Has Donald Trump just added to the Washington ‘swamp’?

Kyran Fitzgerald says that rather than drain the swamp as he promised in his election campaign, Donald Trump will actually bring more alligators with him next month.

‘The Donald’ is assembling his posse and they are headed soon for town. Among the next President’s top hired hands will be that grizzled old gunslinger, Wilbur Ross and a younger lieutenant, Steven Mnuchin.

You have a few crew-cut military types thrown into the mix along with a couple of ladies and the stately white haired vice-president, Mike Pence, for good measure.

It’s going to be quite a party when this lot reach the White House, late in January.

Wilbur Ross looks to be the sharpest tool in Mr Trump’s box. He has arrived late at the political high table as Secretary of Commerce having just entered his eightieth year. We in Ireland remember him well. He was one of a small group of ‘bottom fishers’ who came calling on Dublin a few months after our hapless rulers had been frogmarched into an EU/ IMF bailout and it seemed like the citizenry were facing into generations of penury.

Mr Ross joined up with a Canadian financier, Prem Watsa, founder of Fairfax Financial Holdings, to lead a group which took a 35% stake in Bank of Ireland. It was hailed as a vote of confidence in our battered country where a fire sale of epic proportions was underway. The pressure to offload Irish-owned assets at breakneck speed was led by the Troika and in particular, by our old friends the European Central Bank.

Wilbur eventually offloaded his personal stake in the bank, in two tranches, making a hefty turn on his investment of around €500 million. Prem Watsa also fared very nicely, but then so did a US West Coast fund outfit, Franklin Templeton, which invests in unloved sovereign bonds. Its director, Michael Hasenstab, was bullish on Irish bonds from very early on.

He eventually left carrying a much bigger stack of bank notes than the bundle he had arrived with. Before long, property investors such as Kennedy Wilson streamed in, with longer term investment in mind, while elsewhere, householders discovered more about life under the sway of a US vulture fund.

Wilbur’s Irish good fortune attracted brickbats not least from politician/columnist, Shane Ross, another late arrival to Government service. As he put it, in June 2014: “Wilbur has twice taken us for a ride recently.”

Michael Noonan, however, will handle Wilbur more gently. Much Irish hope is invested in this man. He knows us. He will be our friend. We hope.

Wilbur has certainly been around. The son of a teacher and a judge, he was educated in Yale and then in Harvard. He considered life as a fiction writer before coming to his senses. A summer internship in Wall Street was followed by a move to the dark side.

Wilbur spent two decades heading Rothschild Inc’s bankruptcy advice business. Fatefully, in the early 1990s, he represented investors in Donald Trump’s failing Taj Mahal casino. Mr Ross and fellow financier, Carl Icahn convinced bondholders to reach a deal with Mr Trump allowing him to retain control of the property.

Later, he launched Wilbur Ross & Co, acquiring the $200m Rothschld investment fund and with a further $250m from investors, he began his true life’s work — picking up ailing companies for a song. Mr Ross poured millions into struggling steel, coal, and textile companies, his most notable deal being the creation of the International Steel Group out of LTV Steel, Acme Steel, and Bethlehem Steel. This was later sold for $4.5 billion to Arcelor Mittal, netting $260m for Wilbur and his investors.

Wilbur personally netted $210m after he floated and later sold on the International Coal Group. Ten years ago, 12 miners suffocated at a mine owned by ICG in West Virginia, causing controversy.

What cannot be denied is the operational skills displayed by Mr Ross. He has moved into steel and textile plants completely remodelling the plants, introducing much greater specialisation. Jobs have been shed, but some have been retained, against the odds. Along the way retirement packages have been hit, but the shuttering of plants was largely avoided. President-elect Trump will be counting on Mr Ross to display such turnaround skills across the sunset industry states and regions whose votes have helped propel him to the White House.

Wilbur will no doubt be expected to mentor the younger gunslinger in the form of incoming Treasury Secretary, Steven Mnuchin, a New Yorker, ex-Goldman Sachs manager and long-term supporter of Trump.

Mr Mnuchin’s father was also a partner in Goldman Sachs. As a student at Yale, Steven reportedly drove a Porsche while running the college newspaper. He worked at Goldman Sachs between 1985 and 2002, heading up its mortgage backed securities division. Lending of this kind was a feature of the US property bubble.

Mr Mnuchin’s big move came when he teamed up with George Soros. The two men set up a business, SFM Capital Management, focusing on risky debt. A year later, they founded Dune Capital Management entering the world of entertainment. Its subsidiary, Rat-Pac Dune, alongside Twenty First Century Fox, backed Avatar, one of the highest grossing films of all time. American Sniper was among other high earner movies backed by them. In 2009, Mr Soros, Mr Mnuchin and top investor, John Paulson, acquired failed Californian lender, Indymac from the state rescue agency, the FDIC.

Renamed ‘OneWest’, the bank was heavily criticised over its handling of problem loans. It was later sold off for almost $3.5bn, netting a big profit for the investors.

While Mr Mnuchin’s main film company continues to thrive, another entertainment company he was involved in, went into a Chapter 11 bankruptcy process last year, leaving investors heavily out of pocket. But this has not put a halt to his gallop.

The incoming Treasury Secretary has indicated that a reduction in the US corporation tax rate to 15% is his key priority — not good news from an Irish perspective.

The goal is to restore Reaganite economics as part of ‘Making America Great Again’. Wilbur and Steve may not have their badges just yet , but there should be nerves a plenty in the weeks ahead as we await the arrival of these corporate sharp shooters in town.

Donald Trump promised to drain the Washington swamp. Some Democrats suggest that instead, he has brought more alligators with him.

More on this topic

Impeachment probe hears of Gordon Sondland’s role on UkraineImpeachment probe hears of Gordon Sondland’s role on Ukraine

Democrats hold on to Louisiana governor’s seat despite Donald Trump’s best effortsDemocrats hold on to Louisiana governor’s seat despite Donald Trump’s best efforts

Donald Trump undergoes health check-upDonald Trump undergoes health check-up

Donald Trump overheard demanding Ukraine investigations, impeachment probe toldDonald Trump overheard demanding Ukraine investigations, impeachment probe told


Lifestyle

About 70% of our planet is covered in water, in one form or another and it is vital to our survival.Appliance of science: Where does water come from?

Touched by the last rays of the sun, the grey mud of the estuary is dimpled with silver pools. Above them, rooks fly in their thousands, rooks uncountable, on different levels of the air.Interplay of rooks above Cillmanister a lovely mystery

A NEW survey confirms the presence of at least six rare spiders in Killarney National Park.Six rare spiders found in Killarney National Park

IT WAS written about an old ruin in Co Wexford but it may as well have been written for any other place.Islands of Ireland: Cows come home to Inishbarra

More From The Irish Examiner