WASHINGTON--In about 30 minutes, White House hopeful Barack Obama has a press conference in the Capitol. The freshman Illinois Democrat and Rep. Luis Gutierrez (D-Ill.) skedded the newser to tout a bill to freeze immigration fees bringing in the leaders of Latino empowerment groups concerned about the plight of immigrants.
However, this event, designed to introduce legislation Gutierrez and Obama have been working on for months, will be overshadowed by a page one story in the New York Times questioning the credibility of Obama's blind trust. Turns out Obama bought stock in little known companies whose investors included some of his major donors.
Obama's rapid response team shot out a rebuttal memo this morning. And ABC's "The Note" has a very good roundup on the political implications for Obama.
Click below for more..
from ABC's "The Note"
In their front page investigative must-read, Mike McIntire and Christopher Drew of the New York Times report: "Less than two months after ascending to the United States Senate, Barack Obama bought more than $50,000 worth of stock in two speculative companies whose major investors included some of his biggest political donors." LINK
More McIntire/Drew: "Mr. Obama has made ethics a signature issue, and his quest for the presidency has benefited from the perception that he is unlike politicians who blend public and private interests. There is no evidence that any of his actions ended up benefiting either company during the roughly eight months that he owned the stocks."
"Even so, the stock purchases raise questions about how he could unwittingly come to invest in two relatively obscure companies, whose backers happen to include generous contributors to his political committees."
Sen. Obama's first chance to respond is likely to come at 11:15 am ET in S-115 when he joins Rep. Luis Gutierrez (D-IL) for a press conference announcing the "Citizenship Promotion Act."
(Make your predictions now: Does he cancel? If not, what is his body language and tone like? Does he come with more facts? Does he refuse to take questions on this topic? Will there be live cable coverage? Does Obama call the reporters "guys" in that frustrated way of his? )
The story will now proceed on two levels:
1. Investigative: Other serious news organizations (including and especially the Chicago Tribune, whose humiliated editors thought they were going to be first out of the gate with this stuff) and the right-wing bloggers will scramble to fill in the holes that the Timesmen have dug.
2. What It Takes: How does Obama (and his handlers — yes, he has handlers) deal with the swirl.
Good sign for Team Obama: They have already put out their, uhm, first response document, ahead of The Note's deadline.
Bad sign for Team Obama: Whitewater lost money too.
Good sign for Team Obama: Several potential spin-off problems — such as a nexus between official acts and investments — seem tabled for now.
Bad sign for Team Obama: There are a lot of unanswered questions (and, yes, that Geffen dust-up put blood in the water; and yes, it's a safe bet that you won't hear a peep on this one from the Clinton campaign anytime soon).
from the Obama campaign..
THE NEW YORK TIMES:
“There is no evidence that any of [obama’s] actions ended up benefiting either company during the roughly eight months that he owned the stocks…
[OBAMA] SOLD THEM AT A NET LOSS OF $13,000.”
In 2005, Barack Obama entered into a trust agreement -- the terms of which did not permit his stockbroker to solicit advice from Obama or consult him on the trades that were being made – to manage his stock portfolio. As the New York Times reports today, Obama owned stock in two companies which he did nothing to help – an investment that lost him $13,000. At the end of a thorough examination of Senator Obama’s portfolio, it’s apparent that his dealings were completely above board and his decisions were proactively made in the interest of avoiding the potential for conflict.
Obama Set Up a Trust That Would Independently Manage His Funds. In February of 2005, Obama began the process of creating a trust – the terms of which do not permit the broker to solicit advice from Obama or consult him on the trades that are being made – in an attempt to manage his financial portfolio without a conflict of interest. The intent was that this was a portfolio that would grow over time. [Conversation with UBS Representative, 2/26/07; Obama Trust Agreement, 5/31/2005]
UBS Broker Chose Stocks For Obama; Obama Was Not Consulted. A UBS broker chose the stocks for Obama to invest in, and as per the trust agreement, Obama was not consulted. On Obama’s behalf, the broker purchased $1,001 to $15,000 of Avi BioPharma on 2/22/05 and $50,001 to $100,000 of SkyTerra on 2/10/05. [Conversation with UBS Representative, 2/26/07; Obama Financial Disclosure Form 2006]
Obama Closed Trust Because He Realized It Was Not Truly Blind. In late 2005, after receiving an informational communication from his broker about his investments, Obama realized that his financial arrangements did not significantly protect him against even the perception of a conflict of interest. He contacted his lawyer and steps were taken to sell his stocks and close out the trust. Obama’s stock holdings were liquidated by November 1, 2005, and documents to close the trust were filed on December 15, 2005. [Conversation with UBS Representative, 2/26/07; Trust Distribution and Termination Document, 12/15/05]
Obama Made Less Than $2,500 On AVI BioPharma; Sold Stock As It Finally Began To Trend Upward. UBS purchased AVI BioPharma on Obama’s behalf when it was $2.57 a share in February of 2005, and sold it in October of 2005 at $3.30 a share, for a profit of less than $2,500. The stock price wavered throughout the summer, took a dip to $2.15 in August, and only started to recover at the end of September. [UBS Records Provided 2/26/2007; Obama Financial Disclosure Form 2006; Yahoo Finance Historical Stock Prices, Accessed 3/6/07]
Obama Lost $15,000 On SkyTerra. UBS purchased SkyTerra on Obama’s behalf when it was $36.35 a share in February of 2005, and sold it in November of 2005 at $30.49 a share, for a loss of approximately $15,000. [UBS Records Provided 2/26/2007; Obama Financial Disclosure Form 2006; Yahoo Finance Historical Stock Prices, Accessed 3/6/07]
NO EVIDENCE THAT OBAMA TOOK ANY OFFICIAL ACTION TO HELP COMPANIES
Obama’s Office Took No Action On Behalf of Avi BioPharma. Obama’s Senate office did not have any interaction with or take any action on behalf of Avi BioPharma. Company executives have had no interactions with Obama, company officials said they never talked to Obama about his work on avian flu, and they were not aware of his buying and selling in AVI shares. [www.thestreet.com, 3/5/07; New York Times, 3/7/07]
Obama’s Senate Bill Addressed Preparedness And Early Warning Systems For Avian Flu in Asia, Did Not Fund New Drug Development. Obama’s bill was focused on developing early warning systems for avian flu and encouraged NIH to expand research on influenza but did not fund authorize new drug development. [S. 969, 109th Congress]
Legislation Proposed By Obama and Others Had No Positive Impact on Avi BioPharma Stock. Obama and eight cosponsors introduced his avian flu bill (S. 969) on April 28th, 2005. On the day the bill was introduced, the price actually dropped slightly ($2.71 a share to $2.68 a share). The stock price also dropped during the week the bill was introduced; on April 26th, the stock opened at $2.80 a share, and the price dropped over the next six days, closing at $2.49 on May 4th, 2005. [Yahoo Finance Historical Stock Prices, Accessed 3/6/07]
Bipartisan Senate Amendment Cosponsored By Obama Did Not Earmark Funds for Particular Companies. The bipartisan Harkin amendment, which Obama cosponsored, provided $3.8 billion related to the flu and included funding for new drug development. However, it did not direct funds to individual companies. [SA 2283, 109th Congress; introduced 10/26/05]
Amendment Passed By Full Senate Had No Positive Impact on Avi BioPharma Stock. Obama was one of 15 cosponsors on a Harkin amendment that included funding for drugs designed to combat the avian flu. The amendment was introduced on October 26th, 2005 and passed the next day. On the day the amendment passed, the price actually dropped 21 cents ($3.63 a share to $3.42 a share). The stock price dropped from $3.94 from the day the bill was introduced to $3.56 on October 31, 2005, a drop of 38 cents. [Yahoo Finance Historical Stock Prices, Accessed 3/6/07]
Avi BioPharma Did Not Receive Contract For Stockpiling Drugs Or Any Federal Money For Its Avian Flu Research. “AVI spokeswoman Jenny Moede says the company, based in Portland, Ore., has collaborated with various agencies of the federal government to test its technology on animals. It has not yet been used on humans, and the government has yet to stockpile any of its drugs.” The company confirmed to the New York Times that “it still has not received any federal money for its avian flu research.” [www.thestreet.com, 3/5/07]
Avi BioPharma Did Not Tout Senate Action Connected To Obama In Press Releases Or Conference Calls. A review of Avi BioPharma’s press releases from 2005 shows that they did not tout any Senate actions connected to Obama in either press releases or conference calls. [http://www.antivirals.com/press_2005.html]
Money Avi BioPharma Received Was Unconnected to Obama Or Avian Flu. In October 2005, AVI BioPharma preliminarily announced DoD funding for research on four viruses. That funding was unconnected to Obama and was not related to research on avian flu. The press release from the company stated, “AVI BioPharma, Inc…announced that the U.S. Senate Committee on Appropriations has approved $22 million for AVI’s research and development programs as part of the FY2006 defense spending bill…the spending bill would direct $22 million to AVI for the continued development of technology to test for and find therapeutic agents for Ebola ($6 million) and Marburg ($6 million) viruses, and anthrax and ricin toxins ($4 million). In addition, the allocation includes new funding for an AVI project to test for and find therapeutic agents for dengue virus ($6 million).” AVI BioPharma eventually received $11 million in the DOD Appropriations bill for 2006. [thestreet.com; Avi BioPharma Press Release, 10/3/05]
Obama’s Office Took No Action On Behalf Of SkyTerra. Obama’s Senate office did not take any action on behalf of SkyTerra. A spokesman for Skyterra said the company’s top officials had not been aware of Mr. Obama’s investment. [New York Times, 3/7/07]
CORRECTING THE RECORD: REZKO
NYT: The Obamas House Sat On A Large Property Subdivided to Make It More Affordable
FACT: The original seller divided the land into parcels for individual purchase prior to the Obamas interest in the house and bid on the house. [Obama Financial Records, June 2005]