How Did Cruz Get That Loan? 2016-03-13 05:00 by Karl Denninger

Ted Cruz failed to report two loans he received in 2012 for his Senatorial campaign.

During the campaign itself he claimed he had liquidated his own personal family wealth to finance the campaign. That was a lie; he in fact got two loans; one from Goldman Sachs and the other from Citibank. His wife works for Goldman.At least one of these loans (the Goldman one) was "secured" by a brokerage account.

Some of Cruz's excuses have included that this was allegedly his "retirement" money.Well, if that's true I have some more questions.

You can borrow against a 401k -- up to 50% of its value. But, that 401k couldn't have been his, since he didn't work for Goldman and further, if you leave a job you must immediately repay the entire balance of any loan you have out or it is considered a premature distribution and subject to a penalty tax.This is why, in general, 401k loans are stupid because you cannot always control whether you will leave a job and there is no exception for "I was laid off or fired."

The problem is that no other sort of retirement account, such as a self-directed IRA, rollover from a previous 401k into an IRA or otherwise, can be margined.These, by their nature and law, are cash accounts and cannot be borrowed against.

Taking funds from them, with the exception of a ROTH which allows funds in some circumstances to be removed (not borrowed against) is considered a premature distribution and subjects you to a penalty tax rate.So the question is this: What sort of account was that? Was it a taxable account and thus marginable? Or was it tax-advantaged and thus a loan that nobody that isn't "special" could ever obtain?

Further, where are the details of said loan including the interest rate charged? Margin loans carry a fairly heavy interest rate, especially today in a world of zero rates. In short, did Cruz effectively obtain leverage -- a margin loan in effect, irrespective of what it was called -- on a tax-advantaged account that no ordinary person could get?And if so what was the quid-pro-quo for that very-special act that nobody else can get?Outsider eh?

Cruz is not an outsider; in fact he and his wife are both bankster stooges who have used the "screw the public" bankster system run by Goldman and Citibank and failed to disclose it as required by law.

https://market-ticker.org/akcs-www?post=231229


March | 2016 | Barnhardt