The federal Office of Government Ethics wants former Massachusetts Gov. Mitt Romney, and Sens. Hillary Rodham Clinton and John McCain to open up their blind family trusts because they were not set up under the agency's standards.
That means that the trusts, created so that elected officials could avoid conflicts of interest between their financial holdings and their official acts, will now be in plain sight for the public -- and the candidates -- to see.
The Office of Government Ethics won't comment publicly about their disclosure requirements. But the candidates' lawyers cited the demand to open the blind trusts as the reason for seeking extensions to file financial disclosures statements. Clinton, Romney and McCain all received a 45-day grace period to submit their paperwork. The reports had been due on Tuesday.
Romney, who has assets estimated at between $190 million and $250 million, has all of his family holdings in blind trusts approved by the Massachusetts Ethics Commission in 2002, when he was elected governor.
Clinton and her husband, former President Clinton, have a blind trust valued at between $5 million and $25 million. McCain lists a blind trust in the name of his wife, Cindy, that is valued at between $500,000 and $1 million. Both those trusts have been approved under Senate Ethics Committee rules.
But the Office of Government Ethics won't accept standards other than their own, which tightly restrict contact with trustees.
"It's not unusual for OGE to think that some people's blind trusts really have 20-20 vision," said Jan Baran, a campaign finance lawyer familiar with disclosure rules. "They like to do their own evaluation."
Disclosing the contents of those trusts could prove awkward for the candidates. It will open to public inspection investments and holdings that should have been previously known only to fund trustees.
McCain aides said they believed the Senate rules for blind trusts would have complied with the OGE rules. "However, since OGE has made the decision not to allow candidates to have Senate blind trusts this year, Senator McCain will fully comply and open up the blind trust," McCain spokesman Danny Diaz said.
Advisers to Romney and Clinton said they too would comply with the OGE requirement.
Senate blind trusts came under scrutiny two years ago when then Senate Republican Leader Bill Frist sold stock in the hospital chain his family owns. Frist had held the stock in a blind trust with approval of the Senate Ethics Committee and said he was not aware of its value or that of any of his stock holdings. Documents filed with the Senate showed that blind trust trustees often updated Frist about changes to his trusts, including the addition and sale of hospital chain stock.
"Particularly for members of Congress, there have been a number of instances where the blind trust had one eye open," said Meredith McGehee, policy director for the Campaign Legal Center, a nonpartisan group that monitors campaign finance and ethics rules and procedures. "This is welcome news if, in fact, the standards that OGE established are with the eyes wide shut."
It is unlikely, however, that any of the candidates who are opening their blind trusts will close them again under OGE standards, given that they would only be under the OGE's jurisdiction while they were candidates.
"For the duration of the campaign, they'll know exactly what's in (the trust) and also get a sense of what the trustee's investment strategy is like," said Joseph Birkenstock, an elections law expert and former chief counsel for the Democratic National Committee. "So if they go back to that same individual presumably they have some indication of how that person invests their money.
"It does a lot of harm to the idea of keeping these things blind to the office holder for an upside I'm not as sure that I see."
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