Days after announcing his candidacy for the Republican U.S. presidential nomination last March, Texas Senator Ted Cruz went after his wife Heidi’s employer, Goldman Sachs. All the too-big-to-fail financial institutions on Wall Street were in the business of currying favor with Washington, Cruz said, something he vowed to end when he occupied the White House.
Along with Donald Trump’s headline-grabbing assertions, Cruz’s critiques of what he calls “crony capitalism” are among the few constants of the GOP nomination battlefield. Now, though, the candidate concedes that he took a loan from Goldman, and another from the mother of all bailed-out American banks, Citigroup to fund a 2012 Senate campaign. In what he calls an “inadvertent” filing error, he didn’t disclose them to the federal election watchdog at the time.
The New York Times revealed the discrepancy in a story published on Wednesday. Goldman is hardly a lender most normal people would turn to. Nor is the initial $750,000 total for the two bank loans a figure most on Main Street would be able to borrow. The episode gives off its own whiff of cronyism, and it dents Cruz’s carefully crafted populist image just as the Republican candidates are gathering for Thursday’s Fox Business Network debate.
Cruz has railed against all manner of special-interest policymaking, from the existence of the U.S. Export-Import Bank to subsidies on sugar. His seemingly principled objections to the government subsidizing ethanol production go against the grain of public opinion in Iowa, the state whose voters will be the first to officially express their views on the candidates in a caucus on Feb. 1.
Much of the criticism leveled at the Canada-born senator over the Wall Street loans has homed in on the disclosure issue. Some commentators claim that he broke election rules by neglecting to list the source of his funds at the time. But it’s the nature of the loans that should raise more questions among his supporters.
In 2012, Cruz injected more than $1 million of what were deemed “personal funds” into his Senate effort, money the campaign later paid back. Cruz called the cash “all we had saved” in a subsequent interview with the Times. But rather than taking the risk of liquidating his family’s financial assets to fund his political ambitions, as he has implied, the Cruzes received low-interest loans from Goldman and Citi that eventually added up to $1 million.
Cruz told Bloomberg Television in March: “Goldman is one of the biggest banks on Wall Street, and my criticism with Washington is they engage in crony capitalism.” The Dodd-Frank Act on banking reform, he continued, was “sold to the American people as stopping ‘too-big-to-fail.’ What happened? The big banks have gotten bigger. Goldman has gotten bigger …”
He has built his campaign on the idea that the little guy has gotten a raw deal because the “Washington cartel” has worked solely for the interests of big business and Wall Street. This was the substance of a speech he made at the conservative Heritage Foundation in June, entitled: “The People vs. The Washington Cartel: Restoring Liberty in the Age of Cronyism.”
Cruz has made himself out to be unique among members of his party in battling the K Street lobbyists and suffering for it. “If I’m selfish, then I must be a blithering idiot. Because who selfishly would welcome the derision, the abuse, your fundraising shut off from this town, nasty press stories written one after the other after the other, all planted by Republicans,” Cruz said.
This has been a consistent theme of his campaign. In its regular fundraising missives to supporters, Team Cruz has tried to cast itself as the recipient of small donations, in much the way Barack Obama did in his two successful campaigns for the Oval Office.
Heidi Cruz, currently on leave from her job as a managing director at Goldman, has helped to carry that message for her husband. “A lot of Wall Street is out of touch with mainstream America,” the Harvard Business School graduate has said. “I’m not calling down the Goldman employee list, that’s for sure,” she told the Washington Post in September.
As it turns out, she didn’t need to: after all, she is one already. It’s hard to imagine a Goldman loan would have been forthcoming for someone without such a connection. That the Cruzes could tap the Wall Street firm for financial help underlines Ted Cruz’s point that the little guy, bereft of such relationships, is at a disadvantage. However – as Donald Trump will no doubt point out during the debate – it undermines the candidate’s credibility as the regular American’s advocate.