WASHINGTON — By November 2007, John McCain’s presidential campaign was broke. To survive, he offered his fundraising lists as collateral for a $3 million line of credit from a local bank. But obtaining the loan required an unusual extra step: He had to take out a special life insurance policy in case he did not survive the campaign.
At the time, the 71-year-old senator’s effort was more than $500,000 in the red, and the bank’s line of credit was a pivotal lifeline that allowed him to make a strong showing in New Hampshire and eventually vault into the front-runner’s position.
McCain’s campaign is now back on solid financial ground, having raised at least $7 million this month. His victories in New Hampshire, South Carolina and Florida have loosened the spigot. In recent days, he has held packed fundraisers in Washington, Florida and California, and 10 days ago, a single event in New York raised $1 million.
Anthony Corrado, a campaign finance expert at Colby College, said he had never heard of a candidate having to secure a loan with a life insurance policy.
“It was a big gamble, but I think one of the most important strategic moves the McCain campaign has made,” Corrado said. McCain was “rolling the dice to get the money early, and if they won, it would be easy to repay.”
The financial health of all the campaigns became modestly clearer Thursday, as several candidates submitted their 2007 year-end reports to the Federal Election Commission.
McCain’s chief rival for the Republican nomination, former Massachusetts governor Mitt Romney, raised $9 million during the last three months of 2007 and loaned his campaign $18 million of his own money. Former Arkansas governor Mike Huckabee raised $9 million for the year. Former New York mayor Rudolph Giuliani, who dropped out of the White House race Wednesday, raised $59 million last year.
McCain’s finance reports provide new details about how desperate his financial situation was after his campaign suffered a seismic shakeup in the middle of last summer.
The senator from Arizona raised $24 million during the first six months of 2007, half what the campaign had projected. His initial plans called for highly paid consultants, state directors, large operations in California and New York, and state offices around the country.
“Basically, the campaign had overestimated what it could raise, and had overspent,” said Charles R. Black Jr., a close adviser to McCain. “We had to make dramatic cutbacks.”
By late summer, the campaign had cut staff levels in half and closed offices in 20 states. McCain’s sole focus became New Hampshire, and virtually all of the campaign’s money — much of it borrowed — paid for travel expenses and a short burst of television ads there.
“I can’t imagine any other campaign doing what he did,” said Rebecca Donatelli, who runs McCain’s Internet fundraising operation. “We were down to nobody. To nothing. But somehow it was OK because Senator McCain was in the room.”
In addition to closing offices, the campaign cut loose political advisers and consultants, including four top strategists who had been paid a combined $400,000 during the first six months of the year, records show.
“We cut a lot of staff. We cut consultants. We cut it down to a bare-bones operation,” said Carla Eudy, a senior adviser to McCain. “We lowered our overhead drastically.”
She said her top priority was to keep the structure of volunteer fundraisers in place despite news reports that the campaign was in financial trouble.
“No one left us,” Eudy said. “That was a key to our later success. It would have looked like we were having a mass exodus — it would have been harder for us to stay in the game.”
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