By James Rowley
June 13 (Bloomberg) -- The Senate’s No. 2 Democrat, Dick Durbin, sold more than $115,000 worth of stocks and mutual-fund shares as U.S. stock markets plummeted last September, using much of the money to invest in Warren Buffett’s Berkshire Hathaway Inc.
The Illinois senator’s 2008 financial disclosure statement shows he sold mutual-fund shares worth $42,696 on Sept. 19, the day after then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged congressional leaders in a closed meeting to craft legislation to help financially troubled banks. The same day, he bought $43,562 worth of Berkshire Hathaway’s Class B stock, the disclosure shows.
Altogether, Durbin sold investments worth $116,000 in September. By Oct. 2, he had invested $98,046 in Omaha, Nebraska-based Berkshire Hathaway, the form shows.
The Standard & Poor’s 500 Index plunged 4.7 percent last Sept. 15 after the bankruptcy of Lehman Brothers Holdings Inc. and Bank of America Corp.’s government-engineered takeover of Merrill Lynch & Co. By the end of October, the index had fallen 22.6 percent.
“Durbin was doing what a lot of other people were doing, taking a look at their savings” and seeing it “start to tank and trying to preserve some level of wealth by getting out of the market,” said spokesman Joe Shoemaker.
Shoemaker said Durbin didn’t capitalize on anything Paulson and Bernanke told congressional leaders at the Sept. 18 meeting. Whatever information Paulson gave lawmakers wasn’t secret or classified and was disclosed publicly the next day, Shoemaker said.
Paulson, Bernanke Presentation
The presentation by Paulson and Bernanke kicked off the Bush administration’s campaign for the $700 billion Troubled Asset Relief Program that Congress passed in early October to help shore up distressed banks.
After the meeting in House Speaker Nancy Pelosi’s Capitol office, Paulson told reporters that he and Bernanke were seeking an “expeditious solution” to “deal with systemic risk and the stresses on our capital markets.”
While lawmakers gave no details at the time, Pelosi has repeatedly said since the meeting that Paulson and Bernanke warned that if Congress didn’t act quickly the U.S. economy would collapse.
Over four days from Sept. 16 through Sept. 19, Durbin sold $83,156 worth of shares in mutual funds that invested in China and Latin America and in the RS Global Natural Resources Fund, which invests in mining, oil and other natural resources companies.
Durbin sold shares in the Fidelity Southeast Asia Fund, the Matthews China Fund, the T. Rowe Price Latin America Fund, and Janus Overseas Fund, and the Aberdeen Natural Resources Fund.
Retirement Accounts
Most of the trades involved holdings in Durbin’s individual retirement account. Shoemaker said Durbin, 64, traded the shares himself, through an electronic account at San Francisco-based Charles Schwab Corp.
In addition, the disclosure form shows that during the week that started with Lehman’s bankruptcy, Durbin shifted $52,180 from “riskier funds into safer funds” in his government investment plan, Shoemaker said.
Those retirement-account transactions, listed by Durbin on the financial disclosure form, weren’t included in Bloomberg’s computation of the trades for the period.
On Dec. 31, Durbin and his wife, Loretta, sold $31,476 worth of the Berkshire Hathaway shares, taking short-term capital losses totaling $10,419, according to a copy of the couple’s 2008 tax return filed with the disclosure form.
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