Trump Treasury pick cultivated close ties to police while running “foreclosure machine”

by Gin Armstrong and Kevin Connor

Trump’s pick for Treasury Secretary is Steven Mnuchin, a former Goldman Sachs executive and hedge fund manager. Mnuchin has been receiving critical coverage for his role as chairman of OneWest, a California lender that became notorious for its predatory foreclosure practices, which disproportionately affected communities of color.

His close ties to the Los Angeles Police Department also deserve more scrutiny – and reveal mechanisms through which Wall Street curries favor with the police.

Continue reading Trump Treasury pick cultivated close ties to police while running “foreclosure machine”

Spotlight on LittleSis User Maps: A Guide to the St. Louis Development Corporation

This week, we’re highlighting a map created by LittleSis users in St. Louis. The map below was created by #TeamTIF St. Louis, a group organizing to challenge the city’s tax incentive system and the ways it which it drives racial inequity. The map focuses on the St. Louis Development Corporation, which determines how the city doles out tax incentive packages to developers. The map provides an overview of sub-committees, points out members with financial stake in recent development deals, and highlights how three of the most powerful boards share almost identical memberships. TeamTIF hopes that the map’s release furthers city residents’ understanding of the public bodies involved in the decision making process and spurs more investigation.

Trump’s Billionaire Club, Part 2: Stephen Schwarzman

Donald Trump’s vague campaign promises to take on the power structure – and some nervousness, from the power structure, about his erratic behavior and racist appeals – have given way to a remarkably close alliance between Trump and financial elites following his election.

The stock market has rallied to all-time highs. Trump has tapped billionaires and mega-millionaires for cabinet seats and key appointments. Hedge fund managers and corporate CEOs are cheering Trump on from the sidelines, eager to reap the spoils from his favored economic policies – deregulation, privatization, and tax cuts. In essence, a new club of financial elites is forming, with Trump at the center, and varying levels of access and benefits conferred upon members.

It will be important for journalists, organizers, and researchers to investigate and map these networks in the months and years ahead. Who belongs to this emergent club? What are their networks – political, business, investment, philanthropic, social? How are they benefiting – or poised to benefit – from Trump administration policies? This kind of research can lay the groundwork for challenges to the power structure that surrounds and enables Trump.

This is the second installment in our Trump’s Billionaire Club series. The first, on John Paulson, is here. If you are interested in contributing research to this project, sign up here.

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Trump’s Billionaire Club, Part 2: Stephen Schwarzman

By Gin Armstrong, Aaron Cantú, and Molly Gott

Stephen Schwarzman is the private equity billionaire in charge of Donald Trump’s Strategic and Policy Forum, a group of CEOs who will advise the president-elect on economic policy.

Schwarzman has known Trump for years, but did not publicly support him during the campaign. Now, however, the president-elect is leaning on him heavily for help in lining up the support of Wall Street and corporate America. The panel is very much Schwarzman’s: he is the chair of the panel and also picked all of its members. That selection process culminated with Trump exclaiming “What terrific people!” as detailed in this interview.

In this role, Schwarzman will have a direct line to the President and could have a heavy hand in influencing the administration’s policies. He is already very excited about the policy inclinations of the new administration; at a recent Goldman Sachs conference, he predicted a coming wave of deregulation and tax cuts that would change the “architecture of the world.”

These policies could also make Schwarzman even more wealthy. He is the CEO of the private equity firm Blackstone Group, a massive investment vehicle which generates profits in large part through the strategic avoidance of taxes and regulatory oversight (more about his investment empire is below). If Trump and Schwarzman have their way, this will get even easier, and even more profitable. Not that he needs the money – he made $811 million in compensation last year, and is worth $11.1 billion.

Schwarzman shares some key personality traits with the President-elect: unabashed lavishness, offensive analogies, and a taste for real estate. One Slate feature on Schwarzman – “The Golden Ass” – described him as a “titan of self indulgence” and detailed his love of $400 stone crabs and his strict no-squeaky-rubber-soled-shoes policy for his house staff. When he threw an infamously luxurious party for his 60th birthday party, Donald and Melania Trump were among the guests. The $3 million dollar affair treated guests to performances by Rod Stewart and Patti LaBelle and a large portrait of Schwarzman, which usually hangs in his living room, was on display.

Epitomizing the wisdom that money cannot buy class, Schwarzman equated the timing of a 2008 business deal to being a “noodle salesman in Nagasaki when the atomic bomb went off.” In 2010 he compared President Obama to Hitler over a potential tax increase on private equity firms like Blackstone. He eventually apologized for that one, calling it an “inappropriate analogy.”

As for real estate, Schwarzman told The New Yorker; “I love houses. I’m not sure why.” The billionaire has acquired over $100 million in personal property around the world including estates in East Hampton and Saint-Tropez, a beachfront villa in Jamaica, and a sprawling Park Avenue apartment that was once owned by John D. Rockefeller Jr., where his neighbors include Steven Mnuchin, Trump’s Treasury Secretary. He also has a 11,000 square foot mansion in Palm Beach, a favorite location among his finance industry colleagues, where he was busted for using 7.4 millions gallons of water during a record dry season in the region.

Continue reading Trump’s Billionaire Club, Part 2: Stephen Schwarzman

Trump’s Billionaire Club, Part 1: John Paulson

Donald Trump’s vague campaign promises to take on the power structure – and some nervousness, from the power structure, about his erratic behavior and racist appeals – have given way to a remarkably close alliance between Trump and financial elites following his election.

The stock market has rallied to all-time highs. Trump has tapped billionaires and mega-millionaires for cabinet seats and key appointments. Hedge fund managers and corporate CEOs are cheering Trump on from the sidelines, eager to reap the spoils from his favored economic policies – deregulation, privatization, and tax cuts. In essence, a new club of financial elites is forming, with Trump at the center, and varying levels of access and benefits conferred upon members.

It will be important for journalists, organizers, and researchers to investigate and map these networks in the months and years ahead. Who belongs to this emergent club? What are their networks – political, business, investment, philanthropic, social? How are they benefiting – or poised to benefit – from Trump administration policies? This kind of research can lay the groundwork for challenges to the power structure that surrounds and enables Trump.

This piece, on Trump donor John Paulson, is our first contribution to this effort. If you are interested in contributing research to this project, sign up here.

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Trump’s Billionaire Club, Part 1: John Paulson

By Gin Armstrong and Molly Gott

While Donald Trump was campaigning for president, many prominent Wall Street Republicans refused to publicly support him. One notable exception was John Paulson, the billionaire hedge fund manager famous for making $4 billion by betting that the housing market would collapse in 2007. Paulson is the founder of Paulson & Co., a New York City-based hedge fund that manages nearly $20 billion in assets. When Paulson aligned himself with Trump, he made perhaps the biggest bet of his career.

Now that bet is likely to pay off. Paulson is positioned to wield a great deal of influence over the Trump administration, and he has a wide range of business interests that could benefit from a Trump presidency.  He may also serve as a key bridge between the Trump administration and its Democratic opponents during upcoming legislative battles, since he is one of the top all-time donors to Chuck Schumer, the leader of the Senate Democrats.

For all these reasons, Paulson deserves a great deal of scrutiny in the months and years ahead.

Over the course of the last year, Paulson supported Trump in at least three key ways. Most tellingly, he joined Trump’s economic advisory team, positioning himself to most effectively influence economic policy in his favor. He also donated at least $330,000 combined to Trump’s presidential effort, the Republican National Committee and the National Republican Congressional Committee. And last June, he hosted a lavish campaign fundraiser at the chic La Cirque in Midtown Manhattan. The $50,000-a-head entry fee fell just short of the median annual income for a household in the United States. As a host Paulson paid $250,000.

Trump and Paulson have a long-standing relationship. The president-elect is an investor in three of Paulson’s funds, and kept $15 million there even as the hedge fund manager realized significant losses in recent years. According to his financial disclosures with the FEC, Trump made anywhere from $300,000 to $3,000,000 in profits from those funds.

Before joining Trump’s economic advisory team, Paulson was perhaps best known for making more than $4 billion in profits by betting against subprime mortgages during the 2007 housing market collapse. Much of this profit was the result of a rigged bet manufactured by a few well-connected players, including Goldman Sachs. Paulson and his staff worked with banks to create packages of subprime mortgage securities (known as Collateral Debt Obligations or CDOs) that were known to be bad and thus designed to fail. The banks then sold those bad CDOs to unsuspecting (i.e. less connected) investors so that Paulson could bet against them.

More recently, Paulson has set his sights on Puerto Rico. Paulson & Co. is one of dozens of “vulture funds” that bought up Puerto Rican debt with the hope of profiting off the island’s economic crisis, which has spurred massive cuts to healthcare and public transportation services, as well as the closure of 100 schools.  Paulson himself has been the most outspoken advocate of turning Puerto Rico into a luxurious tax haven for the 1%.

While Puerto Ricans are leaving their homes for the mainland at a historic rate because of worsening poverty and unemployment, Paulson is attempting to lure millionaires to the island. In 2014, he co-organized a conference aimed at convincing the ultra-wealthy to move to there. It emphasized not only Puerto Rico’s generous tax loopholes for the super-rich, but also its other amenities, including white-sand beaches, pleasant temperatures year round, luxury apartment buildings, and private international schools that send their students to Ivy League colleges. In his presentation, he predicted that Puerto Rico would become “the Singapore of the Caribbean,” referring to the infamous Asian tax-haven. Hoping to cash in on the influx of millionaires, Paulson has bought up several luxury hotels and condo developments on the island.

Now, Paulson is hoping his bet on Trump will pay off in the form of a newly-lucrative stake in Freddie Mac and Fannie Mae. The mortgage giants were bailed out by the government in 2008 at the ultimate cost of $187.5 billion. The Obama administration later changed the bailout terms so the government received most of the companies’ profits. For years, Paulson and other shareholders have lobbied for some of the profits that are currently going to the U.S. treasury to go to shareholders instead. Freddie Mac and Fannie Mae shares surged after Trump was elected amidst speculation that Trump would enact Paulson’s favored policy plans.

At this point Paulson has even more reason to feel optimistic. The very day Steven Mnuchin was named to head the Treasury Department he suggested that Freddie Mac and Fannie Mae should be privatized. Paulson and Mnuchin are business partners whose dealings go back to at least 2009 when they pooled resources with other wealthy elites to buy up IndyMac, a failing lender in California, and turned into foreclosure machine OneWest. OneWest foreclosed on at least 36,000 homes in California under Mnuchin’s watch.

See more details on Paulson, his network, investments, and investors below. More in-depth information is also available on the LittleSis pages linked below. Continue reading Trump’s Billionaire Club, Part 1: John Paulson