DOLE TO LEND GINGRICH $300,000 TO PAY FINE : GINGRICH'S LOAN TERMS.

Byline: David Hess and Steven Thomma Knight-Ridder Tribune News Wire

After toying with the idea of enlisting George Bush, Gerald Ford and Nancy Reagan to help bail out Newt Gingrich, Bob Dole decided to do it himself, agreeing to lend the House speaker $300,000 to pay his ethics fine.

Gingrich announced the surprising arrangement Thursday in an 18-minute speech to the House, with his wife, Marianne, watching from the gallery. While Republicans hailed Gingrich's move, some Democrats questioned whether the Georgia Republican was benefiting from a sweetheart deal.

Under the terms of the loan, Gingrich has until 2005 to repay the $300,000, plus an annual interest rate of 10 percent. But Gingrich can delay any payments until 2005, three years after he is expected to leave Congress.

Christina Martin, Gingrich's press secretary, said the speaker probably will not make any payments on the loan, even for interest, until he has left public office. The interest will accrue on the loan, so that Gingrich will be paying interest on the interest as well as the principal.

If he waits until the last minute to repay the whole loan, his liability could approach $650,000. As speaker, Gingrich draws an annual salary of $171,500, but presumably could make far more out of office.

In his speech to the House, Gingrich said he would repay the loan from his personal resources, rather than dipping into his campaign fund or setting up a legal defense fund. He said he seriously considered those two options but rejected them lest they trigger a public backlash.

He said he decided to borrow the money from Dole because ``I have a higher responsibility as speaker to do the right thing in the right way and to serve responsibly.''

Dole, who has a long history of prickly relations with Gingrich, told reporters he initiated the plan because ``I'm a good Republican. I hope my integrity is intact. I want to help the party, help Newt.'' And he insisted the deal was legitimate, saying Gingrich ``could have done better at a bank.''

Gingrich aides said Dole called the speaker from Harvard University on Tuesday morning and made the offer of the loan. That evening, after Dole had returned to Washington from his speaking engagement at Harvard, the two met on Gingrich's Capitol balcony and sealed the deal.

The offer had been simmering in Dole's mind for several weeks, said one Republican source. ``Sen. Dole sent word quietly a few weeks ago that he'd be willing to help,'' the source said. Dole passed the word through his former campaign manager, Scott Reed, who also is close to Gingrich.

At one point in private discussions, Dole suggested that perhaps Bush, Ford, Nancy Reagan and he could each give - not lend - Gingrich $75,000 to pay the fine. But the idea was dropped because it could run afoul of a ban limiting gifts to congressmen to $250, said Rep. Bill Paxon, R-N.Y.

The details about the terms of the loan were still being vetted Thursday by the ethics committee, which demanded the $300,000 as reimbursement for expenses it incurred as a result of contradictory and untruthful information Gingrich submitted to the panel in 1995 and 1996. The committee was investigating charges that he misused tax-exempt foundations to finance his political agenda.

Gingrich's counsel, Atlanta attorney J. Randolph Evans, said the terms of Dole's loan will meet the same standards Gingrich would have to meet if he borrowed the money from a commercial bank.

But some Democrats questioned the propriety of the arrangement and expressed doubt that any responsible bank would agree to the general terms of the loan as outlined by Gingrich aides.

House Minority Whip David Bonior, D-Mich., who brought the charges against Gingrich that led to the ethics investigation, said the arrangement smacked of ``a sweetheart deal.'' He and other Democrats questioned the provisions that allowed Gingrich to defer payments on the loan and absolved him from putting up any collateral - other than life insurance equal to the debt.

House Majority whip Tom DeLay, R-Texas, one of Gingrich's staunchest backers, accused Bonior of carrying on a ``crazy vendetta'' against the speaker and said the Michigan Democrat would ``not be content until Newt and Marianne Gingrich declare bankruptcy and Newt quits Congress.''

Several Democrats also questioned whether it was proper for Dole, who will start work next week with a prominent law and lobbying firm in Washington, to be lending money to a member of Congress.

``We have to know if Dole is involved in any issues pending before Congress,'' said Rep. George Miller, D-Calif.

Though Dole has said his job will not involve lobbying, his law firm represents the tobacco industry and could be involved in seeking congressional approval of any settlement of smoking lawsuits currently being negotiated with several state attorneys general.

Suggestions that Dole would do anything improper enraged House Republicans.

``I can't imagine anything more deplorable than . . . questioning the integrity of Bob Dole, only a few months after President Clinton awarded the senator the Medal of Freedom, America's highest civilian honor,'' fumed House Majority Leader Dick Armey of Texas.

Gingrich got a better deal than most customers could get from a bank, but not a unique one, said Ted Engel, a finance professor at Wilkes University in Wilkes-Barre, Pa.

``It's somewhat generous, but not outlandish,'' Engel said. He said the 10 percent annual rate - which is equivalent to the prime rate plus 1.5 percentage points - was a good rate of return for Dole, ``for the amount of risk he is taking on.''

Most customers of a bank, he said, would have to sign up for an installment loan in which they would have to start paying immediately. But he added that a bank could allow deferred payments for favored customers. ``It depends on how good a customer you are,'' Engel said.

He said the requirement that Gingrich carry a life insurance policy equal to the debt amounts to collateral.

Here are terms for the loan Newt Gingrich is receiving from Bob Dole:

The loan amount is $300,000.

The interest rate is 10 percent (prime rate plus 1.5 percent), simple interest, calculated on an annual basis.

Principal and all accrued interest due and payable within eight years, or 2005. No payments are required before then.

Gingrich may make payments prior to the due date at any time, without penalty. All payments would be first applied to interest, with remaining amounts applied to principal. By paying nothing until the due date, interest would compound and Gingrich would pay back about $640,000, his lawyer says.

Gingrich must maintain sufficient term life insurance to cover outstanding interest and principal.

The loan will not be forgiven by Dole.

If Dole becomes a registered lobbyist, the loan will be replaced with a commercial loan from a commercial institution.

The loan must be approved by the House Committee on Standards of Official Conduct, the ethics committee.

SOURCE: Associated Press 

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box: Gingrich's loan terms (see text)