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From the early days of his campaign, one of Donald Trump's rallying cries was to “beware of Wall Street.” But the president-elect’s Cabinet picks of Steve Mnuchin and Wilbur Ross are stalwarts of the financial establishment. Special correspondent Paul Solman speaks with banker-turned-journalist William Cohan about the relevance of their backgrounds and if the president-elect cheats at golf.
But, first, economics correspondent Paul Solman looks at how Donald Trump's long business career, especially his relationship with Wall Street, may be shaping the way he fills top slots in his administration.
Its part of our weekly series Making Sen$e.
DONALD TRUMP (R), President-Elect: I know Wall Street.
The Trump campaign refrain from the get-go: Beware of Wall Street.
I'm not going to let Wall Street get away with murder. Wall Street has caused tremendous problems for us.
And yet, within weeks of winning, the president-elect has let bygones be bygones, raiding the Street for top economic posts in his administration to be, like Wilbur Ross for commerce secretary, a vulture investor to some, a company savior to others, and former Goldman Sachs executive Steve Mnuchin for treasury secretary.
We sought out longtime Wall Street investment banker turned investigative journalist William D. Cohan to put the picks in context.
WILLIAM COHAN, Financial Writer:
Steve Mnuchin and Wilbur Ross are deal guys. They are Wall Street deal guys.
What is a deal guy?
That means that you are very transactional.
In Steve Mnuchin's case, he made his fortune by buying a bank that the FDIC had foreclosed upon during the financial crisis of 2008, renamed it OneWest, and sold it eventually to CIT, that was run by another ex-Goldman banker named John Thain. And they all made billions as a result.
Wilbur Ross did the same thing buying a business that was in the ashes of the financial crisis and, like a phoenix, resurrecting it from the ashes.
But isn't a major reason that Donald Trump got elected the idea that he was the ultimate change agent, that he would disrupt things as they are? So, who better than deal-makers to do that?
Absolutely, the selection of Steve Mnuchin and Wilbur Ross fit into this vision of people who cut through bureaucracy. I mean, you know, one of Trump's great accomplishments is, you know, fixing Wollman Rink in Central Park.
The skating — the skating rink.
The skating rink. Right.
I got together with everybody, the city, the council. Everything had to be done fast. And we got it done. And you can do that with this country.
Is America Wollman Rink? I don't think so.
No, America isn't Wollman Rink, but I think almost everybody watching, and certainly the people who voted for him, have had frustrating experiences with bureaucrats and bureaucracy, private as well as public, pushing them around.
It's really hard to know what a Steve Mnuchin or a Wilbur Ross will do.
I mean, their firms, they're small, 10, 20, 30 people. Now they're commanding battleships. The Treasury has 80,000 people. Commerce has 50,000 people.
You know, you have to start miles away to turn a battleship around. There's nothing in their background, nothing, that would indicate that they would have any skill at running these bureaucracies.
Is there anything in their background or in their personalities that would suggest they can further Donald Trump's populist ambition, that is, serving the people who elected him?
I'm laughing because Steve Mnuchin and Wilbur Ross are about as far from populism as you can possibly imagine. They are the .001 percent of the 1 percent.
And one of the biggest ironies of the fact that he's surrounded himself with all these Goldman Sachs people is that Goldman Sachs — he was on the Goldman Sachs do-not-fly list: This is the kind of client we do not want at Goldman Sachs.
How do you know that?
Because I wrote a book about Goldman Sachs. And I know that, from talking to people at Goldman Sachs, that he is the poster child for the kind of client they don't want to do business with, mainly because he would borrow all this money from Wall Street to build his casinos, and then didn't pay it back.
One big bank that did lend to Trump in recent years was Deutsche Bank, in 2005, to build the Trump International Hotel and Tower in Chicago. Steve Mnuchin's hedge fund also lent money to the project.
In 2008, at the height of the financial crisis, a big payment came due.
We're talking $330 million payment that was due. He just decided he didn't want to pay it. He sued Deutsche Bank, as well as all the other lenders, including Steve Mnuchin's Dune Capital, claiming that he didn't have to pay the money back because an act of God had occurred, this financial crisis, caused by the very people who lent him the money for this project, and, therefore, he didn't have to pay it back.
So, the one firm on Wall Street that would do business with him, he turns around and sues.
Cohan worked on Wall Street for 17 years, and has been writing about it ever since, in bestsellers like "The Last Tycoons," "House of Cards," and that book on Goldman Sachs, "Money and Power."
He's interviewed Donald Trump for magazine articles.
What was he like to interview?
Very charming, very funny. He once, you know, told me I had a great head of hair, like him, by the way.
One thing that I talked to him about was how everybody on Wall Street had told me that he cheats at golf.
So, you mean you asked him, do you cheat at golf?
Of course. I said — of course I asked him, do you cheat at golf? And he said: "No, William, I don't cheat at golf. I'm a scratch golfer," and, of course, "I have all these country clubs that I own. Why would I cheat at golf?"
And you didn't believe him?
No, I didn't believe him, because subsequent to that, a friend of mine was playing with him in a foursome that day and saw him cheat at golf. He shanked the ball off to the right. And then he would sort of parade up the middle of the fairway with his caddy 20 feet behind him, and then say: "Oh, Mr. Trump, Mr. Trump, your ball, I found it. It's right here in the middle of the fairway."
When you're surrounded by yes-men, when you're surrounded by people telling you how great you are all the time, then you lose perspective.
My point is, it's very different running your own private company, where you're the boss, you're the king. There's not even a board of directors. It is Donald Trump all the time. And he's used to telling them what to do, and if they don't do it, he gets very angry and he makes sure that it gets done.
But from the point of view of his constituency, that's not a bad thing, is it?
I think that's a very different skill set than the one that's required to get your policies through Congress at a very divisive moment in American history.
But make America great is about, hey, this country's in trouble. By doing things the old-fashioned way, I'm going to bring in people, deal-makers, who know how to change things dramatically.
And that is the premise that allowed him to stitch together an Electoral College victory.
So, then why isn't it a good thing that he's got Wilbur Ross, Steve Mnuchin and whoever else he gets from Wall Street in his administration?
They may turn out to be just what we're looking for.
And if these Cabinet appointees that he's named, who have this kind of experience about getting things done, and who know how the capital markets work, if they can, all together, do that, then I will be the first one marching at the front of the line to get Donald Trump, you know, reelected and say he turned out to be a lot better than anybody thought.
But as somebody who's known him and reported on him, you're skeptical?
I'm hoping he doesn't turn out to be the guy who cheats at golf.
William D. Cohan, thanks very much.
Thanks for having me.
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