from there the numbers diverged widely in September and October when the Obama financial juggernaut swamped McCain. By the end, the Democrat was outspending his rival four to one. The reports submitted by the campaigns on Thursday covered the period from Oct. 15 to Nov. 24.

McCain relied heavily on the Republican National Committee to help narrow the financial discrepancy. But even with the party resources Obama had a vast money advantage.

The party committee couldn’t escape one of its most awkward moments of the campaign. After spending nearly $150,000 on clothing and accessories for McCain’s running mate Sarah Palin in September, the party reported spending more than $23,000 in additional accessories in the latest finance document. The spending ranged from $4,384 at Saks Fifth Ave. to $2,130 at Nieman Marcus to small purchases at Wal-Mart and CVS.

Party spokesman Alex Conant said Thursday that the expenditures listed in the party’s October and December reports “were the result of coordinated expenditures at the campaign’s direction.”

“Accessories have been returned, inventoried, and will be appropriately dispersed to various charities,” Conant said.

The RNC reported raising $75 million during the latest reporting period. Overall this year, the party committee raised $322 million.

It ended with $13.5 million cash on hand. The Democratic National Committee reported raising $36.5 million in its latest filing, for a total of $186 million for the year. The party had $8.7 million cash on hand, but it also reported owing $5 million on a line of credit.

Obama’s campaign said nearly 4 million donors contributed to his campaign.

But while Obama has made much of his large number of donors, the nonpartisan Campaign Finance Institute found that Obama collected about 26 percent of his total haul from people who gave less than $200 – about the same as President George W. Bush did in his 2004 campaign.

And like other campaigns, Obama’s relied for nearly half of its fundraising on big donors, those who gave $1,000 or more, a finding that “should make one think twice before describing small donors as the financial engine of the Obama campaign,” the institute reported.

Obama reported having nearly $30 million in the bank at the end of the reporting period and nearly $600,000 in debts. McCain reported $4 million in the bank, nearly $5 million in debts and $1 million owed to the campaign committee. McCain also filed a report for a compliance fund, used to cover expenses associated with his acceptance of public funds. He reported $25 million left over in that account.

WASHINGTON – The national Republican Party wants to make it easier to raise and spend political money and plans to sue the Federal Election Commission to alter a six-year-old law written by John McCain, the defeated Republican presidential candidate.

Republican National Committee Chairman Robert M. “Mike” Duncan said Wednesday that he wants the courts to eliminate restrictions on coordinated spending by national parties and federal candidates and to permit the national organizations to raise money for state parties.

Duncan said he planned to file suits Thursday in federal courts in Washington D.C. and in Louisiana. His goal, he said was to “strengthen the Republican Party and bring a more level playing field to campaign finance.”

The lawsuits represent the most direct party challenge to post-Watergate restrictions on the ability of parties and candidates to work hand-in-hand on political campaigns and on the anti-soft money law that McCain championed in 2002.

Since the 1970s, parties have been limited in the amount of money they can spend in coordination with a House, Senate or presidential candidate. For instance, this year, the RNC and its counterpart, the Democratic National Committee, could only spend $19 million each in consultation with the McCain or the Barack Obama campaigns.
 
The limits mean that the parties, since the 1990s, have set up independent expenditure units that can spend money on behalf of candidates as long as they have no contact with each other. The RNC spent more than $50 million against Obama through its independent operation.
  
“That results in these expenditure units being given money without direction, without coordination,” Duncan said. “You get results where candidates are often upset with the message that is going out.”

The RNC’s effort to permit fundraising for state parties and state candidates would reverse a key component of the 2002 law that McCain helped write with Democratic Sen. Russell Feingold of Wisconsin and House members Christopher Shays, R-Conn., and Martin Meehan, D-Mass.

Under that law, the national parties can only raise money under federal fundraising restrictions. The law banned the national parties from raising so-called soft-money – that is, unlimited amounts of money from corporations, unions or individuals. If the national parties can raise money for state parties or for state candidates, they would adjust that fundraising to state limits, some of which are not as strict as federal law.

Duncan said he wants the RNC chairman to be able to raise money next year, for example, for governors’ races in Virginia and New Jersey. Duncan was spelling out his plans for the lawsuits to governors attending the Republican Governor’s Association meeting in Miami.

He said such greater fundraising freedom also would strengthen the party’s hand for congressional redistricting efforts. The party money could be used to help elect state officials who have a hand in making redistricting decisions and to finance litigation challenging any new district lines.

McCain accepted $84.1 million from Washington, and that is all he can spend. But the Illinois senator rejected the taxpayer money, betting he could raise a lot more. And he has.

In financial disasters past, the balconies of skyscrapers lined up with bankers and investors ready to do a swan dive into some pavement as a result of the collapse of their businesses.

Today, banks and investment houses are going belly up like the after-church crowd at Golden Corral, and once again, bankers and investors are lining up on the balconies to do a swan dive, except this time it’s into a big pot of cash Uncle Sam is piling up for them to splash around in like a free swim in Scrooge McDuck’s money bin.

The U.S. Congress is preparing a $700-billion rescue plan to buy up and resell all the bad debt from the financial industry, which the wise men of Wall Street are taking as a good sign, because after all, who knows more about ginormous debts that can’t be repaid than the government? Especially reassuring is a quote in Forbes Magazine from a top Treasury official about how the government arrived at the $700-billion figure: “It’s not based on any particular data point. We just wanted to choose a really large number.”

It’s nice to see that mainstreaming isn’t just happening in schools, it’s also happening in the government.
A lot of folks are mad that the government is stepping in to prevent the financial industry from reaping the consequences of what they’ve sewn.

Personally, I don’t care so long as I get my bailout, too.

Totaling up all my student loan, credit card and late fees to Movie Gallery (What can I say? It took me two weeks to fully appreciate all the cinematic nuances of Tyler Perry’s latest offering, “Big Melodramatic Piece of Dookie Made Bearable By Funny Dude in Drag.”), I’m in the hole for about $13,000. I figure if the government can toss $700 billion Wall Street’s way, a mere $13,000 isn’t much to ask. Perhaps we should even hike it up to $20,000, so I can give my CEO (me) a nice little compensation package for failing so spectacularly.

Of course, my debts are my own fault. If I had studied harder and gotten more scholarships, I wouldn’t have the student debt. If I had read the fine print about interest, and not used my credit card to contribute to the 401k plans of several waitresses throughout the southeast, I probably wouldn’t owe the good folks at Chase so much money either.

The only difference between me and the guys on Wall Street is a matter of scale. I’m sure that if you gave me several billion to manage, I could find an even more spectacular way to make a muff of it than the big banks and investors.

My point: If you’re not going hold the Masters of the Universe responsible for their mistakes, how about tossing us wage slaves down on the cube plantation a few bones too, boss?

Financial titan J. Monroe Cook can be reached at jcook@dothaneagle.com.

WASHINGTON-When Bush administration officials came to Capitol Hill earlier this week to make the case for a buyout of bad mortgage debt, Sen. Elizabeth Dole said she was skeptical of the plan. Then she looked backwards.

In 2003, Dole began sponsoring legislation to beef up weak government oversight of two key players in the housing market – Fannie Mae and Freddie Mac – warning that failure to fix the mortgage giants could lead to problems.

That prediction proved accurate. The government was forced to take over the two firms this summer, shortly after the passage of provisions Dole had been pushing for five years.

“This problem could have been resolved years ago,” Dole, R-N.C., told Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke at a hearing of the Senate banking committee Tuesday.

Over the last six years, Dole’s membership on the committee gave her a voice on a host of debates related to the current crisis, from the regulation of mortgage giants, to oversight of Wall Street investment banks and hedge funds and monetary policy.

With Congress mulling over a proposal to buy $700 billion worth of Wall Street securities linked to bad mortgages, many are now asking whether Congress and the administration did enough to prevent the current financial woes.

Dole’s role on the banking committee has come up as an issue in her bid for re-election against Democratic state Sen. Kay Hagan.

A review of committee hearing transcripts and bills Dole sponsored during her tenure show she was an early and sometimes lonely advocate for beefing up oversight of Fannie Mae and Freddie Mac, even after a series of accounting scandals revealed deep problems at both firms.

Financial analysts and economists say a lax regulatory environment helped the firms conceal substantial problems created by their purchase of massive quantities of risky subprime loans, a flaw that has hurt the broader economy.

The review of hearing transcripts and legislation she sponsored during her first term also suggests that Dole was more engaged in the mortgage giants’ troubles than she was in a host of other issues that analysts and economists say also contributed to the current woes.

A review of committee hearing transcripts shows Dole did not attend or did not speak- the transcripts do not make clear which – at several banking committee hearings during her first term.
The hearings covered banking and hedge fund regulation, oversight of Wall Street, problems in the subprime mortgage market, foreclosure prevention, and a few included discussions with the Federal Reserve chairman on economic issues.

Hagan’s campaign says her “silence” in those committee hearings shows a lack of commitment to those issues. But Dan McLagan, a spokesman for Dole’s campaign, suggested that argument reflected an overly
simplistic view of the way Washington works.

“There are a lot of ways for a senator to influence regulatory policy and Sen. Dole takes advantages of many of those different options. Depending on the issue, raising it in committee may not be the most effective way of making change,” he said.

Fannie Mae and Freddie Mac have been key players in the housing market for decades. They buy mortgages from banks, package the mortgages together as securities, and sell them to investors or keep them on their own books.

Until a few years ago, the firms mainly bought mortgages that banks issued to the safest borrowers. But a few years ago, they expanded into the growing market for subprime mortgages. Their presence helped make it easier for many Americans to get loans – and drive housing prices up by bringing more buyers into the market.

The firms were private, but long operated with an implicit bailout guarantee from the federal government.
Because of that guarantee, Dole and a handful of Republican senators introduced legislation on several occasions to allow federal regulators to take a closer look at Fannie’s and Freddie’s books. The legislation gave regulators the power to force the companies to reduce risk by decreasing the number of securities tied to subprime mortgages in their portfolios and to require the companies increase the amount of money kept on hand to cover bad bets on subprime mortgages.

Both led to financial problems for the companies that led to the government takeover.

For years, the legislation went nowhere, though Dole and others raised the issue repeatedly in banking committee hearings.

“We need it now,” she said at a hearing in 2006. Many of those provisions passed this year, just in time for the government to take over the companies.

Senate Republicans have blamed Democrats for resisting the measure both before and after Congress changed hands in 2006. But Colleen Flanagan, a spokeswoman for Hagan, said that Dole’s failure to get it passed showed she was not an effective voice on the banking committee.

“She can sign her name on bills until she’s blue in the face, but if they didn’t go anywhere…it’s really no different than total inaction,” she said.

McLagan said the senator did everything she could to get it passed in the face of intense lobbying from the two mortgage firms.

“On what I think is universally seen as the major tipping point of the current crisis, Freddie and Fannie, she talked about it with regulators, staff, members of the administration, and used all private and public venues up to and including brining it up in committee hearings,” he said.

Fannie and Freddie sold many of the subprime backed loans to Wall Street investment banks, including many of the larger firms that have collapsed in recent months.

But whether the collapse of Fannie and Freddie was the major tipping point of the crisis is open to debate, financial experts say. The current problems had many fathers, including some unrelated to mortgages. They include lax oversight of investment banks and hedge funds, and the emergence of complicated financial instruments that, in hindsight, failed to accurately account for risks firms were taking in non-mortgage lending.

“If Fannie and Freddie had not failed, I think we’d still have a financial crisis. That wasn’t the primary trigger,” said Rob Bliss, an expert in financial markets and a professor of business at Wake Forest University.