Louisville businessman Matt Bevin came under fire Tuesday for signing his name to documents that praised federal bailouts, a potentially crippling moment for his 2014 U.S. Senate campaign.
Bevin, who is challenging Senate Minority Leader Mitch McConnell, has made McConnell's support of 2008 bailouts amid the global economic collapse central to his campaign's argument that McConnell is not a true conservative.
However, Politico reported Tuesday morning that Bevin and Daniel Bandi, the chief investment officer and vice president of Bevin's Veracity Funds, wrote in an Oct. 2008 letter to investors that the $700 billion Troubled Assets Relief Program and the government takeover of mortgage giants Fannie Mae and Freddie Mac were positive developments.
"Most of the positive developments have been government-led, such as the effective nationalization of Fannie Mae and Freddie Mac, the passage of the $700 billion TARP (don't call it a bailout) and the Federal Reserve's intention to invest in commercial paper," Bevin and Bandi wrote in the letter, which the Herald-Leader obtained Tuesday. "These moves should help to stabilize asset prices and help to ease liquidity constraints in the financial system."
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The two men wrote that "the government actions to date have been reasonably swift and substantial. The Federal Reserve seems to understand the magnitude of the problem and the underlying issues involved."
Bevin personally signed the letter to investors.
In an interview with conservative commentator Glenn Beck Tuesday morning, Bevin said he was required by law to sign documents attesting to the facts and figures, but not the opinions, contained in the letter that bears his signature.
"There has been no change of heart because I didn't actually sign that thing, or I'm sorry, didn't actually even write that letter," Bevin said.
Bevin said it would not have been appropriate for him to change the wording of Bandi's letter.
"The letter I did not write," Bevin said. "I did not write any of the letters that were ever published as investment commentary for Veracity Funds. I was the president and chairman of the board and by SEC laws was required to sign prospectuses when they were sent out."
In a statement Tuesday, Bevin spokeswoman Rachel Semmel said "Matt has always opposed the TARP bailout and similar misuses of taxpayer dollars."
She acknowledged that Bevin signed the document, but called it a "formality."
"The investment commentary in the Veracity prospectuses were always written by the chief investment officer of the sub-advisor to the Veracity funds," Semmel said. "In his role as president of Veracity, Matt signed every prospectus. Matt's signatures were a formality that were not intended to be an endorsement of the opinions of others."
In a statement, McConnell spokeswoman Allison Moore described the investor letter as "nothing short of a con-man being caught red-handed in the middle of a sale."
Tea Party groups rushed to Bevin's defense, either dismissing the charges as trumped up by McConnell or portraying Bevin as a businessman who was forced to work within the bailout culture that McConnell helped create in Washington.
But to a top McConnell aide, Josh Holmes, the revelation is "the final piece of the puzzle" that proves those groups, including the Senate Conservatives Fund and the Madison Project, are more interested in fundraising than any kind of ideological purity or consistency.
Bandi also wrote a letter in April 2009 praising the $787 billion stimulus package that President Barack Obama signed shortly after taking office. McConnell opposed the stimulus package.
"Some of the positive developments include the numerous programs from stimulus to the various Treasury acronyms (TARP, TALF, PPIP) to the Fed's aggressive balance sheet growth," Bandi wrote in 2009. "To what degree is open to some debate, but our government has taken the challenge head-on and has responded like no other country."
Politico reported that Bevin "filed a Securities and Exchange Commission certification — as required by law — saying he had reviewed both reports and they were accurate."
Washington and New York pundits were quick to seize on the report as a harbinger of bad things to come for Bevin. MSNBC's Joe Scarborough said Tuesday morning that he thinks the report will have a "devastating impact" on Bevin's campaign.
Polling results show that McConnell is deeply unpopular in Kentucky as he vies for a sixth term as senator, but Bevin has struggled to gain traction as the Tea Party alternative.
Bevin trails the senator by a wide margin in polls, and he reported finishing the fourth fundraising quarter of 2013 with just more than $600,000 in cash compared to almost $11 million for McConnell.
In an interview with the Herald-Leader last week, Bevin explained his approach to his businesses and his campaign: "I'm hands off as much as possible and hands on as much as necessary."
In some cases, Bevin said, he is only a board member and not responsible for day-to-day operations, and in instances where he is in charge, "I hire really good people and have tried to surround myself with people I can rely on."