Trump Appointees: Part 3 – posted 1/16/2017 and published in the Concord Monitor 1/20/2017
In this concluding piece on Trump appointees, I examine some appointees who have garnered insufficient scrutiny. Again I will utilize the 10 ranking scale, with “10” excellent and “1” poor.
Wilbur Ross is Trump’s nominee for Secretary of Commerce. A 79 year old billionaire, nicknamed “King of Bankruptcy”, Ross is a veteran of Wall Street. He has specialized in buying failing companies, squeezing them dry by firing workers, filing bankruptcy and maxing out profits. He can accurately be described as a vulture capitalist.
Ross was a major player in foreclosing on thousands of Americans during the Great Recession. In 2007 Ross bought up American Home Mortgage Servicing Inc.. Part of the deal was that he bought the servicing rights which included the right to modify or foreclose mortgages. This covered about $132 billion in loans. The company was the second largest servicer of subprime loans in America.
Ross outsourced its mortgage documents operation to a company named Doc X which was later criminally prosecuted for foreclosure fraud. Doc X forged millions of mortgage assignments, claiming to be the officers of different banks. Documents were fraudulently signed after the fact to recreate a chain of title that lenders broke. American Home Mortgage Servicing Inc. changed its name to Homeward Residential and it was bought by another company, Ocwen. Ross was on Ocwen’s Board of Directors.
The Consumer Financial Protection Bureau, created under President Obama, fined Ocwen $2.1 billion for “systematic misconduct at every stage of the mortgage process”. Investigative reporter David Dayen has written that the crimes included: charging borrowers unauthorized fees, failing to apply borrower payments to loans, failing to maintain accurate accounting statements, imposing insurance policies on borrowers who already had them, deceiving borrowers about loan modifications and robo-signing foreclosure documents in fraud upon state courts.
Ross stepped down from Ocwen’s Board and was able to sell $72 million in stock right before it dropped 20% in price.
Of particular note to working people, Ross’s firm was in charge of Sago Mine in West Virginia when the mine blew up in 2006. Twelve miners died. Prior to the explosion, the mine had received multiple citations for substantial violations of safety regulations.
In the Department of Exploitation, Ross is no slacker. A savvy operator, I rate the King of Bankruptcy a “3” because I am feeling generous.
Gary Cohn is Trump’s new director of the National Economic Council and he will be an assistant to the President on economic policy. A registered Democrat, Cohn is president and chief operating officer at Goldman Sachs which is the number two position at the company. He has been with Goldman Sachs since 1990.
Although during the campaign Trump frequently vilified Goldman Sachs as part of a sinister global conspiracy to rip off Americans, that former posture has now dropped off. Cohn is reportedly very close to Jared Kushner, Trump’s son-in-law. He is also supposed to be at odds with Steve Bannon who considers Cohn a liberal.
Since becoming Goldman Sachs’ president and chief operating officer in 2009, filings show Cohn made at least $123 million in total compensation. He will walk away from Goldman Sachs with $266 million in stocks and awards amassed from his over 25 years at the investment bank.
The journalist Matt Taibbi has exposed Cohn’s role in helping Goldman Sachs get out from under the mortgage crash by dumping its disastrous mortgage investments on its own clients as it bet against them. The maneuver, famously called “The Big Short” was detailed in a report conducted by the Senate Permanent Subcommittee on Investigations chaired by Michigan Senator Carl Levin.
Taibbi shows that while the whole financial world collapsed, Goldman higher-ups profited. While Goldman laid off 3,200 lower level employees, Cohn made $67.5 million. Taibbi calls Goldman Sachs the Vampire Squid. Cohn rates a “4”. Like Wilbur Ross, Cohn was a foxy swindler who made a fortune off of the misfortune of others. However, I do not see a Ross level of deceit.
Carl Icahn is Trump’s pick to serve as Special Advisor to the President on Regulatory Reform. According to Forbes, Icahn’s net worth is $21.6 billion. Now 80, Icahn has a long history with Trump dating back to the early 1990’s when Icahn helped Trump retain power and some ownership of the Trump Taj Mahal in Atlantic City. Icahn bailed Trump out of huge debt and for a while the Trump Taj Mahal was profitable.
Trump owed billions of dollars in non-casino loans and he had to give up his private jet and mega-yacht. Trump was forced to limit his personal and household spending to $450,000 a month. Trump was ultimately grateful to Icahn:
“I have a lot of stuff right now that I would never have if it wasn’t for Atlantic City…I walked away with a fortune”.
Icahn became infamous in the 1980’s for hostile corporate takeovers. In 1985, he won control of the now defunct Trans World Airlines (TWA). He stripped its assets and pocketed nearly $500 million in profit, leaving the airline with more than $500 million in debts. Former company chairman C.E. Meyer called Icahn “one of the greediest men on earth”.
Icahn favors rolling back government regulations. He has publicly complained about the costs his refinery investments face to comply with renewable-fuel mandates. Icahn will be in a position to shape rules affecting businesses in which he has a stake. Icahn Enterprises includes Hertz, the rental car agency, and Herbalife, a personal-care provider. Icahn also has stakes in industries including railroads, casinos, hotels, tires, and oil.
Icahn has conflict-of-interest issues just like Trump. For being rapacious and cold-blooded, he gets a “2”. You don’t make $21 billion without crushing people. Remember Honore de Balzac: “Behind every great fortune lies a great crime.”
Trump ran as an outsider and a change agent but his appointees show that is nothing but a false image. The Cabinet and his picks are a collection of Masters of the Universe. The 17 people Trump has picked for his cabinet or for posts with cabinet rank are, together, more wealthy than the poorest 43 million American households combined. The idea that billionaires will maintain concern for the needs of everyday Americans is like belief in Santa Claus.
To quote John Maynard Keynes:
“Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of motives, will somehow work for the benefit of us all.”
While not all of Trump’s appointees must be approved by the Senate, it will be interesting to see if white collar crimes and excesses are even looked at.
Jonathan P. Baird 
Hey Jon,
I am not sure how valuable this feedback is, but I actually had a very loose run-in with Ross for one of his other investments that you might find interesting.
I worked for a steel company (http://www.ltvsteel.com) in their integrated production (coke to steel) in Cleveland, OH. Same operation that set the river on fire and had plants all throughout the rust belt.
Unfortunately, they were getting beat up in at least 3 different directions (cheaper mini-mills in right-to-work south, import dumping from russia, and some serious legacy liabilities accrued over the decade. They had already gone chap 11 in the 80’s, but that did not help things much. Just as I was graduating with a nice offer in hand, LTV declared chapter 11 again and this time it was expected to be a full shut-down with bleak prospects.
For about 3-6 months, the mood was pack-up and go home. The complexities of an integrated mill appeared not worth the risk. Instead the thinking was let production shift south and/or overseas and let these giant bloated messes die on the vine.
But Ross came in and purchased the company at bargain basement prices and used the liquidation to remove much of the liabilities and create a much stronger balance sheet. Allowing for the company to be successful. He then used that expertise to do the same for Bethlehem steel as well. At the time they were the #2 and #3 biggest steel producers in the country.
I am not an advocate for Ross and not sure any of this affects you score. He is a bottom feeder, probably no the only one, he was able to do significant harm to the local unions with his leverage, I am not sure the environment improved, etc.
I will just say that most of the plants he saved still operate (sold it to ArcelorMittal) today and employ several thousand workers. They are all in those Trump states that surprised Hillary. I have many people in my network who will raise a glass to Ross for what he did to their jobs, the company and their community. I suspect it is that narrative that Trump i leveraging and I can see the power in it.
Cheers,
JC
Josh, that is a really interesting story. In fairness, I would certainly acknowledge the other side and it is good those jobs still exist. Since Ross is now a nominee, his whole history should get looked at. In a career as long as his I am sure there are good aspects. I just think that as a nominee the dark side needs to be considered. I cynically doubt it will be.
I could not agree more. There are aspects about the guy that are really strange. I would suggest you don’t dive too deep into how he view macro economics of foreign trade.
I think if you look at the actions of capitalists who take distressed assets like Ross does, you will find they build a pretty self-serving narrative that focuses on the upside like I did, and avoid all the the external costs they imposed. Sometimes in balance their actions are positive (perhaps in steel), but I suspect more often the juice is worth the squeeze.
It would be nice to see both sides interrogated fully.
Wouldn’t it be cool if DJT tweeted that you were overrated and sad …
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OH my gosh, Jonathan – this is all so upsetting.
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