As The Washington Post reported on Saturday, John McCain's campaign struck a canny deal with a bank in December. If his campaign tanked, public funds would be there to bail him out. But if he emerged as the nominee, there'd be no need for public financing, since the contributions would come flowing.

It's an arrangement that no one has ever tried before. And it appears that McCain, who has built his reputation on campaign finance reform, was gaming the system. Or as a campaign finance expert who preferred to remain anonymous told me, referring to the prominent role that lobbyists have as advisers to his campaign, "This places McCain’s grandstanding on public financing in a new light. True reformers believe public financing is a way to replace the lobbyists’ influence, not a slush fund that the lobbyists use to pay off campaign debts."

Here's the back story. As of December, McCain was still enrolled in the public financing system, but had yet to actually receive any public matching funds. The Federal Election Commission had certified that the campaign would be receiving $5.8 million in public funds. But they wouldn't get that money for a couple more months. In need of even more cash beyond the $3 million loan he'd already secured from a Maryland bank (he'd taken out a life insurance policy as collateral), the McCain campaign was stuck in a bind. They needed more money, but the bank needed collateral.

The promise of those public matching funds (to the tune of more than $5 million) was the only collateral the campaign could offer. But there was a problem with that. Using that promised money as collateral would have bound McCain to the public financing system, according to FEC rules. And the McCain camp wanted to avoid that, because the system limits campaigns to spending $54 million in the primary (through August). That would mean McCain would get seriously outspent by the Democratic nominee through the summer. (McCain has separately pledged to enroll in the system for the general election; that would give him $85 million in taxpayer funds for use after the party convention through Election Day but bar other contributions.)

So here's what the McCain campaign did. They struck a deal with the bank that simultaneously allowed his campaign to secure public funds if necessary, but did not compel his campaign to stay in the public system if fundraising went well (i.e. if he won the nomination). As McCain's lawyer told the Post, "We very carefully did not do that."

He was not promising to remain in the system -- he was promising to drop out of the system, and then opt back in if things went poorly. In that event, the $5.8 million would still be waiting for him. And he'd just hang around to collect it, even if he'd gotten drubbed in New Hampshire and the following states.

You can see the agreement here. The relevant paragraph is on page two. Sizing it up, Mark Schmitt writes at Tapped:

What we know is that McCain found a way to use the public funds as an insurance policy: If he did poorly, he would use public funds to pay off his loans. If he did well, he would have the advantage of unlimited spending.

There's a reason no one's ever done anything like this. It makes a travesty of the choice inherent in voluntary public financing, between public funds and unlimited spending.