Obama campaign: Romney 'blind trust' isn't blind enough, 'carried interest' an issue
June 7th, 2012
04:51 PM ET
10 years ago

Obama campaign: Romney 'blind trust' isn't blind enough, 'carried interest' an issue

(CNN) - Democrats called attention to Mitt Romney's personal financial arrangements on Thursday, suggesting on a conference call with reporters that he was being dishonest with the characterization of his "blind trust," and also claimed he may not be fully retired from the private equity company he founded.

"It's understandable, given the many years that he was involved with Bain and the pride he takes in his service there, that he may have some sort of an arrangement by which Bain believes that he is continuing to render valuable service in some way to them," Bob Bauer, the attorney for President Barack Obama's reelection campaign, said.

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He added that "no one is suggesting day-to-day management" is among the "range of ways in which he provides service" to Bain Capital, the firm from which Romney retired in 1999.

Federal tax law suggests this category of investments, known as carried interest, comes "in connection with the performance of services."

For Romney to continue to count income from these investments as carried interest, Bauer and Obama's campaign press secretary, Ben LaBolt, said, he may still be providing some type of service to the company. Otherwise, he suggested, Romney should be taxed differently.

The Internal Revenue Service has interpreted that provision broadly, and that Romney once performed "services" for Bain - when he ran the company, for example - would likely fit that requirement.

A financial disclosure Romney filed with the Federal Election Commission on June 1 reads, "Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way."

Tax documents released by Romney's campaign in January showed his effective tax rate in the two most recent years was approximately 14.5%.

A spokeswoman for Romney called the issue "another tired distraction by the Obama campaign."

The Obama campaign also took issue with the trust arrangement which has controlled Romney's finances for the last decade.

Romney has explained his that if elected president, the wealth of he and his wife would be converted from the current arrangement, overseen by a lawyer he hired, into a blind trust managed under federal ethics rules.

"If I'm president of the United States, I understand that all of my investments, and Ann's, will all be sold and bought again without us having any idea what's been purchased," he said at a March campaign event in Collinsville, Illinois. "So that's how you would hope that we would live without any particular conflict of interest."

In a statement to CNN on Thursday, Romney's spokeswoman, Andrea Saul, underscored a point the candidate has repeatedly made: that he does not control his investments.

"As has been reported for years, Governor and Mrs. Romney's assets are managed on a blind basis. They do not control the investment of these assets, which are under the control and overall management of a trustee," she said.

On the campaign trail in February, Romney explained that he instituted the trust arrangement upon his election as governor of Massachusetts in 2002.

"I said, look, I'm going to take what I have and give it to a blind trustee, someone who manages the money for me, not for me, not - without my knowing where they invest," he said in Portland, Maine. "And that's been the case for ten years."

But this version of blind isn't entirely so, Democrats charged Thursday.

"This gave him the appearance of keeping his investments at arms' length," said LaBolt, the Obama campaign spokesman. Bauer, the attorney, added: "The choice he's made is to have a blind trust that is not quite a blind trust, certainly by federal standards," because he knows who manages his investments.

That Romney continues to profit from Bain's investments – and that he knows this – itself makes the trust less blind, as some of the firm's investments become public.

In January, Romney's trust manager, Brad Malt, told reporters on a conference call that he makes financial decisions regarding Romney's wealth without his input.

"Each of these investments are in a blind trust. This means the decision[s are] made by me not Governor Romney," Malt said. "It is simply inaccurate to report that Gov. Romney has anything to do with these investments."

- CNNMoney.com's Jeanne Sahadi, Charles Riley, and Dan Primack and CNN's Shawna Shepherd and Gregory Wallace contributed to this report

Also see:

Romney reacts to Wisconsin recall vote

Texas a cash cow for Romney

Jill Biden weighs into 2016

Filed under: 2012 • Mitt Romney • Taxes
soundoff (46 Responses)
  1. claude

    you can not fix an 8 years mess in 3 years... but under Obama we can see a sign of hope!!..

    June 7, 2012 06:34 pm at 6:34 pm |
  2. FedUpInSeattle

    I'm trying to find info on the Walker NOT being recalled.....Oh there it is hidden at the bottom of the political page. Funny how Romney is only for the Rich because he is a Republican but when John Kerry is the 3rd richest person in Congress, that is perfectly OK. Never once heard growning up that John Kennedy was a bad President because he had money. Romney gave 19.4% of his $20.9 mill income to charity. This constant idea the liberals are trying to paint of Romney as a money grubbing fat cat does not jibe. I'd rather have a man who gives 19.4% of his income to charity than a man who gave 1% to charity while taking 15% of my taxes and rewarding those who voted Democrat with that money.

    June 7, 2012 06:50 pm at 6:50 pm |
  3. Aaron

    @ The REAL Truth That's a REAL silly statement. It's definately not that he can't manage assets – since he's rich – but that he puts it into a trust while in a public serving role is actually a good management decision. You just don't get it, that's really enough said....

    June 7, 2012 06:55 pm at 6:55 pm |
  4. FedUpInSeattle

    Its amazing the stories you can find to write to hurt a candidate when you want to try to define that person by reporting it as news. Something tells me that this story could have been written about at least half of the Dems in Congress right now but who cares about that?

    June 7, 2012 06:56 pm at 6:56 pm |
  5. Jay

    The Billionaires are opening up their wallets, they want things like it was when dubya was President, the rich got richer,and the middle class got poorer

    June 7, 2012 07:40 pm at 7:40 pm |
  6. Pete

    He has to pay taxes even if had them extended,that's IRS guidelines.Eventually his overseas investments will be found because of IRS attempts to collect taxes on off shore accounts,Romneys being one of them,then he'll have more problems than Pres.Obama to worry about,they don't play,I know!!He thinks he's Cheney,remember him as Halliburtons CEO,while still being the vice pres,that conflict of interest didn't go over too well did it.Romney helped corporations also get startup monies from Massachusetts,while still governor and they failed as well,but the difference being Massachusetts budget is significantly smaller than the federal budget,states monies are felt sooner in the state and it effects citizens harder because of the transaction there's no financial backup because its not federally approved to begin with,so its lost tax payers monies they can't recoup..He also mentioned his effective unemployement rate at 4.7%,but that's because he lost 200,000 jobs that left the state,not his job creation working,that's his constant play on words and numbers,always favoring him!!! Republicans on these sites still believe he's good for this country,but they thought Trump was God to them also,ignorence to republicans is pure bliss,but ya got to give them credit,if they're that tough,they really must be stupid,that's a heck of a way to go thru life,isn't it!!!

    June 7, 2012 08:04 pm at 8:04 pm |
  7. Gurgyl

    Folks, we are in much better shape than four years ago, Mittens sells USA to china for one Dime. True. Kindy support our president. Obama is shrewd, smart, honesty, knows and smtrives hard for the betterment of Middle Class Americans. I am an educated telling, you can not go wrong. God bless you, and the USA!!! Amen.

    June 7, 2012 08:06 pm at 8:06 pm |
  8. C

    Lame...Obama won every election by digging up dirt on his opponents...Chicago style politics.

    The media has turned into a state-run propaganda machine anymore I swear...it's really creepy.

    Let Obama run on his own merits...what little he has at this point.

    Furthermore...Obama hides so much about his past that he cannot get away with pointing fingers as four point back at him.

    Hope and Change 2012..... if we can make it until we have a President Romney....

    June 7, 2012 08:09 pm at 8:09 pm |
  9. A not-so-stupid former republican

    Just another corrupt republican politician lying to the American people. When will it end?

    June 7, 2012 08:10 pm at 8:10 pm |
  10. Yonni

    Mitt will not tell us anything about his past nor his present plan, he is busy bashing the POTUS. Please, somebody do investigative journalism and tell us what he is about? Couldn't afford another mistake like we had for the last decade. The human and financial cost of the trickle-down economy and shoot first ask later war policy cost was enormous; forget how much we lagged from the rest of the world with scientific research, environmental protection and education.

    June 7, 2012 08:36 pm at 8:36 pm |
  11. stephanie

    i just want to know which romney are you supporters going to vote for and why you are either too lame or to stupid or too embarrassed to google the crap that keeps changing day after day after day after day. he has not stood by anything he has ever said. even went so far as to say, ROMNEY: “I’m not familiar precisely with what I said, but I’ll stand by what I said, whatever it was.” who does that? what kind of moron votes for that? why are you ok with this? there is no cure for stupid.

    June 7, 2012 08:36 pm at 8:36 pm |
  12. Donkey Party

    The only thing that is going to help our country move forward, is a civil war. That way the domestic terrorist GOP can be wiped out, and idiots like Penobscot who support them.

    June 7, 2012 08:54 pm at 8:54 pm |
  13. DougO

    That "he may have" some arragement. Key words "may have"; keyword "may". Well, Obama "may" suck a big one; Moosell "may" have a penis. I "may" be hadsome, young and rich (not). This is what liberals have descended into, attacking and critcizing on "may have". The Wizard of Oz "may have" been a true historical account too!

    June 7, 2012 08:59 pm at 8:59 pm |
  14. S.B. Stein E.B. NJ

    There needs to be a better explanation as to what is covered by the blind trust and Romney can do with it. If can have any control over it, it might not give enough seperation from the company invested.

    June 7, 2012 09:56 pm at 9:56 pm |
  15. J.V.Hodgson

    America need to have the sysytem in Japan. Tax year is calendar year. say 2011
    You have until mid Feb 2012 to declare your income for the year 2011, no delays or exceptions.
    you must pay the tax by Mid March, even if you make a genuine error you pay not only the tax but a daily penalty compound interest rate amount on the undisclosed income or capital gains.
    Interest and dividends are treated as INCOME.

    June 7, 2012 10:21 pm at 10:21 pm |
  16. luke,az

    Gov. Robme is not a leader. He is a puppet of the 1%. Corporations are taking over America. Arizona's top corporate ceo from Freeport-McMoran, Richard Adkerson, made $82,000,000 in 2011. I thought we were in a recession.

    June 7, 2012 11:27 pm at 11:27 pm |
  17. Sue

    As many have stated time and time again........Liberals are hilarious.....They are more worried about what Romney does with his own money, then what Obama is doing with theirs!! The voters/tax payers are not worried about what Romney does with his own money--but they are DEFINITELY worried/angry about what Obama is doing with their tax dollars. Just like every other attempt that Obama has made to go after Romney--this will also backfire right in his face!!!

    June 7, 2012 11:35 pm at 11:35 pm |
  18. X liberal

    Mitts knows how to make riches! if he is a crook like how this gynarchy wants us to believe then why is he not behind bars! the guy has broken no laws while making his fortune.

    June 8, 2012 12:10 am at 12:10 am |
  19. Ray

    The GOP is happy to talk about the need to keep the Bush tax cuts in place, happy to talk about Obama being a tax and spend president, happy to talk about Obama raising taxes, but they want to claim that talk about Romney's taxes is a distraction? Right.

    June 8, 2012 12:32 am at 12:32 am |
  20. Kenny K

    Does it mean that the blind-trust managers can invest the money in anything they like, whether it contradict with Romney's belief?

    Also, how can we know whether his money is been used to fund terrorists all over the world who can pay top-notch interest rate and investment returns?

    June 8, 2012 12:42 am at 12:42 am |
  21. Vanessa

    Well said Fernace!

    June 8, 2012 01:32 am at 1:32 am |
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