aww, poor snow. "accidentally" holding Fannie Mae debt, and he lost money to boot ...
Reuters
UPDATE - U.S. Treasury's Snow held mortgage company debt
Wednesday May 26, 10:41 pm ET
(Updates asset totals, income)
WASHINGTON, May 26 (Reuters) - U.S. Treasury Secretary John Snow unknowingly held more than $10 million of debt issued by controversial housing finance giants Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) from February 2003 through May 2004, the Treasury Department disclosed on Wednesday.
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The debt was bought accidentally by Snow's broker, a Treasury Department spokesman said, after an apparent miscommunication over Snow's efforts to divest his financial holdings on taking the helm at the department in 2003.
The debt securities were sold or matured within days of their discovery, Treasury spokesman Rob Nichols told reporters. Treasury also released a legal opinion from the Treasury's ethics lawyer that found the holdings did not represent a conflict of interest, although the official directed they be sold to prevent future potential conflicts.
'VERY REGRETTABLE'
Treasury has been pushing to gain a stronger oversight role over the government-sponsored enterprises, which critics say derive special benefits from being perceived in financial markets as almost as secure as U.S. Treasury debt itself.
Nichols said Snow had told his broker to invest in Treasury debt and, believing his instructions had been carried out, did not check his periodic financial statements.
"He views this as very regrettable," Nichols said.
The debt was discovered on May 10 after a review of Snow's draft financial statement and, ironically, after a speech Snow gave to a bankers' group in which he stressed the need for "a credible regulator" for the government-sponsored enterprises.
Snow actually lost money on the transactions. According to Treasury, the worth of the debt securities totaled about $10.38 million when they were sold on May 14, a loss of about $478,000 from when they were bought.
Despite the opinion of Kenneth Schmalzbach, Treasury's assistant general counsel and designated ethics official, clearing Snow of any conflicts in the matter, Snow sent a letter on Wednesday asking the Treasury's inspector general to review the matter.
Snow's financial disclosure form showed 2003 assets of between about $43 million and $128 million. That compared with the previous year's report that showed assets worth between $77 million and $295 million.
In 2003, a hefty chunk of Snow's income came from a retirement package from his former company, railroad giant CSX Corp. (NYSE:CSX - News), the disclosure form showed. Snow received about $72 million in CSX-related income, according to the form.
