The bogus Obama stock story

Via Eric Alterman, Todd Gitlin had the same reaction as me (and Alterman) to the front page New York Times story on Barack Obama yesterday:

The story? Well, here's the lede:

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.

Sounds like they nailed him dead to rights. But hold on for the fourth graf:

A spokesman for Mr. Obama, who is seeking his party’s presidential nomination in 2008, said yesterday that the senator did not know that he had invested in either company until fall 2005, when he learned of it and decided to sell the stocks. He sold them at a net loss of $13,000.

The spokesman, Bill Burton, said Mr. Obama’s broker bought the stocks without consulting the senator, under the terms of a blind trust that was being set up for the senator at that time but was not finalized until several months after the investments were made.

So let's see if we've got this straight. First graf: "Barack Obama bought...." Fourth graf: "the senator did not know that he had invested...."

If you're feeling nostalgic for the '90s, or if you're of a numerological bent, please note that today's peculiar choice of a front-page story comes fifteen years minus one day after the legendary March 8, 1992, front-pager by Jeff Gerth on Gov. Bill Clinton's Whitewater deal.

So how do the Times reporters justify the story after having conceded that the purchases were made by a (mostly) blind trust? They write:

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.

Note the weasel words "raise questions." The mundane explanation for Obama's purchase is buried in the article:

But he put $50,000 to $100,000 into an account at UBS, which his aides say was recommended to him by a wealthy friend, George W. Haywood, who was also a major investor in both Skyterra and AVI BioPharma, public securities filings show.

Translation: It appears Obama's broker at UBS bought the stocks on his behalf after having done so for Obama's friend, who recommended UBS to Obama. A followup in today's Times (by a different reporter) makes this more explicit:

Mr. Obama said he retained a broker upon the recommendation of a wealthy friend and top contributor, George W. Haywood. The senator said he did not specifically instruct the broker to follow the investment patterns of Mr. Haywood, who along with his wife, Cheryl, has contributed nearly $50,000 to his campaigns and political action committee.

“What I wanted to make sure was that I didn’t want to invest in companies that would potentially bring conflicts with my work here or not abide by some public statements I’ve said in terms of how things work,” Mr. Obama said. “Obviously, the thing didn’t work the way that I wanted it to, which is why we ended up discontinuing it.”

But, he added: “It wouldn’t be surprising to me that he was recommending stocks similar to me that he would be recommending to others.”

Hotline on Call notes how weak the original Times report is on substance:

The Times suggests that Haywood recommended that Obama use UBS's broker in part because he knew that UBS would invest some of Obama's assets in the two companies partly owned by Haywood.

The ultimate consequences of the purchase provide no help, here. Obama lost money overall and divested himself as soon as the purchases were disclosed to him. The facts are on his side.

If you think Obama is lying and somehow directed his broker to purchase these stocks on Haywood's advice (and knew that Haywood was an investor in those companies), and if Obama planned to use his office to appropriate avian flu funds to the pharma company, then... say that. The circumstantial evidence does not begin to prove it.

This is a classic example of the weaknesses of "objective" news reporting on ethical issues. The Times reporters don't make an explicit argument or concede the limitations of their claim. Instead, they string together a series of facts around a loose hypothesis (that Obama's actions "raise questions") and leave it to the reader to infer what they cannot prove. It's dirty pool.

Comments

[Darby Suckling]

I'm baffled by your accusation of "dirty pool" by the Times. Are you suggesting that the article shouldn't have mentioned Obama's support for an avian flu vaccine? If that had been omitted, right-wing blogs would be accusing the Times of coddling Obama. In fact, the article effectively debunked a potential right-wing conspiracy theory.

[Ellen]

It's an important story. Thanks for elaborating on it. If anything it shows me that Obama can be naive and trusting.He is a true outsider when it comes to Wall Street and that is something new.