“The case is Federal Election Commission v. Ted Cruz for Senate, and it involves a federal law intended to prevent campaign donors from putting money directly into the pockets of elected officials. Specifically, the law permits candidates to loan money to their own campaigns, but forbids the campaign from repaying more than $250,000 of that loan from funds raised after the election takes place.
Typically, federal law draws a sharp line between money donated to a campaign, which can only be spent on the election effort, and money given directly to a candidate, which is ordinarily not allowed. But loan repayments exist in a gray area between these two kinds of donations. Yes, money repaid to a candidate ostensibly just reimburses that candidate for money they fronted during the campaign. But any dollar given by donors to repay such loans still goes into the pocket of a former candidate who may very well be a powerful elected official by the time they receive the money.
Without a cap on loan repayments, elected officials with clever accountants could profit off of their donors. In 1998, for example, Rep. Grace Napolitano (D-CA) made a $150,000 loan to her campaign at 18 percent interest (though she later reduced that interest rate to 10 percent). By 2009, she’d reportedly raised $221,780 to repay that loan, meaning that she earned at least $71,000 in profits.
Thus, should this challenge to the repayment cap succeed — and it appears overwhelmingly likely to succeed — elected officials could potentially make enormous loans to their campaigns at high interest rates, and then use those loans as a vehicle to accept bribes from lobbyists and other donors who want to trade money for access to the official.”