Richard Painter, a professor of law at the University of Minnesota, was the chief White House ethics lawyer for President George W. Bush from 2005 to 2007. Norman Eisen, a visiting fellow at the Brookings Institution, was the chief White House ethics lawyer for President Obama from 2009 to 2011.
As former ethics counsels to Presidents George W. Bush and Barack Obama, we dealt extensively with blind trusts in the White House. More than most, we recognize that asking Trump to put his vast holdings in one of these entities is no small thing. Making a total break with his complex U.S. and international interests would be a difficult and expensive sacrifice on his part.
Every president for the past four decades has used some combination of a blind trust or widely diversified, publicly traded holdings to ensure that their decisions are conflict-free. A blind trust is defined by federal law as one in which a federal official selects an independent trustee (with no familial ties) who sells the official's known assets and purchases investments unknown to the official. That is what makes it blind.
The president-elect and his spokespeople have instead suggested that he will allow his children to guide his enterprises while he retains all or most of the ownership interest. This arrangement has two major flaws. First, Trump will know what is in the trust. (He cannot put Trump Tower in a blind trust and then forget that he owns it.) Second, he knows the people who will be managing the assets; he is their father. This is the opposite of a blind trust. It is a demand that the American people blindly trust Trump and his family.
Here’s what he should do instead.
First, Trump should appoint an independent, professional trustee to take charge of liquidating and converting to cash Trump business holdings through an initial public offering or leveraged buyout.
Second, the proceeds of the IPO or buyout should be turned over to the trustee to be managed. The trustee can then invest these assets on Trump’s behalf. The trustee would report to Trump regularly on the value of the trust but not on what is in it. Some of the proceeds of the sale of the businesses could also be invested in U.S. treasury bonds, mutual funds and other widely diversified assets that do not create conflicts of interest with the duties of the presidency.
Third, while Trump's children and their spouses are dealing with any Trump business matters, he should ask them to step away from the transition team and the White House, and to not advise him or be involved in any U.S. government affairs.
Trump ally Rudolph W. Giuliani has argued that it would not be fair to cut the Trump children out of the family businesses. We understand. So if the Trump children end up having a continuing role in any of the Trump businesses, including after the sale, the new president should establish an ethics "firewall." He should pledge not to discuss the businesses with his kids or anyone else involved. As an extra safeguard, contacts about the Trump businesses should be prohibited between all other administration officials and people involved in the businesses, including the Trump children. Except for personal communication with the president or first lady, such telephone calls and emails should be routed to White House counsel to make sure that the firewall is not breached.
The alternative approach apparently being contemplated — Trump maintaining an interest in his businesses and letting his children manage that interest — risks making his transition and his presidency the most conflicted in modern history. To take only a few examples:
●Every time Trump makes a decision as president-elect or president, or someone who works for him makes a decision, critics will allege that it is intended to benefit the Trump businesses. This includes decisions about regulation of the financial sector and the potential dismantling of the Dodd-Frank banking law, as the Trump Organization, like most real estate empires, is heavily indebted to banks and other lenders.
●Every time an officer or employee of the Trump businesses discusses the possibility of favorable or unfavorable action by the U.S. government toward a person or entity dealing with the Trump businesses, that person could be accused of soliciting a bribe or extorting money on Trump’s behalf.
●Every time any foreign government or company controlled by a foreign government does business with a Trump entity, the president could be accused of accepting a payment in violation of the emoluments clause of the Constitution, creating a constitutional crisis that could even result in threats of impeachment.
●Every time any private party sees an opening for litigation against a Trump business entity, that person, perhaps in collusion with the president’s political opponents, could file suit, perhaps even against Trump personally, embroiling the presidency in litigation.
We hope the president-elect will “drain the swamp,” as he has pledged. Setting up a true blind trust would reassure the voters that the decisions he makes are not influenced by his personal financial interests, or those of his business empire or his family. Otherwise he risks flooding the swamp instead.
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