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Arnold terminates the loan

Gov. Arnold Schwarzenegger has agreed to use his own money to pay off $4.5 million in personal loans to two campaign committees from last fall's recall election, responding to a judge's ruling that the loans violated campaign-finance law.

The Republican governor filed papers Friday to convert the loans into campaign donations to the committees, Californians for Schwarzenegger and his Total Recall Committee.

In a preliminary ruling late last month, Sacramento County Superior Court Judge Loren McMaster said the loans violated Proposition 34, a campaign reform measure approved by California voters in 2000. The measure allows candidates to loan their campaigns no more than $100,000.

The restriction is designed to prevent winning candidates from loaning their campaigns large amounts of money, then using their newly won positions to leverage donations to repay themselves. -- Schwarzenegger to Pay Back Campaign Loans (AP)

A $100,000 cap on loans -- what will those populists in California think of next to level the playing field for ordinary candidates?