by Greg Palast with Dennis J Bernstein for Nation of Change
Trump desperately needs to get his tiny hands on some cash to fund his presidential campaign. On TV, Trump may play the role of a gazillionaire, but the reality of his reality TV persona is that it’s all paid for with other people’s money. His self-funding pledge is going the way of all Trump’s promises — down the gilded crapper. This week on The Best Democracy Money Can Buy: Election Crimes Bulletin, we focus on where and how Trump is going to get his campaign funds — and the deal he’s made with Wall Street’s devils in order to get it.
TRANSCRIPT (Originally broadcast on June 22, 2016)
Dennis J. Bernstein: All the news is about how Hillary has raised zillions and Donald has a mere one or two million dollars… I thought Donald Trump was a billionaire — he could pay for anything!
Greg Palast: Yeah, that’s the TV show, isn’t it? As he says, he loves debt. So, yes, he has a lot of money, OPM, other people’s money. He’s an OPM addict, an other peoples’ money addict. But as far as using it for himself, there’s very good reason he doesn’t have close to what he’s talking about. So just like bank robbers, he’s going where the money is.
DB: He’s got some cagey friends?
Palast: Yes. The guy who is now raising money for the guy who doesn’t supposedly need it and who said he will self-finance his own campaign. Where would you go if you needed to suddenly get bazillions and millions of dollars as a politician? It’s a quiz. What’s your answer?
Three, two, one… too late, Bernstein! It’s Goldman Sachs!
If you want golden sacks you need Goldman Sachs. So he went to a guy named Steven Mnuchin who came out of Goldman. Mnuchin thenwent to a guy named Tony Scaramucci, who is another billionaire hedge fund manager, and they put together a team. They decided to have a lunch to raise a couple bucks for their good buddy, Donald, their billionaire bro… or at least one with his name on a used jet.
By the way, the reason why he has that big jet is that it’s a lot cheaper than a Gulfstream — I’m not kidding!
DB: He got it at a flea market?
Palast: Yeah, he literally got it at a bankruptcy sale. By the way, I think Hillary should release her transcripts of her talks at Goldman Sachs — but so should Donald. ‘Cause how did he get Mr. Mnuchin there? Is it because he has made racist comments about Mexican-Americans? Is it because he has said he won’t allow Muslims into the nation? Is it because he thinks students should be armed going to school?
No! It’s because, until now, Donald Trump has been against something called the carried interest tax break.
Since Trump clearly isn’t a billionaire, and he doesn’t have a hedge fund, this is not his tax loophole. The billionaire hedge fund guys — whom he’s previously called “overrated sharks, who get away with murder and don’t pay their taxes” — Trump was for closing their big tax loophole. The “carried interest” loophole cuts their tax enormously, by literally $170 billion over 10 years. No kidding.
The biggest beneficiary of that tax break is a guy named John Paulson. Don’t confuse him with a Goldman guy named Hank Paulson, who was W Bush’s Secretary of the Treasury. This is John A. Paulson, okay? I’ve been hunting down this little vulture for years. In fact, I found him. Ms. Badpenny, my chief investigator and I, we showed up at a thousand-dollar-a-plate fundraiser in our cool speed boat. I kid you not. We looked like we were part of the crowd and got in, and then I confronted Mr. Paulson.
DB: Where was this?
Palast: This was in the Hamptons last summer.. By the way, if you want to have dinner with Paulson at one of his six homes — he has the biggest house in Manhattan, 28,000 square feet, and the most expensive property in the Hamptons, called Old Trees… At one of these properties–the Secret Service says he’s not allowed to say which—Paulson is holding a luncheon for Trump. If you want to break bagels or bread with JP as a co-host, you have to put up $250,000.00 to even put your tookiss in the chair—money that goes to Trump’s campaign.
DB: Does that come with dessert?
Palast: That’s probably another $250,000.00. It’s a quarter-million dollars to walk through that door as a co-host with JP and his billionaire buddies.
It’s going to be a Vulture’s Picnic as a matter of fact. You are going to have JP and you’re going to have Steve Feinberg from Cerberus Capital. If you’re wondering how they came up with the name for this hedge fund, to give you an idea of how they operate, their name Cerberus refers to the mythical three-headed dog from Hell.
DB: Speaking of JP, just for a little back ground, how did he make his money?
Palast: Remember when the mortgage market went over a cliff? John Paulson’s the guy that gave it a push. What he did, in coordination with Goldman Sachs, you’ll love this… He bet that billions of dollars of mortgages in America would go bad. That’s what he is credited with doing. So he’s supposed to be3 a smart guy, betting that the mortgage market would fall apart.
But that’s not exactly what he did. JP and Goldman went to pension funds in Europe and said, “We think the mortgage market is going to come back to life, and if you insure all these mortgages, you’re going to make billions and billions of dollars.” So all these schmucks from Europe bought insurance on mortgages through a special security created by Goldman Sachs and John Paulson.
Goldman said, “By the way, if you’re wondering if these things are really going to take off, John Paulson is going to bet alongside you, bet that the mortgages will rise in value. JP’s even going to insure the worst mortgages.”
Well, what Goldman didn’t say is that actually John Paulson was not going to invest with these guys, he was investing against them. They were giving out insurance, billions and billions and billions of dollar of insurance, on mortgages in the U.S. with the mortgage market about to collapse. Paulson was the secret beneficiary of the insurance.
Think about this, it’s as if an arsonist got people to buy fire insurance and he is the secret beneficiary of a building he knows is going to burn down. So when the mortgage market started collapsing, JP’s hedge fund made $14 billion dollars. JP personally pocketed $5 billion on this scam.
The Securities and Exchange Commission – that’s the finance police, right – they imme-diately busted his French assistant, who translated JP’s sales pitch into French for the Swiss bankers. They grabbed JP’s assistant, and they nailed him for translating the pitch.
Everyone assumed that JP is going to go to jail. But what happened was JP hired the previous chairman of the Securities and Exchange Commission, who wrote the charges against the French kid and wrote a charge against Goldman Sachs. He said every time that Goldman Sachs and the French kid lied, Paulson was out at the boys room. I’m not making this up. So Paulson was completely let off the hook. He didn’t have to pay a fine. Goldman paid a half-a-billion dollar fine, which for Goldman is couch coins, and the French kid lost his stock trading license.
So Paulson has $5 billion, and then this carried interest tax loophole saved him $1.2 billion on that $5 billion dollar take down.
DB: And this is the uniting loophole that would bring JP together with Trump on their way to this fundraising dinner. Are you going to go to that by the way?
Palast: I did try… I did get to Old Trees, that is, I shot a drone over JP’s estate — I really did! I had a drone team. I didn’t do this illegally, I got clearance from the FAA to fly over Old Trees. Then I tried to get to his place through David Koch’s property — that didn’t work either. That’s when I snuck into another fundraiser he was at and confronted him.
By the way, when the mortgage market started collapsing and he started collecting from all these banks, the regulators told the banks to stop giving out mortgages or insuring mortgages. In other words, the mortgage market was sliding, but JP pushed it way over the cliff. And when he pushed it over the cliff, JP shorted the stock of the banks that he knew were insuring him, like Royal Bank of Scotland. He knew that he was going to bankrupt the biggest bank in the UK, so he shorted their stock and he made money off that too. He drove them over the cliff; sold them bad securities and then made money when Royal Bank of Scotland went bankrupt. He’s a great guy!
Understand that JP has a 70-room ski hut in Aspen. So I asked him, “I know this family that lost their home from your mortgages in Detroit… Maybe you can give them one of your rooms in your 70-room mansion in Aspen? Because I know you don’t use it.”
He told, “I had nothing to do with the mortgage market,” which is pretty funny because he just gave a speech at Yale boasting about his mortgage market “kill.”
So that’s the guy who is getting behind Trump, along with Mnuchin of Goldman Sachs, and the three-headed dog from Hell.
DB: Didn’t Trump make some kind of comment along the way that he wasn’t totally up-set about the housing crash because he was going to make money on it?
Palast: Yeah, but he wasn’t smart enough to join in with these guys. But, yes, he saw that as an opportunity for buying distressed property. But one thing that’s happened is Trump has stopped talking about this carried interest loophole. Clinton was forced into saying she’d close the loophole because of some guy named Senator Sanders — remember him? Sanders said he would close the loophole right away, and so Hillary had to jump in and say she’d close it too. Whether she will or not, we’ll see; because Obama promised that, and then, he didn’t even propose it after he got re-elected. He didn’t even propose closing the loophole!
But Trump has now got to make amends to all these billionaires he’s having lunch with. So he’s agreed to wash their cars — with his tongue! So no more talk about greedy hedge fund managers who are just a bunch of gamblers. That’s his term. Rather he’s finding them to be upstanding citizens.
By the way, if you want more information on JP, the foreclosure king, and the rest of these characters, you can still pick up a copy of Billionaires and Ballot Bandits or go to GregPalast.com and scrape off the stories for nothing.
Greg Palast new film on the theft of the 2016 election: The Best Democracy Money Can Buy: A Tale of Billionaires and Ballot Bandits, will be debuted at Net Roots Nation on July 16 in St. Louis.
Dennis J. Bernstein is the executive producer of Flashpoints, syndicated on Pacifica Radio, and is the recipient of a 2015 Pillar Award for his work as a journalist whistle-blower. He is most recently the author of Special Ed: Voices from a Hidden Classroom.
Greg Palast has been called the “most important investigative reporter of our time — up there with Woodward and Bernstein” (The Guardian). Palast has broken front-page stories for BBC Television’s Newsnight, The Guardian, The Nation Magazine, Rolling Stone, and Harper’s Magazine. He is the author of the New York Times bestsellers Bil-lionaires & Ballot Bandits, Armed Madhouse, The Best Democracy Money Can Buy, and the highly acclaimed Vultures’ Picnic, named Book of the Year 2012 on BBC’s Newsnight Review. His books have been translated into two dozen languages.
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Greg Palast (Rolling Stone, Guardian, BBC) is the author of The New York Times bestseller, The Best Democracy Money Can Buy, which will be released as a feature documentary movie this fall. Get your name in the movie credits! The deadline to do so is 4th of July 2016.
Or support the The Palast Investigative Fund (a project of The Sustainable Markets Foundation) by shopping with Amazon Smile.
Dennis J. Bernstein is the executive producer of Flashpoints, syndicated on Pacifica Radio, and is the recipient of a 2015 Pillar Award for his work as a journalist whistleblower. He is most recently the author of Special Ed: Voices from a Hidden Classroom.
Nation of Change is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Nation of Change.