The Shortsightedness of Blind Trusts

Abstract

This article presents an analysis of problems plaguing government officials’ use of blind trusts as a conflict of interest avoidance measure, and proposes changes to strengthen the device. In theory, a blind trust allows an independent trustee to manage a government official’s wealth, without the official knowing the identity of his or her assets. Unaware of their exact financial holdings, policy makers can render impartial decisions on matters that may affect their economic welfare. Blind trusts, however, do not always prevent public officials from knowing what assets they own. The federal statutory scheme governing blind trusts does not include sufficient incentives to avert the flow of information from trustees to policy makers. Because of this flaw, blind trusts can mislead the public into believing that decision makers are acting without knowledge of their financial affairs, when they may not be doing so. A blind trust that conceals a conflict of interest from public oversight undermines the transparency essential to democratic governance. This article recommends specific amendments to strengthen qualified blind trust rules so that the device can deter financial conflicts of interest and enhance public confidence in the integrity of official decision-making.