Tax Reform

Congressman Launches His Yacht in the Swamp

Rep. Vern Buchanan bought a yacht with a giant loan from a foreign bank that lobbied heavily in favor of tax reform.

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Bill Clark/CQ Roll Call/Newscom

There's nothing wrong with using a loan to buy an expensive yacht, but it's fair to raise questions when a member of Congress does so using a loan from a foreign bank that just happens to be lobbying in favor of some major tax legislation. Especially when said member officially makes the purchase on the same day he votes yes on a bill that benefits his lender.

Rep. Vern Buchanan (R-Fla), the top Republican on the House Ways and Means Subcommittee on Tax Policy, is accused of doing just that. On November 16, 2017, Buchanan voted in favor of a draft of the Tax Cut and Jobs Act. That was the same day he bought a 73-foot Ocean Alexander Yacht, Florida Politics reports, citing a financial disclosure form.

How was Buchanan able to afford such a purchase? Though he's worth about $74 million, the Florida Republican didn't use his own money. Instead, he took out a loan of up to $5 million from BMO Harris Bank, the Chicago-based subsidiary of the Canadian Bank of Montreal, according to an article published by the Florida Center for Investigative Reporting (FCIR) in partnership with the watchdog groups MapLight and Capital & Main.

The timing of that loan and another that Buchanan used to buy a plane is more than a little curious. FCIR reports:

At the time Buchanan's company received the 2017 yacht loan, BMO Harris was lobbying congressional lawmakers on tax policy overseen by the Ways and Means Committee, according to federal records. Buchanan received a separate BMO Harris loan for a plane in 2016. Records show that loan, worth between $5 million and $25 million, was made around the same time that the bank began lobbying lawmakers on "tax reform proposals."

Lobbying efforts cost BMO Harris a total of roughly $760,000 last year.

The tax reform legislation, meanwhile, eventually passed both houses of Congress and was signed into law by President Donald Trump. Both BMO and Buchanan were expected to benefit from the tax cuts.

According to the House Ethics Committee, a loan to a member of Congress is classified as an improper gift if it's provided "at a below-market interest rate." That's not what happened in this case, Buchanan's re-election campaign manager, Max Goodman, tells the Sarasota Herald Tribune. Buchanan got "the going rate" on his yacht loan, Goodman says.

But according to Craig Holman, an ethics advocate at the progressive consumer rights advocacy group Public Citizen, BMO Harris' loans to Buchanan could be cause for concern. "It isn't just business for Buchanan," Holman tells FCIR. "The loans grant Buchanan the luxuries of a personal jet and a yacht. It is very reasonable to assume those luxuries could well influence Buchanan's official actions."

Buchanan's probable Democratic challenger this November, David Shapiro, was quick to attack the incumbent. "Today, we learned the Congressman financed his yacht with a loan from a foreign bank lobbying on the tax bill," Shapiro said in a statement to the Tampa Bay Times. "It's time Vern Buchanan answer the question once and for all: is he representing Florida families in Washington, or his special interests?"

There's nothing wrong, of course, with a member of Congress supporting a bill that lessens a big bank's tax burden. Tax cuts can help everyone—constituents and big businesses alike. Plus, a lot of the banks capable of providing Buchanan with a multimillion-dollar loan were likely lobbying for the tax reform legislation as well.

But the optics are gross. And as Rep. Thomas Massie (R-Ky.) told Reason's Matt Welch last month, members of Congress can't "buy" committee leadership roles without cozying up to corporate lobbyists. In Buchanan's case, accepting a massive loan from BMO Harris as he was voting for legislation that helped the bank creates the impression that a big bank can buy changes in the law the rest of us can't.

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  1. And Wiener was forced to resign for a dick pic.

    1. Lefty Soccer Moms demand puritanical sex offender laws and one of their own Lefty politicians gets burned.

      Lefties eating their own. Hilarious!

    2. Dick pics to a 15 year old, amongst others.

      1. Horrors – the poor girl’s life is ruined.

        Just like the cry-babies who wail that their life was ruined by a priest who touched their pee-pee when they were 14 or 15.

        1. First, yea

          Second, Weiner was scum and I don’t care what took him down.

        2. What? Are you seriously arguing sending dick pics to 15 year olds is not amoral and ridiculous?

    3. Cathy is resident pedophile apologist, bro, get a new schtick.

  2. Buchanan got “the going rate” on his yacht loan, Goodman says.

    Jesus, for a guy whose office comes up every two years to put himself in a position where this is a sentence that has to be uttered in his defense…

    1. How much you want to bet he will be reelected? Guy sounds like a regular two bit dirtbag but whatever.

  3. Congressmen get paid too much.

    Congressmen recklessly spend other people’s money.

    Shocked! Shocked, I tell you!

    1. Congressmen get paid too much.

      Congressmen recklessly spend other people’s money.

      I don’t disagree, but this is a huge nothingburger of a story. Why hope that only Buchanan got lower than the going rate for loans? Then we could indict them all and put an end to this tax reform nonsense!

  4. Fuck tax reform because the optics are gross?

    No. Fuck you, cut spending.

  5. As a right-winger, this Buchanan fellow is certainly a white nationalist. So which sort is he? The oddly Nixon-loving paleoconservative kind; the gay 19th-century President kind; or the most insidious of all–the segregation-loving voucher enthusiast kind exposed by the brave and brilliant KKK hunter Nancy MacLean?

    1. She is every bit as brave as PB, Tony, Michael Hihn, and the Right Reverend Arthur K. Kirkland who, notwithstanding the grave danger presented to their self-esteem, somehow, someway, muster the courage to come here and post, every single day.

  6. “…Plus, a lot of the banks capable of providing Buchanan with a multimillion-dollar loan were likely lobbying for the tax reform legislation as well.”
    OK, no matter where he got the loan, he was in trouble?

    “But the optics are gross.”
    According to the above, that would have been the case regardless.

    Pretty sure the headline should read
    “Congress Critter Gets Loan, Activist Whines”

    1. The optics are only gross if you’re wearing #Bluewave-colored glasses.

      Otherwise, the guy got a loan at the market rate and is in charge of regulating banks. I suppose there may be a case that Satan’s suggesting we tear the whole system down, but it seems unlikely.

      1. Satan’s suggesting

        Setyon’s suggesting. Sometimes my feelings for autocorrect border on love/hate.

        1. You nailed it the first time

    2. This. If it could be proven that his status as Congressman influenced their decision, that’s an ethical problem for them; if he somehow hinted that the vote was condition on the loan being approved, that’s on him.

      Without some actual proof, this is just an elected official getting an loan on something. As fun as it might be to see happen, it’s ridiculous to suggest that all elected officials abstain from financial transactions anytime they’re voting on anything that might be seen as connected to it.

      1. don’t forget, he’d borrowed before to buy his airplane. Same bank. But there was no tax bill pending when he got that loan. With his net worth, it looks ot me like the timing coincidence between the floating the boat loan and voting on the tax bill is just that.. coincidence. Two things happening on the same day are not always causally related.

  7. Represents Florida. Needs boat.

    1. It’s not an airboat though.

      1. @ 73′ figured it was for offshore gambling cowboy shootouts and monkey fights

  8. There’s nothing wrong with using a loan to buy an expensive yacht

    Legally, anyway.

    1. Of all the ten commandment, my favorite is probably, “Thou shalt not covet”.

      It’s the commandment against socialism.

      1. Are you saying that he’s breaking the commandment or that I am?

        1. Reason/the author is. The guy bought a boat with a legit loan and that’s a problem for them.

        2. Do you covet this guy’s yacht or loan?

          I wouldn’t begrudge him either because I don’t have them.

          1. A loan to buy a boat sounds like 2 great ways to set money on fire.

            1. If you’re gonna get divorced anyway, you might as well enjoy it now.

              The great Sam Best was the highest paid athlete of his era. After being retired for a very short period of time, he found himself in bankruptcy court. A reporter asked him where all the money had gone and responded (translated from cockney), “Most of it I spent on fast cars, chasing women, and buying drinks for my friends–and the rest of it, I just squandered”.

              There’s something to that.

              I’m a really frugal guy, but one of the reasons I’m so thrifty is because I want to save my money for important things–like fast motorcycles, chasing women, and buying drinks for my friends.

              Have you ever read the book of Ecclesiastes?

              Good stuff in there.

          2. Do you covet this guy’s yacht or loan?

            Nope. Quite the opposite. He’s a dumbass for doing it.

    2. Well, the congressman is violating one of Dave Ramsey’s cardinal rules: if you can’t pay cash it, you can’t afford it.

      Dave Ramsey would characterize the use of a loan to finance a yacht as “not winning with money.”

      Last I checked, Dave Ramsey is a rock-ribbed conservative Christian.

      1. The only time it makes sense is if the interest rate is below the rate of inflation, which is almost never the case.

      2. “If you can’t pay cash you can’t afford it” might be an interesting rule of thumb, to get a sense of proportion for consumer goods, but paying cash when you can finance it at a lower interest rate than you can earn with that money is stoopid.

        You can’t afford a home if you can’t pay cash for it?

        What if you’re only paying 5% interest, and you can rent it out at 20% capitalization rate?

      3. PayPal gave me a line of credit in the thousands, with no interest or payments due for the first six months!!!

        I’d be an idiot to pay cash for a new TV considering that.

      4. Except, from what I saw in the article, he could pay cash for it. He just chose not to.

        Why would someone with $75M in the bank take out a $5M loan to buy a yacht instead of just paying for it? Well, maybe he thought he could beat the interest rate on the market.

        i.e.: Spend $5M up front, but lose the opportunity to invest that money in something else, or take out a loan for $5M, and commit to paying the $5M + interest, but invest the $5M that’s still in your account and try to make more money on the market than the interest costs you.

        1. Spend $5M up front, but lose the opportunity to invest that money in something else,

          And this assumes he hasn’t already done it. That the cash isn’t leveraged already.

          Literally the only reason he shouldn’t have gotten the loan is because Joe Setyon thinks the optics are bad.

        2. Being “worth 74M” is not the same as having 74M in a bank account.

      5. Didjya note his stated net worth, listed in the piece? He could have paid cash for that boat. AND for the airplane he bought a year or so before. We don’t know all his financial workings, so can’t say whether floating the loan was wise. Ramsey has some pretty goofy ideas, too….

  9. “On November 16, 2017, Buchanan voted in favor of a draft of the Tax Cut and Jobs Act. That was the same day he bought a 73-foot Ocean Alexander Yacht, Florida Politics reports, citing a financial disclosure form.”

    I think we should go after everyone who both voted against the Tax Cut and Jobs Act and didn’t get a loan, too.

    Trump’s tax reform didn’t do anything for this company specifically. It was a fundamental rewrite of the tax code that affected everyone. If we ever get to the point where congressmen can’t do business with anyone who may be impacted by future legislation, we’ll only have politicians who’ve built their own log cabins, grow or hunt their own food, and make their own clothes out of buckskin. Do you have any idea what kind of society we would have if our country was governed by people like that?!

    On second thought, we should amend the Constitution to prohibit congressmen from doing business with anyone who might be impacted by their legislation in the future–right away.

  10. This guy took out a few loans, that he definitely has to pay back, at the going interest rate.

    WHAT’S THE FUCKING PROBLEM? Can politicians never take out loans if a bank lobbies now? What utter drivel.

    1. Real libertarianism is now all about the politics of envy, and if you don’t understand that, then you have no chance of being retained after your summer internship at Reason.

      1. Taking this article’s insinuations to their logical conclusion implies the author is in favor of restricting legitimate business between consenting parties for absolutely no reason.

        The fact that this is even an article in a libertarian magazine is fucking embarrassing.

        1. This article is stupid enough in premise that it would be embarrassing to Jacobin magazine, let alone Reason.

        2. This site used to be the kind of place where people would come who wanted to argue with libertarians.

          Now it’s more of a place where the staff write to antagonize libertarians.

          Half of me thinks they’re trying to change to be more appealing to millenials. The other half thinks they don’t argue libertarian principles with reasoned arguments because a) they don’t really share libertarian principles and 2) they’re incapable of reasoned arguments.

          Lately, I’ve been leaning towards the latter. It may be a generational thing. They think they’re libertarian because their intentions are good–and that we should support them for that reason, too. Libertarians don’t think like that. We default to reason because we believe reason leads to libertarian ideas. They no longer share these principles. It’s enough for them to write about libertarian ideas–like an auto journalist might write about cars without being a car.

          1. Web traffic is the most important thing.

            If regulars dont comment enough, send in the intern sock puppets.

    2. Reason is against tax cuts or something. Complaining is what matters, about anything, every day, no matter what.

      1. I’m not usually on the anti-Reason brigade but this is seriously utter nonsense. Joe usually writes halfway decent articles but this is some seriously statist nonsense.

  11. So, he took a loan at the market rate.

    Where, precisely, is the scandal?

    1. “Where, precisely, is the scandal?”

      (R)?

  12. In Buchanan’s case, accepting a massive loan from BMO Harris

    “accepting” a huge loan? Squeeze me, it does not appear that BMO Harris hunted him down and offered him the loan. He’d borrowed from them previously for his airplane. Article stated he’s worth $Mn150+. so what’s a 73 foot OA? (nice taste in vessels, I must say).
    Come on, a tax bill that benefits many was working through the House, BMO Harris favoured it and was lobbying so Buchanan had borrowed from them before, he voted in favour of the bill, he bought a yacht at the same time.

    Gonna haffta come up with a bit more than that.

    We gots demons under everyone’s bed these days, and monsters in the shed, too.

  13. He did it wrong.

    If he invested in a green company, then helped get that corporation favorable legislation that led to it succeeding, he could then buy the boat with his investment income and everyone would congratulate him.

    When the green company goes broke and screws the less will timed investors, he can get fired and sail off into the sunset.

    See, a giant win-win for government.

  14. So first of all how many Banks were lobbying for this? Are all Banks lobbying all the time? This man has plenty of money but probably not liquid, I don’t see much problem here.

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