From the Chronicle Sacramento Bureau

Campaign loan illegal -- 'fantastic,' says governor
Robert Salladay, Wednesday, January 28, 2004

Sacramento -- A $4.5 million bank loan Gov. Arnold Schwarzenegger used to
finance his own campaign is illegal, according to a Superior Court judge,
but the Republican governor said Tuesday the decision was "fantastic" in a
statement that contradicted his position in court.
Judge Loren McMaster's decision late Monday found that Schwarzenegger
violated Proposition 34, which prohibits a candidate from receiving a loan
of more than $100,000. At the Sacramento Press Club on Tuesday,
Schwarzenegger said the decision was OK with him because he always intended
to use his own money to repay the loan.
Lawyers who sued the governor were highly skeptical of his delight and said
he was changing his mind after losing an important campaign-finance case.
The law is written so that candidates cannot get large loans for their
campaigns and repay the money through contributions raised after an
election. Campaign finance watchdogs said voters needed to know all of a
candidate's contributors before an election.
Schwarzenegger on Tuesday contradicted weeks of statements by his staff
members, who repeatedly said the governor had not made a decision about how
to pay off the loan. But the governor said there was never any doubt.
"First of all I said to myself, 'This is great this decision, it's
fantastic,' " Schwarzenegger said. "We never intended to pay back the
campaign debt that we had. We never wanted to raise the money to pay it
back. I myself paid for that."
The statement raised an immediate question about why Schwarzenegger spent
months defending himself in court after he was sued by Bill Camp of the
Sacramento Labor Council, which has strong ties to Democrats. Lowell Finley,
a Berkeley lawyer who represented Camp, said if Schwarzenegger was delighted
with the judge's ruling, "he is on some kind of medication that I would like
to have a prescription for."
"I don't buy it," Finley said of Schwarzenegger's statement. "I think he
held out hope of being able to pay himself back and only changed his mind
when the judged ordered him to."
Schwarzenegger was asked Tuesday why he simply hadn't written himself a
check instead of getting a loan. He said he needed "the money very quickly,
and I was out on the campaign trail, so I wasn't there to write those
checks. I am a hands-on guy when it comes to money."
Schwarzenegger, who reportedly is worth at least $100 million, obtained the
loan from a bank without collateral and with a low interest rate.