It was early December 2015, and Steve Bannon was wearing a full-on bombardier costume with leather jacket and goggles, and toting a goatskin flying helmet. He was dressed up as one of his favorite movie characters of all-time, Brigadier General Frank Savage, the tough-as-nails commander, played by Gregory Peck, who takes over a demoralized World War II bombing unit and whips them into fighting shape in the 1949 classic Twelve O’Clock High. Ordinarily, Bannon wasn’t big into cosplay. But this was a special occasion: the annual Christmas party thrown by the reclusive billionaire Robert Mercer, an eccentric computer scientist who was co-CEO of the fabled quantitative hedge fund Renaissance Technologies.
As introverted and private as Bannon was voluble and outspoken, Mercer was nonetheless a man of ardent passions. He collected machine guns and owned the gas-operated AR-18 assault rifle that Arnold Schwarzenegger wielded in The Terminator. He had built a $2.7 million model train set equipped with a miniature video camera to allow operators to experience the view from inside the cockpit of his toy engine. He was a competitive poker player. He liked to relax by shaping gemstones. And he loved to dress up in costumes.
Each year, Mercer and his family threw an elaborate, themed Christmas party at Owl’s Nest, his opulent waterfront mansion on Long Island’s North Shore. Past themes had included “Cowboys and Indians” and “The Roaring Twenties.” This year’s theme was “The End of World War II.” Mercer, styled as General Douglas MacArthur, had obtained an authentic World War II tank to park on his lawn and had flown in artifacts from the National World War II Museum in New Orleans: a piece of the USS Arizona recovered from the floor of Pearl Harbor, a parachute-silk wedding dress that once belonged to the French wife of an American GI, and the Medal of Honor given to PFC Arthur Jackson, a young Marine who single-handedly killed fifty Japanese soldiers on the South Pacific island of Peleliu in 1944. As guests mingled beneath tents spread across Mercer’s sprawling twelve-acre lawn, a group of Andrews Sisters impersonators provided the evening’s entertainment.
Mercer, who was then sixty-nine, had recently developed another late-in-life interest: politics. From a distance, his hard-line antigovernment views appeared no different from those of any number of financial-industry power moguls scattered throughout the country, whose collective fortune financed the Republican Party and its affiliated think tanks and pressure groups. Up close, however, Mercer was . . .well, he was different. He resembled the bloodless capitalist hero in an Ayn Rand novel. Mercer wanted to bring back the gold standard and abolish the fractional-reserve banking system upon which the modern economy is built. He funded an Idaho activist who foments legal challenges to environmental laws, claiming they are part of a United Nations plot to depopulate rural America. He was once overheard by a Renaissance colleague insisting that radiation from the atomic bombs dropped on Japan in World War II actually improved the health of people outside the blast zone. “He’s a very independent thinker,” said Sean Fieler, a fellow conservative hedge fund manager who has worked with Mercer to lobby for a return to the gold standard. “He’s a guy with his own ideas, and very developed ideas.”
Mercer’s budding interest in right-wing politics was propitiously timed. He started to become active just as the Supreme Court was getting ready to hand down its decision in the 2010 Citizens United case—the case David Bossie had brought—opening the floodgates for wealthy individuals to take a larger and more active role in electoral politics. Mercer excited the Republican political world because, though he was a talented poker player, he didn’t bluff about his intentions and he was willing, and even eager, to make an enormous ante to a candidate or a cause he believed in.
Of course, Mercer’s eccentricity made it a bit difficult for ordinary Republican candidates to maneuver themselves into a position where they might catch the billionaire’s eye. The first horse Mercer bet on in a big way was a candidate so far out on the right-wing fringes that simply to describe him is to invite disbelieving laughter (which it often did). In 2010, a sixty-eight-year-old research chemist named Arthur Robinson, who lived on a sheep ranch deep in the Siskiyou Mountains of southern Oregon, decided to challenge the longtime Democratic congressman, Peter DeFazio. Calling Robinson a “research chemist,” while technically accurate, doesn’t quite do justice to the exotic nature of the man’s pursuits. A self-funded medical renegade, Robinson was consumed with extending the human life span and believed that the secret to staving off death and disease could be found in human urine. To that end, Robinson collected thousands upon thousands of urine samples, which he froze in vials and stored in massive refrigerators that stood among his wandering sheep. Robinson published a newsletter to share his findings and to periodically put out calls for more urine (“We need samples of your urine” read a typical house ad). Mercer was a subscriber to Robinson’s newsletter (this was likely the source of his claim that exposure to atomic radiation can benefit human health, a theory known as “hormesis”).
Robinson, who understandably had difficulty enlisting the backing of the National Republican Congressional Committee, did not appear to pose a threat to DeFazio. He had as little money to put toward a congressional race as he did for his urine research. Yet six weeks before the election, a wave of ads began appearing on local television attacking DeFazio as a tool of the Democratic House majority leader Nancy Pelosi. Robinson had no idea where the ads were coming from. When reporters discovered that Mercer had funded the group responsible for airing them, Robinson was surprised but appreciative. “I don’t know him very well,” he confessed. “If he’s helping me in the campaign, then I’m grateful.” While he didn’t win, Robinson gave DeFazio his closest race in decades.*
In the years afterward, Mercer spread his political largesse among a broad group of beneficiaries. Some of them fell closer to the mainstream of the conservative movement than did Arthur Robinson. They included Bossie’s group, Citizens United, as well as groups such as the conservative Heritage Foundation and the Federalist Society. As a rule, Mercer distrusted the political establishment, just as he shunned the Wall Street financial establishment. Even so, he drifted close enough in 2012 to contribute $25 million to the dark-money network of wealthy conservative donors organized by Charles and David Koch, and he gave millions more to Karl Rove’s Super PAC, American Crossroads, and to another that supported Mitt Romney. At around this time, Mercer’s middle daughter, Rebekah, became more actively involved in the family’s political giving. When Romney lost the presidential election and Rove’s handpicked slate of Senate candidates was wiped out to a man, the Mercers became enraged and all but withdrew from their involvement in mainstream Republican politics. Led by Rebekah, the family members veered sharply to the right, establishing themselves as the alt-Kochs and using their fortune to back outsider candidates and causes of their own.
As the evening stars rose over Owl’s Nest, friends and courtiers from all walks of life strolled across the Mercers’ lawn, magically transported, if just for the evening, back to 1945. Jack Hanna, the khaki-clad celebrity zookeeper, came wandering by (the Mercers gave $100,000 to his zoo). But the evening’s buzz was all about politics. With the presidential election less than a year away, Rebekah Mercer, who was dressed as Rita Hayworth, stood to be a figure of consequence. Texas senator Ted Cruz, dressed as Winston Churchill, was especially solicitous of her. As everyone gathered on the lush grounds of Robert Mercer’s estate was keenly aware, the Mercer family had given away more than $77 million to conservative politicians and organizations since 2008.
You didn’t have to be a brilliant scientist to see the joy Bob Mercer derived from his annual Christmas pageant, or to understand that anyone hoping to curry favor with him would be wise to play along. This is how it came to be that adults who never imagined themselves dressing up in costumes—adults like Steve Bannon—wound up hunting for just the right period-appropriate accoutrements to make a positive impression. The effort could pay off handsomely. In fact, for Bannon, it already had. Over the past three years, the Mercers had become the key financial backers of a far-flung network of interlocking political and media groups that Bannon either had conceived of or had come to control. Bob Mercer was going to be vitally important to the presidential race. He was a man you’d dress up for. Bannon called him “the Godfather.”
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For years before he joined Trump’s presidential campaign, Bannon had been a Washington figure of no particular distinction who tended to inhabit the far fringes of Republican politics, where he felt most at home. Sometimes, he drifted so far out on the fringe that he and his compatriots were shunned by mainstream right-of-center outfits such as the American Conservative Union, which throws the annual Conservative Political Action Conference. Bannon not only didn’t mind the slights, he reveled in the minor notoriety, playing up his image as the skunk at the garden party.
In 2013, when CPAC banned a number of speakers for incivility and anti-Muslim animus, Bannon had Breitbart News organize a nearby counter-conference that he dubbed “The Uninvited” and personally emceed.* Featured guests included the blogger Pamela Geller, who called Muslims “savages”; Frank Gaffney, a former Reagan official who claimed that the Muslim Brotherhood had infiltrated the Obama administration; and Robert Spencer, the founder of Jihad Watch and Stop Islamization of America. (Geller and Spencer were later banned from entering the United Kingdom out of concern they would spark “inter-community violence.”)
Bannon, in other words, was about the least likely candidate anyone could imagine to wind up being the recipient of millions of dollars from a wealthy conservative benefactor intent on radically reshaping American politics.
And yet one donor thought otherwise.
The reason Bannon appealed to Mercer and almost nobody else is that Mercer’s odd, charmed life had taught him to reject ordinary ways of thinking and reflexively seek advantage in places other people didn’t look or couldn’t see. It shaped his way of viewing the world and made him extravagantly rich. And the particular way in which Mercer had taken this worldview and applied it at Renaissance Technologies—by stringing together a series of models that functioned in tandem—was the same way that Bannon thought about politics and hoped to attack the system.
The model that Mercer believed in so fiercely was devised by a mathematician and former code breaker for the Pentagon’s secretive Institute for Defense Analyses named Jim Simons. In the late 1970s, Simons was chairman of the math department at Stony Brook University on Long Island and an avid amateur speculator in commodities (he spent his wedding money trading soybean futures). Believing that he could bring mathematical rigor to the gut-driven practice of commodities trading, Simons began recruiting some fellow mathematicians and code breakers to help him automate the process of finding the best trades. These esoteric skill sets were more applicable to finance than they might at first seem. The job of a military cryptographer is to devise systems through which to send and spot signals amid a sea of noise, ideally signals so faint that others don’t detect them. Finding the patterns that constitute the signal, Simons realized, was not all that different from spotting hidden patterns coursing in a sea of seemingly random market data—patterns that might prove to be predictive and therefore profitable trading opportunities.
What made Simons and his code breakers iconoclasts in the realm of Wall Street’s financial world is that the hidden patterns they were looking for were not supposed to exist. The prevailing view among academic economists at the time was that prices were efficient, and if it was possible to know ahead of time that stocks or soybeans were going to rise or fall, the valuations would have changed already—all relevant information was thought to be priced into the omniscient mind of the market. Money managers might get lucky for a spell and outperform a benchmark index. But efficient-market theory held that over the long term, they couldn’t consistently beat the market.
Simons thought they could, if only they applied the right sort of expertise. With professional code breakers to detect systemic patterns in equity markets and mathematicians to write sophisticated algorithms, Renaissance Technologies, which Simons founded in 1982, built a program that traded on the basis of computer-generated signals. Before long, the firm was consistently outperforming discretionary traders. As his company flourished, Simons recruited additional mathematicians, astronomers, and computer scientists—but never economists or people with experience working on Wall Street. Simons considered them, in effect, to be intellectually corrupted by what he thought was the narrow and incurious way in which Wall Street trading houses approached financial markets. He himself had come from the academy and prized the independence of mind this background had instilled in him. And he believed, correctly, that his ability to think differently from the major Wall Street firms was the wellspring of his success. Struck by the limits of establishment thinking, he sequestered Renaissance on a campus on Long Island, far from Manhattan’s financial district, and hired only academic specialists trained in abstract thought. One of them, in 1993, was Bob Mercer.
Mercer and a colleague, Peter Brown, were recruited mid-career from IBM’s research center, where they had revolutionized the field of computer translation. All his life, Mercer had romanticized computers. As a teenager growing up in New Mexico, he had taught himself programming by reading books. Having no access to a computer himself, he wrote programs in longhand in a wire-bound notebook. In high school, he finagled a job in a nearby Air Force weapons lab writing programs in Fortran. Mercer, who almost never grants interviews and rarely speaks, even in private company, once described with feeling the sense of bliss that overcame him in the job. “I loved everything about computers,” he recalled in a 2014 speech to a gathering of linguists. “I loved the solitude of the computer lab late at night. I loved the air-conditioned smell of the place. I loved the sound of the discs whirring and the printers clacking.” After earning a Ph.D. in computer science at the University of Illinois at Urbana, he joined IBM’s Thomas J. Watson Research Center in Yorktown, New York, where he became part of a team that was trying to teach computers to translate human language.
At the time, the field of computer translation was dominated by linguists. The agreed-upon approach was to teach computers the rules of syntax and grammar, so that they might develop sufficient “linguistic intuition” to be able eventually to translate, say, English to French. That is, after all, how people learn language. Mercer and Brown took an entirely different approach, chucking any concern about grammar and instead relying on a tool called an “expectation maximization algorithm”—a tool code breakers would use to find patterns. The pair got hold of Canadian parliamentary records, which are cross-published in English and French, and fed them into an IBM computer, which they instructed to look for correlations. Outside IBM, their unorthodox approach to translation was greeted with hostility (“the crude force of computers is not science,” huffed one linguist at a professional conference who reviewed their work). But pattern-hunting worked. A computer could learn to recognize patterns without regard for the rules of grammar and still produce a successful translation. “Statistical machine translation,” as the process became known, soon outpaced the old method and went on to become the basis of modern speech-recognition software and tools such as Google Translate.
At Renaissance, Mercer and Brown applied this approach broadly to the markets, feeding all kinds of abstruse data into their computers in a never-ending hunt for hidden correlations. Sometimes they found them in strange places. Even by the paranoid standards of black-box quantitative hedge funds, Renaissance is notoriously secretive about its methods. But in 2010, one intriguing example of the patterns it turns up became public. As the author Sebastian Mallaby details in his history of the hedge-fund industry, More Money Than God, a group of scientists at the firm’s flagship Medallion Fund discovered a correlation between weather patterns and market performance. As Mallaby writes: “In one simple example, the brain trust discovered that fine morning weather in a city tended to predict an upward movement in its stock exchange. By buying on bright days at breakfast time and selling a bit later, Medallion could come out ahead.”
Many of these signals were modest at best, difficult to detect and even harder for most people to profit from. But for Renaissance they held two great advantages. Stronger signals meant that other quantitative traders would be more likely to pick up on them, too, causing the market inefficiency to correct. The subtler and stranger the correlation—like the relationship between sunny weather and rising markets—the less likely that others would spot it and cause it to go away. “The signals that we have been trading without interruption for fifteen years make no sense,” Mercer explained to Mallaby in a rare interview in 2008. “Otherwise someone else would have found it.”
The other advantage Renaissance held was its ability to exploit these faint patterns, even if they were individually modest. Because trades were made algorithmically by computers, it didn’t require much human effort to make hundreds or thousands of quick trades to capture small profits. Collectively, those profits added up. Where human ingenuity came into play was in building the infrastructure that tied all these programs together into a seamless, humming machine. The system’s architecture and scope were Mercer’s constant, preoccupying concern. “I spent all my time thinking about the problem of coordinating everything,” he said in 2014.
This openness to odd correlations and skepticism toward received wisdom paid enormous dividends for Renaissance and its employees. In 2016, Bloomberg dubbed the firm’s Medallion Fund “perhaps the world’s greatest moneymaking machine,” having by that point produced about $55 billion in profits during the twenty-eight years of its existence. Much of the firm’s success was driven by Mercer and Brown, who took over as co-CEOs when Simons retired in 2009.
When Mercer’s interest in right-wing politics began to blossom two years later, his instincts didn’t lead him to seek out the wisdom of the GOP establishment—wisdom that had, not incidentally, produced the disastrous loss of the White House and both houses of Congress by 2008. They led him instead to charismatic, peripheral figures with dramatic, world-changing ideas—people such as Andrew Breitbart, whom Mercer met in 2011 at a conference held by the conservative group Club for Growth. And they led him to Steve Bannon, whom he met shortly afterward. As a glance across Mercer’s lawn at Christmastime would confirm, his interests, and his generous sponsorships, were broad-based and varied. But by every account, both he and Rebekah were thoroughly captivated by Breitbart’s zany, outsider approach to upending politics. The fact that most members of the Republican power structure viewed Breitbart as a loudmouth and a jester (and would come to view Bannon the same way) did not, in Mercer’s eyes, detract in any way from his appeal, and probably counted as a mark in his favor. What good was the collective opinion of the establishment, anyway?
Through Bannon, the Mercers agreed to invest $10 million to help finance Breitbart News’ long-planned relaunch. The rollout was scheduled for the spring of 2012, but Breitbart didn’t live to see the result. After his sudden death a few days before the relaunch, the Mercers gave their blessing for Bannon to step in and take over the site. But Breitbart News was only a piece of a much larger system that Bannon wanted to build. There were other parts, too, and they would all work in harmony. Bob Mercer and his family became their eager benefactor, because to him such an approach made intuitive sense.
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The Mercer family was not Trump’s largest donor, but they were without a doubt the most important in helping Trump to win the presidency. There is no small irony in this fact, because Trump was not the candidate whom the Mercers initially backed in the 2016 Republican presidential primary. Ted Cruz was their first choice. The Mercers admired how Cruz had taken on the Republican establishment, going so far as to drive the shutdown of the federal government in October 2013 in an effort to slash government spending on health care. Republican leaders loathed Cruz, and yet he persevered in his criticism of them and in his strident right-wing politics. The Mercers gave $11 million to a Super PAC they established to support Cruz’s candidacy, hiring Kellyanne Conway to run it, and they organized other wealthy donors to do the same.
Although the Mercers later switched their allegiance to Trump after Cruz dropped out, and gave millions more in support of his candidacy, their greatest impact on his behalf was indirect and aimed at helping Cruz. Through Bannon and his interlocking groups, the Mercers bankrolled the effort to discredit Trump’s eventual opponent, Hillary Clinton, who everyone in politics had long assumed would wind up the Democratic presidential nominee. (The Mercers had simply expected that Cruz would be her opponent.)
To Bob Mercer, the plot to tear down Clinton may have held greater appeal than his support for a Republican alternative because, according to former Renaissance employees, he had long been convinced of the Clintons’ treachery. Nick Patterson, a computational biologist who worked with Mercer in the 1990s, claims that at a Renaissance staff luncheon during Bill Clinton’s presidency, Mercer declared that Clinton, while governor of Arkansas, had been involved in a CIA-backed drug-running scheme based out of the Mena, Arkansas, airport—a conspiracy theory that circulated in extreme right-wing circles at the time. “Bob told me he believed that the Clintons were involved in murders connected to it,” Patterson said.
Bannon’s plan to stop Hillary Clinton was multifaceted and years in the making. It was built primarily on four organizations, each of which the Mercers funded or had a stake in (they also compensated Bannon directly). The first was Breitbart News, whose staff and audience grew rapidly after the Mercers’ $10 million investment in 2012. Although much of the site’s energy was devoted to attacking establishment Republicans, such as former House Speaker John Boehner and his successor, Paul Ryan, Breitbart’s constant stream of outrageously critical stories about the Clintons made it a natural rallying point for conservative readers and a steady source of material for high-profile Clinton-hating sites like the Drudge Report.
The second organization was the Government Accountability Institute, a nonprofit research group based in Tallahassee, Florida, that was established in 2012 to serve as a home for Peter Schweizer, the conservative researcher whose book on Ronald Reagan had been the basis of Bannon’s filmmaking debut in 2004. In the years after his book was published, Schweizer had become increasingly consumed with the issue of Washington cronyism, and his interests turned toward exposing this culture. In 2011 he published an investigative book, Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison. The book had a real effect, catching the attention of 60 Minutes and leading Congress to pass a law, the STOCK (Stop Trading on Congressional Knowledge) Act, which aimed to curb the abuses Schweizer documented. Bannon told him that he ought to focus next on the cronyism endemic to the Clintons, and that financial help would be forthcoming if he was to agree. “He told me, ‘I know people who will support this kind of work,’” Schweizer said. In 2013, the Mercer Family Foundation contributed a million dollars to GAI, which hired Schweizer as its president. Rebekah Mercer took a seat on the board. The following year, the foundation contributed another million dollars, and in 2015, it upped that amount to $1.7 million, which constituted the overwhelming majority of GAI’s budget. The investment paid off. That year, Schweizer’s book Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich, was published by HarperCollins, just as Clinton was preparing to launch her candidacy. The book dominated the national political conversation for weeks on end, doing more to shape Clinton’s image in a negative way than any of her Republican detractors could.
The third Mercer-backed group was a film production company called Glittering Steel, which Bannon and Rebekah Mercer established to make movies and political advertisements. According to Bannon, Glittering Steel had ambitions not only to influence politics but also to become a commercially successful producer of Christian-themed movies, an endeavor that greatly excited Rebekah, who home-schooled her four children. It held allure for Bannon as well. During his Hollywood years, he was part of a discreet network of religious conservatives in the film industry that was loosely organized by the Wilberforce Forum—an evangelical group chaired by the reformed Watergate felon Chuck Colson—whose mission was to “shape culture from a biblical perspective.” This network included the actor and director Mel Gibson, whose 2004 film The Passion of the Christ had been an unexpected hit, as well as a producer of that film with whom Bannon briefly teamed up to make a documentary on Pope Benedict XVI. Although Glittering Steel didn’t turn out any commercially successful films, it did produce a movie version of Clinton Cash that appeared in 2016, just as the general election race was kicking off. The film debuted during the Cannes Film Festival,* on the French Riviera, where Rebekah Mercer entertained guests, including Bannon, aboard the family’s 203-foot luxury super yacht, Sea Owl.
The fourth Mercer-funded outfit was a business after Robert Mercer’s own heart, the U.S. offshoot of a British data analytics company, Strategic Communication Laboratories, that advised foreign governments and militaries on influencing elections and public opinion using the tools of psychological warfare. The American affiliate of SCL, of which Robert Mercer became principal owner, was christened Cambridge Analytica. (Bannon, too, took an ownership stake and a seat on the company’s board.) The purpose of acquiring a major stake in a data company was to equip the Mercer network with the kind of state-of-the-art technology that had been glaringly absent from Mitt Romney’s campaign. It also allowed the Mercers to build out an infrastructure for sophisticated messaging and strategy that would be independent of the institutional Republican Party (an impulse shared by their fellow billionaires, David and Charles Koch, who also spent tens of millions of dollars building an alternative party structure, so disillusioned were they by the ineptitude of the GOP). Rebekah Mercer, who gained a fast reputation for aggressively involving herself in the campaigns of politicians she backed, made clear that as a condition of her financial support, she expected that campaigns would hire Cambridge Analytica to do their data work. Whenever necessary, Bannon played the role of heavy.
By the time Clinton launched her presidential campaign in April 2015, all four of these groups were up and running like the machine they were envisioned to be. But the collective power of the Bannon-Mercer project wasn’t obvious to many people at the time. Trump was still considered a carnival sideshow, Breitbart News a site for trolls and crazies, and Bannon a fringe figure who wouldn’t possibly factor into something as large and important as a presidential race. These were all assumptions the Clinton brain trust would come to bitterly regret. “One of the realities that I don’t think was truly appreciated by our campaign,” Brian Fallon, Clinton’s communications director, admitted after the election, “was just how profound the Breitbart effect was in cultivating a standalone ecosystem in conservative media that very aggressively and successfully promoted certain stories and narratives we had a blind spot for during the campaign.”
The Mercers cut a higher profile, as is typically the case when billionaires—especially eccentric ones—decide to direct part of their fortune toward influencing electoral politics. The family’s public image as sinister masterminds of Republican politics has only mushroomed since Trump’s victory. What’s most interesting about the Mercers, however, is that their true role in the election belies this breathless coverage. After all, their preferred candidate didn’t win. And yet their virtually limitless resources wound up working on behalf of the man who did win: the candidate preferred by Steve Bannon. It’s standard practice for ultrarich people with an interest in politics to hire an adviser to counsel them on where to direct their money. What’s so unusual about the relationship between Bannon and the Mercers is that it reversed the normal power dynamic. Typically, the adviser is a well-paid employee, a kind of political maître d’ who oversees campaign donations and arranges meetings with Washington heavyweights. That person functions as a clear subordinate to his wealthy benefactor. In Bannon’s case, the relationship was inverted. Instead of the help, he became the Svengali. And the Mercers, whether or not they fully appreciated it, became the merchant bankers funding Bannon’s broad-ranging ambitions.