updated 1/5/2004 1:43:29 PM ET 2004-01-05T18:43:29

At a time when his state’s banking system was having problems, then-Gov. Howard Dean sold $15,000 in stock in five Vermont banks after getting what he says was an “inside report” from the state banking regulator in 1991.

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In a statement Sunday responding to questions, the Democratic presidential candidate did not characterize the information or identify the banks. But he said he sold the stock because “it became clear to me that information I might receive in the future as governor could present a possible conflict of interest.”

Dean disclosed his sale of the bank stocks in a 1994 interview with the Vermont Business Magazine, telling an interviewer that he sold his shares because the state banking regulator “came over one day and said, ’Here’s the inside report on all the banks,’ and I went ’Yikes.”’

Spokesman Jay Carson said that when Dean returns from the campaign trail in a few days he will go through his tax records to see if he can ascertain the names of the bank stocks he owned.

Carson said Dean’s thinking at the time was “I didn’t know I had access to this type of information. Now that I do, I need to sell these stocks to avoid even the appearance of impropriety.”

Some Vermont banks were experiencing financial problems around the time Dean became governor unexpectedly following the death of his predecessor in August 1991.

Bank assets in the state declined from 1990 to 1991 and fell even more in the first part of the following year, dropping 1.7 percent through three quarters of 1992. Nonperforming loans doubled from 1987, to $239 million by the end of 1991.

The results were weakened capital positions, suspension of dividends and “plunging stock prices at almost all the large- and medium-sized Vermont banks,” Vermont Business Magazine reported in December 1992.

Substantial stock gains
Carson said many Vermont bank stocks had climbed substantially in value by 1994, in two cases doubling in value and in another going up 15 times.

“When I was working as a doctor and serving part time as lieutenant governor, I purchased approximately $15,000 of Vermont bank stocks,” Dean said in his statement. “As I volunteered to a Vermont Business Magazine reporter, I sold these stocks shortly after Gov. (Richard) Snelling died and I unexpectedly became governor when it became clear to me that information I might receive in the future as governor could present a possible conflict of interest.”

Within a few weeks of Dean’s elevation from lieutenant governor to governor, legal aide Josh Fitzhugh wrote in a Sept. 4, 1991, memo that “Some bank CEOs would like to meet with the governor to increase their ‘comfort’ level.”

“One suggestion is for him to attend an executive board meeting of the VBA,” stated Fitzhugh’s memo, referring to the Vermont Bankers Association.

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