Posted on: Thursday, May 27, 2004

Snow corrects $10M error in investment portfolio

By Martin Crutsinger
Associated Press

WASHINGTON — Treasury Secretary John Snow, a strong advocate for tighter government controls over the biggest players in the nation's mortgage industry, has discovered that he inadvertently owned more than $10 million in debt issued by those government-sponsored enterprises, the Treasury Department said.

Snow, who found the entire incident "very regrettable," has sold the holdings at a loss of $478,000 even though a Treasury Department ethics officer has ruled there was no conflict of interest, Snow spokesman Robert Nichols said yesterday.

Nichols said that the mistake occurred because of a misunderstanding between Snow and his investment adviser.

Snow, who took the Treasury post last year after heading up railroad giant CSX Corp., told his adviser to invest in Treasury bonds to avoid any conflict of interest.

However, the adviser believed he had the power to invest in the bonds of such companies as Fannie Mae, Freddie Mac and the Federal Home Loan Banks as well as U.S. Treasury bonds. The adviser purchased $10.87 million of the corporation's bonds for Snow's portfolio without Snow's knowledge.