NATIONAL
Working for Trump only pays if you’re a white Wall Streeter
NEW YORK CITY (Sept. 16, 2016) — It’s well-documented that if you work for Donald Trump, there’s a good chance you won’t get paid. That’s a pretty big deal to everybody — except the rich Wall Street financiers trying to help get him elected.
Seven of the 13 white men on Donald Trump’s economic team are hedge fund managers or Wall Street bankers who made billions off of the housing crisis, and by taking advantage of bankruptcies, and/or investing in companies that price-gauge lifesaving medicines and put workers’ safety at risk. They speculate on risky enterprises and take advantage of government programs designed to repair the destruction left by high-risk lending.
Meanwhile, the folks who work at Trump’s hotels and resorts are people just like you — and here’s what they’ve gotten: “Less pay. No respect. More abuse.”
Like Trump himself, his economic advisers are focused on maximizing short-term profits for themselves, at times at the expense of the health and well-being of working people. They have shown no interest in developing stable jobs for working people. What kind of an economy can we expect from them?
Andrew Beal is founder and chairman of Beal Bank and various other companies. He has benefited from using aggressive debt collection tactics on Small Business Administration loan recipients in default who received their loans after a massive hurricane.1 He says he hates big government and regulation, but uses FDIC-insured bank deposits to make high-risk loans.2 Most of his bank’s deposits come from Wall Street firms.
Thomas J. Barrack Jr. made billions from the savings and loans crisis in the 1980s and in 1991 by buying up bad real estate loans cheaply and then selling them back to the original owners at a much higher price.3 There have been numerous complaints from renters that Colony American Homes, one of the companies owned by his private equity firm Colony Capital, is a slumlord.4 His investments in an Atlantic City casino property 5 ended with a mortgage default and ownership transfer. Future owners eventually would lay off more than 200 workers and cut the pay of nearly 500 others in half.6
Stephen M. Calk, founder and CEO of the Federal Savings Bank and National Bancorp Holdings. CitiMortgage sued him for selling it 18 loans that were based on inaccurate underwriting documents; CitiMortgage further claimed that Calk dissolved Chicago Bancorp in order to intentionally avoid paying what it owed CitiMortgage. A federal judge awarded summary judgment in favor of CitiMortgage on nine of the 11 loans disputed in an earlier lawsuit.7
Steven Feinberg owns private equity firm Cerberus and exemplifies the worst of hedge fund and Wall Street practices. The firm has been involved in buying foreclosed homes during the financial crisis to operate them as rental properties. Through its First Key Lending affiliate, Cerberus also provides “landlord loans” to real estate funds to buy single-family homes with a view to securitizing the loans.8 Housing advocates worried that landlord loans from private equity firms such as Cerberus “could fuel the purchase of homes by investors ill-equipped to manage rental properties.”9
Steven Mnuchin, CEO of Dune Capital Management, cashed in on the housing crisis, leading an investment group that bought bankrupt mortgage lender IndyMac from the FDIC for $1.65 billion and sold it five years later for $3.4 billion. IndyMac was a major seller of subprime mortgages that didn’t have income verification requirements.10 The FDIC covered 80% of the losses when IndyMac mortgages failed ($15.4 billion). OneWest, IndyMac’s successor, then foreclosed and sold the houses, and evicted more than 35,000 residents, disproportionately minorities.11
John “JP” Paulson is the founder and manager of a hedge fund that invests in companies like Mylan Pharmaceuticals, which increased the price of lifesaving EpiPens® by 450% in the past eight years.12 As a major investor in Mylan Pharmaceuticals, John Paulson has been profiting from Mylan’s significant price increases due to its near monopoly control of the device.13 In 2007, he made $10 million in one day by using credit default swaps to short the subprime mortgage market.14
Wilbur Ross is the founder and manager of a private equity firm that specializes in investing in distressed companies, often buying them out of bankruptcy. Private equity firms, generally, often rely on voiding union contracts, discharging legacy health care costs and then getting the Pension Benefit Guarantee Corp. to take over the company’s pension liabilities.15
In 2004, Ross worked with A.T. Massey Coal to acquire coal mines operated by Horizon Natural Resources. The investment group acquired the nonunion assets of Horizon, but declined to acquire the union mines. Eventually, 1,000 active and 2,300 retired union miners lost their benefits, including some sick from black lung disease. A Ross company owned and operated the Sago Mine in West Virginia where an explosion killed 12 miners in 2006, after ignoring 202 safety violations the previous year.16
1. George Anders, Maverick Banker in Texas Chases Distressed Assets, The Wall Street Journal, Jan. 13, 2005.
2. Anthony Effinger, Beal Becomes Billionaire with FDIC Assets as He Tops Poker Pros, Bloomberg Markets, June 29, 2011.
3. Shawn Tully, I’m Tom Barrack and I’m Getting Out, Fortune, Dec. 31, 2005.
4. www.huffingtonpost.com/2013/10/25/wall-street-landlords_n_4151345.html; http://colony-american-homes.pissedconsumer.com/.
5. Donald Wittkowski, Lenders and Resorts Atlantic City Agree to Takeover Deal, Press of Atlantic City.com, Dec. 9, 2009.
6. Dennis Hevesi, Denis Gomes, Operator of Casino in Atlantic City, Dies at 68, The New York Times, Feb. 25, 2012.
7. Lisa Brown, CitiMortgage Seeks $4.5 Million in Lawsuit Against Chicago Bankers, St. Louis Post-Dispatch, July 21, 2014.
8. Matthew Goldstein, Equity Firms Are Lending to Landlords, Signaling a Shift, The New York Times, March 3, 2015.
9. Matthew Goldstein, Equity Firms Are Lending to Landlords, Signaling a Shift, The New York Times, March 3, 2015.
10. Los Angeles Times.
11. The New Republic; https://badbankmerger.com/maps/.
12. The Daily Beast.
13. The Daily Mail UK.
14. Wall Street Journal.
15. Lewis, Elizabeth. “A Bad Man’s Guide to Private Equity and Pensions.” Edmond J. Safra Research Lab Working Papers, No. 68, June 19, 2015. See also: Appelbaum and Batt, “Private Equity at Work: When Wall Street Manages Main Street” Russel Sage Foundation (2014) p. 299.
16. New York Times; New York Times.
AFL-CIO Now contributed to this report.
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