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Obama team calls Romney blind trust ‘not-so-blind’
Question of the Day
The Obama campaign launched an attack on Mitt Romney's personal finances Thursday, this time arguing that his Republican rival's blind trust for his $250 million fortune is "not so blind."
Mr. Romney's current trustee, Boston lawyer R. Bradford Malt, buys and sells investments he thinks are consistent with Mr. Romney's public policy positions, preventing him from having direct control over his vast holdings.
That constitutes a blind trust under Massachusetts law, but a federally "qualified diversified" blind trust is governed by tougher standards, preventing Mr. Romney or the public from even knowing what his portfolio contains. The Office of Government Ethics, where candidates file their financial disclosure records, vets both the trust and possible trustees to ensure assets, sales or purchases are not disclosed.
If Mr. Romney were to win the presidential election, he plans to place all his assets into the stricter type of trust overseen by federal officials, a Romney campaign official told the Associated Press.
The Obama campaign quickly pounced on the admission, raising conflicts of interest questions about Mr. Romney's foreign investments and how they affect his political positions.
"[The blind trust] is how he denied responsibility for his investments in a Swiss bank account, Chinese companies, companies that do business with Iran and Bermuda and Cayman Island tax havens," said Obama campaign lawyer Bob Bauer. "Yet, even as he admits that his 'blind' trust isn't truly blind, he's only promising to fix it if he's elected president."
Mr. Bauer pointed to a decision by Mr. Romney's financial advisers to sell most of his investments in China, worth as much as $1.5 million, at some point after mid-August when he started talking tough on China's trade imbalance with the U.S. as a Republican primary candidate.
The sell-off prompted criticism that Mr. Romney was influencing his financial advisers' decisions to keep his portfolio consistent with his political positions, a charge the campaign denied. Since 2010, Mr. Malt also has sold stocks in companies that trade with Iran or do stem-cell research — both of which Mr. Romney has opposed as a candidate.
Casting it as just "another tired distraction" from the White House, the Romney campaign said the story was old news, that Mr. Romney has managed his assets this way for years.
"As has been reported for years, governor and Mrs. Romney's assets are managed on a blind basis," Romney spokeswoman Amanda Henneberg said in an email. "They do not control the investment of these assets, which are under the control and overall management of a trustee."
Mr. Romney's ongoing connection to Bain and the campaign's refusal to provide details about those ties is harder to dismiss, especially with a new poll out Thursday showing that the argument is gaining traction in battleground states despite being panned up and down the Northeast corridor.
According to the latest survey from the bipartisan Purple Poll, 47 percent of likely voters in swing states agreed with the statement that private equity firms "care only about profits and short-term gains for investors. When they come in, workers get laid off, benefits disappear, and pensions are cut. Investors walk off with big returns, and working folks get stuck holding the bag."
During the conference call, Mr. Bauer again focused on Bain, taking issue with Mr. Romney's decision to set up a family trust to acquire new interests in Bain Capital through a Bain partnership established in the Cayman Islands that lets the Romneys receive millions in income from a Bain profit-sharing agreement for years to come.
Even though Mr. Romney says he stopped working for Bain in 1999 and has distanced himself from any actions or investments, the former Massachusetts governor has admitted to receiving the 15 percent carried-interest tax rate, which is available only to active participants in investments firms who provide services to those firms.
In addition to failing to disclose more than one year of tax returns, Mr. Romney has so far refused to answer questions about any ongoing dealings with Bain, including what type of services he continues to provide and elements of his retirement agreement.
"I think that everyone would like to know the basis on which he sustains his financial relationship to Bain once he stopped providing services," Mr. Bauer said during the conference call.
Over the last two months since Mr. Romney secured the Republican nomination for president, the Obama campaign tried to saddle Mr. Romney with Bain's role in shuttering manufacturing plants and laying off workers in some of the companies it owned.
Despite harsh criticism from workers who lost their jobs, Republican supporters and several leading Democrats have given the company credit for other successful investments that have helped businesses expand and hire workers.
The Associated Press reported Thursday that Mr. Romney's financial ties to Bain are unlikely to end any time soon. Just last week, Mr. Romney disclosed more than $2 million in new income from Bain and taxation experts say the payments raise the very real possibility that Mr. Romney could continue receiving income from his former company over the next several years.
Although nowhere near Mr. Romney's personal fortune, Mr. Obama's book sales have made him a millionaire worth between $2 and $7 million, according to his latest annual financial disclosure report.
When he arrived in the Senate in 2005, Mr. Obama set up a blind trust but when he received a prospectus from one of the investment companies, he realized that the trust was not sufficient to protect him against even the perception of a conflict of interest, according to a campaign spokesman.
Mr. Obama then sold the stocks, closed out the trust and placed his holdings in U.S. Treasury notes and bills.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
Susan Crabtree is an award-winning investigative reporter with more than 15 years of reporting experience in Washington, D.C. Her reporting about bribery, corruption and conflict-of-interest issues on Capitol Hill has led to several FBI and ethics investigations, as well as consequences for members within their caucuses and at the ballot box. Susan can be reached at firstname.lastname@example.org.
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