No one is likely to mistake me for a Howard Dean supporter, but I’m disgusted at the attempt by Rupert Murdoch’s New York Post , aided and abetted by some who should know better, to make him out as having engaged in insider trading.
The only actual information available is from a front-page story in today’s Wall Street Journal (subscription only) by Bob Davis and Jackie Calmes, and in this AP story.
It seems that shortly after Dean became Governor, he saw a state report on various Vermont banks, realized for the first time how much information was in them, and decided to sell his stock in the five banks whose shares he owned. The total value of the stock sold was $15,000, not a huge sum in Dean’s multi-million-dollar portfolio. No one knows whether the stocks as a group went down or up after Dean sold them, but one of them is now worth ten times what Dean sold it for. No one knows what was in the report.
Dean says that the report was innocuous, but made him aware that owning Vermont bank stocks might create a conflict of interest for him, given how much information on their condition he would be getting as governor. The Wall Street Journal reporters point out that he held on to shares in IBM and AIG Insurance, both of which do business in Vermont, with AIG’s business being state-regulated. But they also provide Dean’s response, which is that neither the information he got nor the decisions he made as Governor of Vermont could possibly be material to the value of IBM or AIG, while his knowledge of the financial condition of a local bank could have given him a big potential edge in the market. Moreover, his ownership of Vermont bank stocks could have created a nasty conflict of interest, since his decisions might easily materially influence the value of his holdings.
Naturally, Deborah Orin of the Post provides none of that detail, merely reporting (under the headline “Howie Sold Stox After Getting Inside Info”) the apparent inconsistency about Dean’s not having sold IBM or AIG.
Prof. Steve Bainbridge of UCLA says that Dean’s explanation that he sold the stock to avoid potential conflicts of interest is “possible, even probable.”
But Bainbridge then goes on at great length to speculate that (1) IF the information in the report was negative; and (2) IF as a result of that information he sold the stock; and (3) IF by selling the stock Dean avoided a loss; and (4) IF a particular theory of fiduciary responsibility is adopted, THEN Dean might possibly have been guilty of something, UNLESS he could show that he actually sold the stock to avoid a conflict of interest. Of course, all of this is merely theoretical, since any case would have been long since barred by the statute of limitations.
Neither Orin nor Bainbridge notes that Dean volunteered the information about the sale in an interview with the magazine Vermont Business in 1994, apparently without leading anyone to ask any questions at the time. If Dean really had something to hide, why talk about it to a reporter when a case could still have been brought against him? The Wall Street Journal reports that the sale “is stirring controversy,” without mentioning anyone actually prepared to say that it was improper. This smells like a plant from a rival political camp: either one of his primary rivals or the GOP.
Of course, by the time the story gets to Steve Verdon’s blog, Dean is already a hypocrite: “Geee, I thought Dr. Gov. Dean was going to prevent this sort of bad behavior if he were elected President.” Of course, no actual bad behavior by Dean has been demonstrated; what does Verdon care about that, as long as he can use the incident to slur the integrity of a politician of whose views he disapproves?
And that’s how it’s done. In a world where voters distrust politicians, it’s easy for this sort of almost certainly baseless charge to gain currency. (Think of the expert hit-job Hugh Shelton did on Wesley Clark, which was even more effective because Shelton wouldn’t specify the “integrity issue” he claims to be upset about.)
But as far as I can tell, there’s nothing there. I expect no better of anyone working for Murdoch, so I’m not surprised by Deborah Olin’s behavior. The reporters for the Wall Street Journal and the AP, though I think they erred by even discussing this non-scandal as if it might be a scandal, at least presented a balanced view of the facts.
But it seems to me that respectable people, and especially those with academic titles, even if they disapprove of Howard Dean’s political positions, ought to refrain from impugning his integrity unless and until there is at least probable cause to think that he did something wrong.
So far, there isn’t.