During the debate in Jacksonville last night, Mitt Romney was hammered by Newt Gingrich for owning shares of Fannie Mae and Freddie Mac, the Treasury-devouring undead semi-governmental entities that did such a lovely job remodeling the U.S. housing market. Romney was said to have made a million dollars selling a portion of his Fannie and Freddie positions.
Romney responded by explaining that he doesn’t control those investments directly:
First of all, my investments are not made by me. My investments for the last 10 years have been in a blind trust, managed by a trustee. Secondly, the investments that they’ve made, we’ve learned about this as we made our financial disclosure, have been in mutual funds and bonds. I don’t own stock in either Fannie Mae or Freddie Mac. There are bonds that the investor has held through mutual funds. And Mr. Speaker, I know that sounds like an enormous revelation, but have you checked your own investments? You also have investments through mutual funds that also invest in Fannie Mae and Freddie Mac.
A reasonable point, but as Dan Riehl and one of his Twitter correspondents discovered, Romney had an entirely different view of blind trusts when he was running against Ted Kennedy in 1994. From a 2007 article in the Boston Globe:
During that campaign, Romney objected to Kennedy’s blind trust’s purchase in 1981 of a property in Washington D.C., which the trust then leased to federal tenants. Romney called it “a conflict of interest, pure and simple” and rejected Kennedy’s argument that he was knew nothing about the trust’s investments.
“The blind trust is an age-old ruse,” Romney told the Boston Globe in October of that year. “You give a blind trust rules. You can say to a blind trust, don’t invest in properties which would be in conflict of interest or where the seller might think they’re going to get an advantage from me.”
(Emphasis mine.) So it looks like it’s Mitt Romney 2012 versus Newt Gingrich 2012 and Mitt Romney 1994. It’s a complex topic, and I’m a layman, having invested my millions in lunar real estate. From what I can tell, it is permissible to give a blind trust general rules for how the funds should be handled, but not direct it to invest in specific entities. Based on this, it seems to me that Romney could have directed his trust to avoid government-sponsored enterprises. In Romney’s defense, it also appears that the rules surrounding these trusts have, unsurprisingly, changed over the past 17 years.
None of which would help Romney much if he was getting slammed with that quote by Obama, or the media, during the general election. He would have to be ready with a much more detailed and compelling response than the one he gave Gingrich. Romney’s finances are understandably complicated, but he’s got a large campaign staff, and they had better be ready to offer a comprehensive defense of every fund, trust, and stock purchase.
Unfortunately, Romney’s other problem in this particular instance is that his Fannie and Freddie investments were not held in a blind trust. According to a September 2011 review of his finances in the Boston Globe:
On his financial disclosure statement filed last month, Romney reported owning between $250,001 and $500,000 in a mutual fund that invests in debt notes of Fannie Mae, Freddie Mac, among other government entities. Over the previous year, he had reported earning between $15,001 and $50,000 in interest from those investments.
And unlike most of Romney’s financial holdings, which are held in a blind trust that is overseen by a trustee and not known to Romney, this particular investment was among those that would have been known to Romney.
The investment was also not on Romney’s 2007 financial disclosure form. A Romney aide said the investments were made in the latter half of 2007, after he had filed the earlier disclosure form. That was around the time that the scale of the housing crisis was coming into focus.
The campaign declined to comment on the record. The Romney aide said the investment was made by Romney’s charitable trust.
This is the kind of thing that would get Mitt Romney fact-checked to death against Obama. He might try saying he didn’t notice that this particular fund, a small part of his vast holdings, was putting money into Fannie and Freddie, or didn’t attach any great significance to the investment at the time. He might try defending the investments, as he made some effort to do during the Jacksonville debate. He did a good job of counter-punching against Gingrich by citing his mutual fund holdings in Fannie and Freddie, something Gingrich should have been much more prepared to deal with, or at least not look surprised by.
But saying they’re in a blind trust, when they weren’t? Advancing a position that is radically different from something he was documented saying in the past, without explaining that either he’s had a sincere change of opinion, or the rules surrounding blind trust have changed in such a way that he feels differently about them now? That’s not going to cut it. Not against Obama and the massed legions of the mainstream press.