Sarbanes joins investment game

He downplays disclosure of mutual fund plunge

June 16, 2000|By David Folkenflik | David Folkenflik,SUN NATIONAL STAFF

WASHINGTON - One could be forgiven for thinking that Sen. Paul S. Sarbanes - Maryland's best known practitioner of the politics of prudence - has finally succumbed to the irrational exuberance gripping much of the rest of the populace.

The admittedly tenuous evidence for that claim arrived this week in the form of a lone typed "X" on a financial disclosure form. It showed the longtime lawmaker had invested between $15,001 to $50,000 in a mutual fund last year.

Sarbanes' recent taste of the market is nothing like the wild trading of technology stocks that marked the reports of some of his more flamboyant colleagues. But it represents the first known time that Sarbanes, the most senior Democrat on the Senate Banking Committee and a frequent critic of Federal Reserve Board Chairman Alan Greenspan, has held a private investment.

And for that alone, Sarbanes' modest mutual fund investment could be taken to be a calculated shift. Except that Sarbanes himself concedes no such thing.

"You've got to be kidding," Sarbanes said in a cramped Senate basement corridor yesterday. "You mean, did I go through a complicated formula? No. No."

Throughout the 1990s, Sarbanes missed out on the stock market boom that lifted the wealth of many middle-class families, despite his role overseeing the banking, securities and bond industries. While some have dismissed the feverish approach to investing that has taken root among many Americans, others applaud the marriage of Main Street and Wall Street. But Greenspan himself questioned what he termed the "irrational exuberance" of investors in December 1996.

Said Sarbanes of his investment: "It's not a very speculative mutual fund. I took some money out of the bank. It seems inconsequential to me."

As for Greenspan, credited by many for the economy's surprisingly long-lasting resilience, Sarbanes said he is not offering any new endorsement. The Fed chairman remains too willing to raise short-term lending interest rates to guard against any rise in inflation, the senator said.

"The Fed gets nervous when the unemployment rate gets down. Then they start worrying about inflation," Sarbanes said. "As long as we hold down the two - low inflation and low unemployment, that's a virtuous economy."

Sarbanes placed his money in a Teachers Insurance and Annuity Association - College Retirement Equities Fund "suitable for investors who seek broad diversification and who prefer to have their asset allocation decisions made by a team of professional investment managers," according to the company's Web site.

Economist Charles W. McMillion said Sarbanes' investment was in keeping with his reputation for caution. "It's not one of those high-flying funds," said McMillion.

Sarbanes, 67, receives a congressional salary of $141,300. Were the senator to step down in January at the end of 30 years in Congress, he would receive an annual pension worth more than $100,000. But he's running for re-election.

Disclosure documents do not offer a clear window into finances, instead providing broad ranges of values for assets.

Maryland's other senator, Democrat Barbara A. Mikulski, made more than 20 new investments in mutual funds last year, while selling her holdings in more than 17 mutual funds, transactions involving tens of thousands of dollars.

House members also filed reports. Some highlights:

Rep. Wayne T. Gilchrest, an Eastern Shore Republican, said he owns shares worth between $30,000 and $277,000 in 18 separate publicly traded corporations.

Rep. Benjamin L. Cardin, a Baltimore Democrat, reported holdings between $1.8 million and $4.2 million, much of it inherited.

Rep. Robert L. Ehrlich Jr. , a Baltimore County Republican, invested in eight mutual funds last year and voluntarily listed the exact worth of his financial assets. The total: $224,730.

Rep. Albert R. Wynn, a Prince George's Democrat, reported slight rental income - under $2,000 - from two properties he owns, and a windfall of less than $15,000 from the sale of a third.

Rep. Roscoe G. Bartlett, a Republican who represents Western Maryland, earned between $15,001 and $50,000 in rental income from his 104-acre property outside Frederick, and reported owning tens of thousands of dollars in precious metals and bonds.

Rep. Elijah E. Cummings, a Baltimore Democrat, reported making between $5,000 and $10,000 in capital gains, interest and rent on properties he owns.

Rep. Constance A. Morella, a Montgomery County Republican, reported holdings worth $1.1 million to $2.55 million.

Rep. Steny H. Hoyer, a Southern Maryland Democrat, received a 60-day filing extension.

Several, including Bartlett, Cardin, Cummings and Morella, receive pensions from their service as state legislators or educators.

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