For Obama, lack of huge stock portfolio helps avoid need for blind trust
Friday, April 16, 2010; 2:55 PM
He's the ultimate public official. And public officials put their money in blind trusts, right? It's a way of getting around the whole "conflict-of-interest, don't want the appearance of impropriety" thing.
In fact, President Obama has rejected the approach taken by most of his predecessors in the modern era.
His personal wealth -- which is rapidly growing -- is not shielded from his view.
Officially, the answer is that the president wanted more transparency in his personal finances -- fitting in with his pledges to be the most open White House in history.
"The choice not to have a blind trust is an effort to be transparent about where his money is kept, and the public can see his latest financial disclosure documents, which we have made public and accessible on the Web site," a senior White House official said. But a little digging into Obama's financial disclosures suggests another answer.
According to documents Obama filed in May of 2009 (another round is due next month), most of the first family's money is invested in plain vanilla U.S. Treasury bonds. Those are the kinds of low-yield investments that are unlikely to provoke any conflict of interest concerns.
Kenneth A. Gross, a lawyer at Skadden Arps, is a key adviser to uber-wealthy New York Mayor Michael Bloomberg. He said in an interview that Obama has no need for a blind trust.
"I think it's an instinctive thing -- oh you are in public office now, you should set up a blind trust," he said. "You can avoid a blind trust fairly easily by putting money into investments such as a widely diversified fund."
Gross, who said Bloomberg has largely avoided putting his billions into a blind trust, said Obama does not own hundreds of individual stocks that could be bought and sold, causing him to recuse himself on numerous issues.
"There's no blessed reason why you would set up a blind trust for that kind of investment," Gross said of Obama. "He's got his money in exactly the kinds of investments that don't require a blind trust."
In theory, Obama is the one man in the country (along with Federal Reserve Chairman Ben S. Bernanke) who could affect interest rates, and thus the value of his Treasury bonds. But Gross said that's a stretch.
Melanie Sloan, the executive director of Citizens for Responsibility and Ethics in Washington, said she tends to favor blind trusts for most politicians.
"The blind trusts are necessary so it's clear to other people that you are not making decisions that affect your own financial interests," she said. "They get in trouble all the time when they are making decisions that make their own stock portfolio worth more."
But she conceded that Obama's lack of a huge stock portfolio made a difference. "Perhaps Obama is keeping his money in the bonds exactly because it raises no conflict issues," she said.