You can't make this stuff up. Capitalism in action....

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California’s Napolitano Makes $220,000 From 1998 Campaign Loan

By Timothy J. Burger

Feb. 13 (Bloomberg) -- During a decade in Congress, California
Representative Grace Napolitano has pocketed more than $200,000
of political contributions by charging as much as 18 percent
interest on money she loaned to her own campaign.

The suburban Los Angeles Democrat made the $150,000 loan in 1998,
when she was first elected to the U.S. House of Representatives.
Through Dec. 31, her campaign committee has used donations to pay
Napolitano $221,780 of interest while reducing the principal by
just $64,727, a review of her Federal Election Commission filings
shows.

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For Napolitano, a 72-year-old grandmother of 14, the campaign IOU
has been a profitable asset, far outperforming stocks since the
loan started accruing interest in May 1998. Over the same period,
an investment in the Standard & Poor’s 500 stocks, with
reinvested dividends, would have lost more than 7 percent,
according to Bloomberg data.

In the first five months of 2008, Napolitano’s campaign paid her
almost $68,000 of interest, according to FEC records. An
additional $15,227 of principal was paid last May.

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Biggest Asset

The debt is the biggest asset listed in Napolitano’s
financial-disclosure filings, which don’t include personal
residences. A former Ford Motor Co. secretary, Napolitano
withdrew $150,000 for the loan from an employee-stock retirement
plan. Ford shares, which traded for about $45 in May 1998, closed
yesterday at $1.79.

Napolitano gave the money to her campaign in March 1998 and began
charging 18 percent interest on May 3, 1998, after the deadline
passed for moving the funds into another retirement account
without early withdrawal penalties, according to FEC records.

Napolitano cut the interest charge to 10 percent in July 2006. As
of Dec. 31, the campaign owed $85,273 of principal and $5,549 of
unpaid interest, according to FEC filings.

When the FEC investigated her opponent’s 1998 complaint about the
loan, Napolitano’s lawyer, Diane Fishburn, said the 18 percent
interest rate was “not out of line with the rates on other
unsecured loan transactions.” The FEC concluded that the interest
rate, while “high,” was allowable.

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Unka' George [George McDuffee]
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He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).