David Dodd 2:53 a.m., May 21
Capitol Hill's top two personal debtors hail from San Diego, analysis finds
North County mega-millionaire Republican and newly elected La Jolla Democrat not eager to talk about places on congressional debtor list
Two San Diego county congressman rank at the very top of the list of Congress's biggest debtors, but neither are eager to provide details about their personal high finances, according to a report posted online today by OpenSecrets.org, a Washington-based non-profit devoted to collecting and analyzing political disclosure data.
As first reported here last August, car alarm magnate and GOP congressman Darrell Issa, while worth multi-millions, is carrying around a lot of bank debt, though many details are hazy:
Precise net worths are difficult to determine from the congressional forms, because members only have to report ranges of their holdings, income, and personal liabilities. Issa's disclosure, for instance, reports that on January 7, 2011 he borrowed in excess of $50 million from Merrill Lynch.
The same day, according to the disclosure, Issa paid off a "personal note" valued at between $25 million and $50 million to DEI, LLC, one of his holding companies. That loan had been made on November 5, 2010 by DEI with "funds provided through a business line of credit from Merrill Lynch secured with personal assets."
Three days later, on January 10, 2011, Issa paid off another "personal note," valued at greater than $50 million, to Greene Properties, another family holding company. That loan, which had been made on January 7, 2010, was also funded by money from a Merrill Lynch credit line secured by personal assets, the statement says. Then, on October 14 of last year, Issa took out a personal loan exceeding $50 million from Union Bank.
Today's analysis by OpenSecrets.org puts Issa at the top of its list:
Ranking No. 1 in congressional debt for 2011 was Rep. Darrell Issa (R-Calif.), who made a fortune in the car alarm business and has frequently appeared at the top of OpenSecrets.org's list of wealthiest lawmakers (this year he's ranked number two with an average estimated net worth of $480.3 million). Issa owed at least $100 million on two personal loans from Union Bank and Merrill Lynch, but his office [did not respond] to a request for comment on the reason for the loans.
OpenSecrets talked to Allen Laufer, director of financial planning at Silvercrest Asset Management, "a financial advisory firm that specializes in helping wealthy families,” who explained that the rich go into debt for different reasons than the poor:
"It's a different kind of borrowing -- one that either enhances returns (on investments) or it is maybe for estate or gift tax planning," Laufer said. Often, wealthy people are able to borrow money at a very low interest rate not generally available to the public; they then invest the funds in something with a higher rate of return. For example, Laufer said, money can currently be borrowed from a family trust at an interest rate of roughly 1 percent.
Issa isn't the only super rich San Diego politico to play the debt game and not want to talk about it, says OpenSecrets:
A distant second to Issa among the biggest debtors of 2011 was freshman Rep. Scott Peters (D-Calif.), whose combined liabilities totaled between $18 million and $90 million. As with Issa, that's not much compared to his overall personal wealth, which, including that debt, we estimate to have been, on average, about $86.2 million.
Peters' debts are cryptic: Some lines say nothing more than "CALL SPX - SHORT," for example. Two financial experts we talked to said it appeared that Peters may have been borrowing to short sell an S&P index fund. Several similar entries use different acronyms that could refer to different funds.
But Peters' office would provide no further information when we called multiple times. "Scott has complied fully with his reporting requirements and supports this process for government transparency," his communications director, Taylor Lavender, said in an email. "Voters will have the information they need to be confident he's acting in their best interest and in the best interest of the country."
Lynn Gorguze, who is married to Peters, is the daughter of super wealthy La Jolla industrialist Vincent T. Gorguze, who has backed Mitt Romney and other Republicans.