One leading theory behind the triumph of presumptive Republican presidential nominee Donald Trump is that voters are attracted by the promise of having a successful businessman running the country. Government needs the discipline and accountability that only a take-no-prisoners CEO can provide, someone uniquely focused on, well, making America great again.
There’s a lot wrong with this theory: government isn’t a business, for one. But to accept it, you must first agree that Donald Trump is a successful businessman, which he’s said enough to will the nation into believing it. A cursory examination of just one part of Trump’s corporate empire reveals that he’s more like a late-night infomercial charlatan, exploiting the weak and the vulnerable for his own devises. He’s also not all that good at it.
If you were to pick the worst possible time in American history to start a mortgage company, April 2006 would get a lot of consideration. That’s when The Donald held a press conference at Trump Tower for Trump Mortgage, right at the peak of the housing bubble. Just one month later, Ameriquest, one of the largest subprime lenders in the country, closed all its retail offices, an early warning of the collapse to come.
But that April, Trump was characteristically upbeat, vowing that Trump Mortgage would become the nation’s top home lender. He told Maria Bartiromo, “I think it's a great time to start a mortgage company,” adding, “who knows about financing better than I do?”
Trump hired as chief executive of Trump Mortgage a man named E.J. Ridings, a friend of his son Donald Jr. Ridings boasted on the corporate website of being a “top executive at one of Wall Street's most prestigious investment banks” with 15 years of financial industry experience. All of that turned out to be false; he was a registered stockbroker with Dean Witter Reynolds for a total of six days, and an entry-level loan originator at a boutique mortgage company for a little over a year. Ridings gamely ignored the embarrassing disclosures, telling Money magazine, “Trump Mortgage is going to be huge.”
Six top executives left Trump Mortgage in the first six months. An initial sales goal of $3 billion in the first year was soon downgraded to under $1 billion. By August 2007, Trump Mortgage closed, one of hundreds of failed lenders in the wake of the housing crash. Unsurprisingly, Trump distanced himself from the implosion, saying he only licensed his name to it, and that “the mortgage business is not a business I particularly liked or wanted to be part of in a very big way.”
Despite that coolness, Trump allowed his name to be licensed by First Meridian Mortgage for a second company, renamed Trump Financial. That too went out of business; the company reverted back to its original name. Like most mortgage originators in the U.S., First Meridian created mortgages that were later sold to large banks, including IndyMac. Some of those large banks allegedly employed “robo-signers” who created questionable paperwork for those mortgages, and at least one robo-signer working on behalf of IndyMac created mortgage assignments in the name of Meridian Mortgage. It is not clear if Meridian was aware of the creation of the new mortgage assignments, and Meridian denies any involvement in the process.*
Trump was not done with the mortgage collapse, however. Twenty years earlier, he helped save a woman’s farm from foreclosure. But a remarkable Los Angeles Times column in December 2007 shows that Trump saw the latest iteration of foreclosure crisis not as a tragedy, but a business opportunity.
Trump University, The Donald’s learning institute, touted in ads that “investors nationwide are making millions in foreclosures… and so can you!” David Lazarus, the Times author, attended a free seminar about the scheme (which was only a preview of a 3-day workshop costing $1,495). The instructor, himself a foreclosure victim, explained that students should scoop up soon-to-be-foreclosed properties from homeowners at a discount, and sell them to another buyer at a higher price, making a fortune.
This would be pretty terrible advice in normal times for anyone without a high level of working capital, in case they get stuck with one of the properties. But it’s completely insane advice to give in late 2007, when foreclosures were everywhere, buyers scarce, and nobody in their right mind would pay high prices for a foreclosed property. People who followed this tactic would be guaranteed to fail.
And that’s apart from the moral atrocity of seeing a flood of foreclosures and immediately thinking of a way to get rich off it. “There are unbelievable opportunities for making money,” Trump himself told Lazarus. “There are very few buyers and lots of sellers,” he added, inadvertently explaining why a scheme predicated on eventually selling a home to another buyer is doomed.
Trump University held seminars and workshops like this all over the country as the foreclosure crisis raged, making $40 million in revenue from 2005-2010, $5 million of which went to Trump himself. Multiple allegations that Trump University ripped off clients led to three separate lawsuits, one by New York Attorney General Eric Schneiderman and two class action suits in California. In fact, Trump will likely have to take the witness stand in one of these trials later this year; he already delivered a pre-trial deposition, which one plaintiff has used to prove that the GOP front-runner threatened to put her into financial ruin if she continued to pursue the case.
Practically everything that might concern you about a Trump presidency is available in these interlocking stories. There’s the poor instinct and business acumen; the partnerships with lying con artists and cronies; the denial of accountability for failure; the preying upon the weak, whether foreclosure victims or poor dupes that took his seminars; and the open threats of retaliation. And you can go beyond the mortgage industry to find these red flags in Trump’s corporate past, with millions in losses and questionable associates. About the only thing Trump is good at is getting on TV, and using that celebrity to license his name around the world.
If we’re going to believe that government would be better run as a business, we should at least look at the business of the man who wants to run the government. And what we end up seeing from Trump’s mortgage and foreclosure dalliances strikes me as so outstandingly awful it would be amusing – if it weren’t coming from someone with an even-money shot at the presidency.
*Correction: An earlier version of this story said that First Meridian Mortgage, a company Donald Trump briefly partnered with, was “subsequently accused of illegally fabricating mortgage assignments to foreclose on properties."Although First Meridian Mortgage and many other lenders were listed in a document published by Lynn Szymoniak, a lawyer and whistleblower who maintains a large archive of fraudulent foreclosure documents, there is no direct evidence that any of these companies—including First Meridian Mortgage—authorized known robo-signers like Bethany Hood and Brian Burnett to assign documents on their behalf. It was never our intention to suggest that First Meridian was accused in a court of law over these issues. Finally, we should not have said that First Meridian directly employed robo-signers. The Fiscal Times regrets the error.