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Sweet column: Obama's stock answers. Finally pays 17-year old parking tickets.

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WASHINGTON -- White House hopeful Barack Obama was on the defensive Wednesday over stock purchases from companies whose investors included his political donors.

And Obama revealed that he terminated a "quasi-blind" trust he created for the stock purchases -- called the "Freedom Trust" -- after realizing that it wasn't blind after all.


Obama's campaign team ramped up a rapid reaction defense after a story about his portfolio hit the front page of Wednesday's New York Times and was the subject of scrutiny Monday on thestreet.com.


The political damage potential is high because one of the firms Obama bought stock in was developing medicine to treat avian flu -- with the purchase coming as Obama started to champion more federal funding to fight the disease. Obama, who has made ethics one of his signature issues, took questions at a news conference in the Capitol called originally to tout an immigration bill. He denied any connection between his investments and legislation.

Meanwhile, Obama's research team -- aware that every part of his life is under a microscope -- turned up unpaid parking tickets from his days as a Harvard law student. In January, an Obama representative paid $400 in fines and penalties, according to the Somerville News.

Here's the situation:

Investing the book windfall: "This was not a lot of money," Obama said.

Obama had about $100,000 he wanted to invest in 2005. The money was a portion of the $1.2 million he got from a book contract. He said Wednesday he decided the $100,000 could be put into something "more high risk" and asked a friend to recommend a stock broker. That friend was donor George W. Haywood, who held what the New York Times called "major" positions in the two stocks Obama ended up owning, Skyterra and AVI BioPharma.

Another Obama donor who invested in the same stocks -- which were characterized as "obscure" in thestreet.com story -- was Jared Abbruzzese. He was also a donor to the anti-John Kerry Swift Boat Veterans for Truth and is being investigated by the FBI in New York for public corruption. Obama declined to name the UBS broker. Net loss on the investments: $13,000.

"I thought about going to Warren Buffett, but I decided it would be embarrassing with only $100,000 to invest to ask for his advice," Obama quipped.

The 'quasi-blind' trust: "Now obviously the thing didn't work the way I wanted it to," Obama said.

The Senate Ethics manual has detailed rules about blind trusts and qualified blind trusts. Obama did not want to sign on to either of those options because he did not want to wash his hands of the responsibility of investments made in his name, attorney Robert Bauer said.

Because the off-the-shelf trusts were not satisfactory, "We tried to see if we could jigger it to make it work better," Obama said. He signed papers on May 31, 2005, for the custom trust designed to shield him from knowing how his money was invested -- but let him respond to media inquiries about potential conflicts. Obama realized his system was not working when he received some sort of shareholder letter in fall 2005.

Katten Muchin Rosenman attorney Michael Hartz in Chicago drew up the papers for and was the trustee of the "Freedom Trust." Bauer said this particular kind of trust did not require any clearance from the Senate Ethics Committee because he did not ask to be relieved from any reporting rule. Bill Allison, a senior fellow at the Sunlight Foundation, said that if any kind of blind trust was created, "you should have the Ethics Committee sign off on it."

The trust was revoked on Dec. 31, 2005. Obama put his money in cash and mutual funds.


10 Comments

You have to wonder about Obama's potential management sytle should he become President. To allow some broker, with whom you've had very little experience previously, to invest sums as large as $100,000.00 and not want to have any say or determination as to the company you'll be investing is irresponsible. Are we to assume from this that even though he's a Harvard Law graduate that he knows that little about finances and investment and so would leave such important life responsabilities to a stranger? Or does he have so much money in other accounts with other brokers that this $100,000.00 was pretty small potatoes anyway?

Mr. Obama, when the Clinton's get done with you, you had just better worry that you can get re-elected to the senate next time. Because whether it be trusts, Rezko, a controversial pastor, getting up on the wrong side of the bed, the Clinton team (Clinton's, NY Times, Carville, McAuliff, Lockhart, Begala, etc.) will let all of us know. But they'll do it with a smile on their face, and say, "but it didn't come from us."

There is a problem with Obama and "...stock purchases from companies whose investors included his political donors."???

Let's follow the rationale.

Before Obama can purchase stock in any company, anywhere, is it now his charge and obligation to review ,or have reviewed under his personal direction, the finicial portfolio of each of his individual donors?

Can I now expect the next request for a political donation to include, "...and kindly mail your donation along with a complete finicial statement setting forth your holdings in all publically traded stock(s) you now own, have the right to own or may own in the future". **

** As I am precluded from owning stock in any company in which you have invested or may invest, we will not be seeing you at the next stockholders meeting(s).

Didn't the NYTimes do a hit piece on the Clinton's marriage last April-front page-above the fold?
The problem I have with Obama maniacs is that they are so angry with Hillary Clinton that they can't or won't look at this important nomination with intellectual honesty and clarity. The Clinton conspiracy theorists had best think about who the real enemies are -this is far too important- If Obama can't handle the heat he will not become the nominee- That's the process and this is mild-Wait until the Republican machine starts on him. Remember his talking points-he's above all this-he's so clever-Harvard Law Editor in Chief-whoops-so he doesn't really know about blind trusts-quasi blind trusts -investments-wow what are the rest of us mere mortals to do- And it was "only" $100,000-how many of his supporters would see that sum as "only" a small amount?? Only his donors-the ex-Republican smear team members could think that way- Let's not have the Democrats eat each other alive- not again-this time it's too important-

NEWS FLASH: OBAMA NABBED FOR JAYWALKING IN 1975!

Yes, Ladies and Gentlemen, Senator Barack Obama has finally fessed up to crossing the street against the light on September 15, 1975!

This admission poses more questions than answers: Why didn't he fess up to this earlier? What was he trying to cover up? He's led us to believe that he always crosses when the light is green. Now we know different. Senator Obama should explain the discrepancy -- and how he feels this will affect his run for the White House.

-- Your MSM at Work

This blog has spell check,but I still see lots of typos. Names like Obama or Blagojevich always show up as misspellings while names like Clinton or Edwards don't.

It seems to me, everyone is missing the forest for the trees. Forget the investments, why are people who backed the Swift Boat campaign backing Obama? And why did the Republicans run a black man who doesn't live in the state against Obama? Is Obama who he says he is, or is he another Al Sharpton, whose presidential bid was entirely backed by right wingers? Maybe Obama isn't the savior of the Democratic party, but a Trojan Horse of the GOP?

Pierre, good point. Maybe the republicans think Obama will be easier to beat than Hillary?

Obama is NOT the "Savior" of the Democratic Party and I do NOT believe he could be associated with the GOP in any form. He was held out as squeaky clean (no pun intended) and under scrutiny it is shown he is not. It is also showing he is not an astute businessman and details are not important to him. There will be more turn up as time goes on.

As Pierre pointed out, his Republican opponent in the Illinois U.S.Senate campaign was a softball, his opponent in the Presidential race will not be!

Can he last ?


In response to T. Zievers, please remember the first rule of stock investing - individual investors on average do average. Just because Senator Obama went to Harvard doesn't mean that he should know how to invest well. The best way to manage money is in a passive fund (such as an index fund) as opposed to actively managing a portfolio.

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on March 8, 2007 6:50 AM.

Sweet Column: House Majority Whip Clyburn and the S.C. primary. "Nah, come on"--on Bill Clinton's nickname "first black president" was the previous entry in this blog.

Sweet column: Obama's stealth fund-raising. is the next entry in this blog.

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