THREE MONTHS BEFORE THE ELECTION, on August 5, 2016, Donald Trump released a list of fourteen economic advisors, all of whom were men, most of them bankers. We’ve met many of them already in this book. “I am pleased that we have such a formidable group of experienced and talented individuals,”1 the Republican nominee for president said in a statement. The list included Barrack, Mnuchin, John Paulson, and Wilbur Ross. Another member of Trump’s economic panel was Stephen Feinberg, whose private equity firm, Cerberus, ran a business similar to Barrack’s, buying up single-family homes and turning them into rentals. Only two were economists. Most had no record of public service. (And five of them were named Steve.)
These Homewreckers didn’t just give Trump advice. Like Barrack and Mnuchin, the rest of them had been raising money for his campaign. In June, Paulson and Ross hosted a $50,000-a-plate fund-raiser at Le Cirque, a tony French restaurant in Midtown Manhattan, raising between $5 million and $7 million. Published reports said other members of Trump’s economic team, including Feinberg and Anthony Scaramucci, another former Goldman Sachs investment banker named as one of Trump’s economic advisors, were also in attendance, and all agreed to pony up $250,000 each for themselves and a guest.2
And, yet, despite the fact that he surrounded himself with hedge fund managers and private equity kingpins, Trump savaged his opponent “Crooked Hillary” as a tool of Wall Street, often mentioning the $675,000 she’d made giving paid speeches to Goldman Sachs. “Wall Street!” he yelled to a crowd of eight thousand at the Silver Spur Arena in Kissimmee, Florida, which had recently played host to acts such as Toby Keith, Def Leppard, and Lynyrd Skynyrd. “They own her lock, stock, and barrel. She will do whatever they want her to do.”3
TRUMP’S ANNOUNCEMENT OF his economic team, and his speech in Kissimmee, coincided with the release of new data from the Census Bureau showing that the nation’s homeownership rate had fallen to its lowest level in fifty-one years. According to the Census, renters now outnumbered homeowners in nearly half of all major cities compared, with 21 percent a decade before. Many of the cities that experienced the biggest drop in homeownership were in the swing states Trump would claim to win the presidency: Florida, Ohio, Michigan, North Carolina, and Wisconsin.
Trump turned the damage to his own advantage. “What’s the greatest thing that everyone wants? Homeownership, right?” he said at the Kissimmee rally, lofting a giant poster board graphic showing homeownership’s decline. “That’s the American Dream! The American Dream! We want the American Dream!! We want to own our home.
“Look at this chart!” Trump bellowed. “This is a disaster!” He blamed the incumbent president—“Great job, Obama!”—but, tellingly, offered no solutions. “That number is crashing,” he went on. “That number is sad. That is not good.” The crowd cheered. Then he changed the subject, setting off on a rambling attack on Hillary Clinton.
The tangled, forty-seven-minute speech typified the Trump campaign: economic populism for the base with little substance behind it—“We’re going to win so much you’re going to get tired of winning!”—punctuated by personal attacks on Barack Obama (“the founder of ISIS”) and Hillary Clinton (“Lock her up!”). His few specific promises tended to double as nativist taglines, such as his promise to ban Syrian refugees or, “We’re going to build a great, great wall and Mexico is going to pay for it.”
Three weeks before the election, Trump unveiled a new applause line: “Drain the Swamp.” At first, he said he didn’t like the phrase, a promise to root out corruption in Washington. But that changed when he delivered it. “The place went crazy,” he told a rally in Kinston, North Carolina, and now it was “trending all over the world.” Trump exalted in another wave of cheers. “So, we like that expression.”4
“DRAIN THE SWAMP” was the phrase that hooked Teena Colebrook, who had lost her Southern California home and two rental properties to foreclosure by Steve Mnuchin’s bank. In February 2015 the fifty-eight-year-old Colebrook was among the homeowners who’d spoken at the Federal Reserve Board’s hearing in Los Angeles, seeking to block the merger of OneWest and CIT. She told the Fed that she had tried six times to modify her mortgage with OneWest but had been turned down every time, even as the bank tacked on thousands of dollars in fees. “It should be jail time not sale time with bonuses for them so they can live in their $30 million mansions like Mr. Mnuchin while stealing the equity and the homes of ordinary folk like me and thousands of others,” she explained.5 In April 2015, two months after the Federal Reserve hearing, Colebrook’s home was sold to Nerja Investments LLC, a shell company based in Orange County.6
Colebrook said she didn’t learn of Steve Mnuchin’s role in Trump’s campaign until after the election, when he was nominated to be the Treasury Secretary. “Like many of the people I’m in touch with who were foreclosed on by Mnuchin, we voted for Trump because we’re fed up—like most of America—with the politics as it is,” she said. “We’re fed up with the government and all those elected officials who were elected to serve the people but they’re really only serving themselves.” She said she believed Trump when he said, “My only special interest is to you the American people. Not major donors for party or corporations.”7
On October 18, 2016, the same day that Trump unveiled his “Drain the Swamp” promise, Fannie Mae, the government-controlled company that FDR created to promote homeownership during the Great Depression, issued a disturbing report on the impact that companies such as Barrack’s Colony and Schwarzman’s Blackstone were having on the nation’s housing stock. The “explosive growth of the single-family rental market has been a defining characteristic of the housing bust and recovery,” wrote Patrick Simmons, Fannie Mae’s director of strategic planning. But, he warned, that had come at a cost: a “starter-home shortage that now appears to be slowing the return of first-time buyers to the housing market.” The swing was striking. Investor purchases had taken more than a million starter homes off the market, putting them out of reach of young families who might want to buy them. This shortage of available homes for sale, Simmons wrote, was a hallmark of the “coming of age of the large millennial generation.”8
PERHAPS IT’S NOT surprising that Donald Trump surrounded himself with vultures who profited off pain during the housing bust and enriched themselves with the federal government’s cash. Donald’s own father, Fred Trump, had made his fortune in a similar fashion: gaming the system to get an inside track on foreclosures, buying distressed properties on the cheap, and then pocketing the taxpayers’ money to cash in on the rebound. As the years went by, Fred would be hauled before Congress for profiteering and sued by the Justice Department for racial discrimination.
Just as Steve Mnuchin’s big break was the collapse of IndyMac, so too did Fred Trump’s road to riches begin with the failure of a major mortgage lender. The year was 1934. Fred was twenty-eight years old, standing six feet tall, muscular, with blue eyes, blond hair, and a thick mustache. Fred loved construction and always wanted to be a builder. “It was my dream as a boy, just as some kids want to be firemen,” he said.9 He was not easily deterred. In 1918, when Fred was twelve, his father died of the Spanish flu, a global pandemic that killed an estimated 50 million people, including 675,000 Americans. Fred, suddenly a major breadwinner for the family, took night classes in carpentry at the YMCA and studied plumbing, masonry, and electrical wiring in correspondence courses. But although he had some success in the Roaring Twenties, Trump’s building business went bust in the Depression. There was no financing to build and no home buyers to buy. To stay afloat, Fred opened a grocery store near the home he shared with his widowed mother in the Woodhaven section of Queens and pined for the day that he could return to construction.
That opportunity came with the demise of one the biggest mortgage companies in Brooklyn, Lehrenkrauss & Co. The family-owned House of Lehrenkrauss, as it was called, was a fixture in the German immigrant community. Over its half century in business, it had helped more than forty thousand families buy homes. Somehow it had survived the rash of bank runs that toppled thousands of other banks, but at the end of 1933, it collapsed abruptly. As soon as that happened, it became clear that the only way Lehrenkrauss had been able to stay in business was by cooking its books.
“It was a Rock of Gibraltar institution” for the German immigrant community, Gwenda Blair, author of the family history The Trumps: Three Generations of Builders and a President, told me. When bankruptcy proceedings opened, she wrote, a crowd of three thousand spectators showed up at court at the Main Post Office Building in Brooklyn, overflowing the three-hundred-seat courtroom and clogging the marble-lined corridors and stairwells. Nearly everyone was angry, save a young grocer named Fred Trump, who pushed his way into the back of the courtroom seeking his chance at a fortune. Thousands of people were devastated, Blair wrote, but “Fred Trump could not have been happier.”10
Lehrenkrauss’s central conceit was similar to Michael Perry at IndyMac—although far more brazen. Unlike most banks at the time, Lehrenkrauss didn’t keep mortgages on its books, but sold the debt as shares to wealthier members of the community. The company continued to service the mortgages, collecting the payments from homeowners, and then passed a portion of the profits on to its investors in the form of dividends. But the whole system was prone to fraud. In testimony before a federal bankruptcy court, the family patriarch, Julius Lehrenkrauss, testified that he sold the mortgages for amounts far above their face value and then certified the same mortgages again and again and resold them, over and over. The scheme persisted, both because members of the immigrant community trusted Lehrenkrauss and because, whenever he could, Julius would pay dividends by issuing still more stock in the company—not unlike the scheme hatched by Zero Mostel and Gene Wilder in the Mel Brooks comedy classic The Producers.
“Using high-pressure sales techniques that included enthusiastic testimonials from nonexistent investors and facsimiles of their dividend checks, Lehrenkrauss salesmen convinced hundreds of naïve customers to invest in worthless stock,” Blair wrote. “The funds were so varied and plentiful that unraveling them was nearly impossible. . . . Julius had shuffled funds from one corporate bank account to another to give the appearance of healthy balances, and he and another senior executive had routinely extorted kickbacks.”11
Lehrenkrauss pled guilty to grand larceny. On March 1, 1934, the balding, sixty-seven-year-old patriarch appeared in court dressed in a black suit with striped trousers and a dress shirt with a winged collar. “This day marks the termination of three generations of a proud family gone to destruction,” he said.12 Then he was carted off to Sing Sing prison to serve a sentence of five to ten years.
Fred Trump attended many of these proceedings, paying particular attention to Lehrenkrauss’s mortgage servicing operation, one of the few parts of the family empire that was still making money. His interest wasn’t so much in the day-to-day work of collecting mortgage payments; the amount of money to be made collecting on these loans was small, with profits that came slowly. But by owning the mortgage servicing operation, Fred would be positioned to get some extremely valuable inside information. If he knew which borrowers were falling behind on their payments, then he would know which homes were at risk of foreclosure. And by knowing that, Fred could scoop up the homes before other members of the public had the chance to bid at a public auction. It was his ticket to return to real estate.
Fred Trump wasn’t the only one who wanted Lehrenkrauss’s servicing operation; so did a number of other, more well-established businessmen. To best them, Trump greatly exaggerated his qualifications and assets to the court. Though his previous experience in banking was limited to occasionally extending credit to the purchasers of homes he’d built, Trump declared himself to have “been engaged for many years in the servicing of mortgages.”13 Though his only operating business was a grocery store, Fred Trump’s letters were embossed on the stationary of the F. C. Trump Construction Corporation, adorned with the slogan “Permanence, Comfort,” wrapped around a thumb-sized drawing of a country home. Trump also overstated his experience in real estate by five years and presented himself as a big-time builder from Queens, though he promised to relocate to Brooklyn if his bid was accepted.
According to journalist Wayne Barrett, Fred Trump made a striking impression in court. “He had an erect, almost military-like bearing, muscle bound and purposeful,” with a strong German accent, Barrett wrote in the biography Trump: The Greatest Show on Earth. Unlike the other, more-experienced businessmen, who were represented by lawyers, Fred Trump represented himself, leading the court stenographer to mistake him for an attorney.14
It was a gigantic bluff, but the fantastic story seems not to have been second-guessed by the judge. In the end, Trump didn’t make the highest bid for Lehrenkrauss’s mortgage lists, but the court awarded them to him anyway after he talked his way into a deal with the representatives of the bank’s creditors:15 thirty-one thousand working-class German immigrants in the Bushwick section of Brooklyn and the Ridgewood neighborhood of Queens, many of whom had placed their life savings in the bank.16
Under the terms of the deal, the creditors were given the option of buying back the mortgage servicing rights. (Presumably they would only want to do it if the economy improved dramatically, which wasn’t likely anytime soon.) In the meantime, the judge said Fred Trump could charge a fee of 0.5 percent on everything he collected from Lehrenkrauss’s remaining borrowers—the rest would go to the people who actually owned the mortgages. That was enough for Trump to get out of the grocery business. Like Steve Mnuchin’s IndyMac purchase seventy-five years later, Fred Trump had bought into a no-lose financial proposition. If Lehrenkrauss’s homeowners made their payments, he would take his commission. If they didn’t, he would foreclose and be first in line to buy their properties. “With this one favorable nod, the court had provided him with what he needed to relaunch his real estate career,” Blair wrote. “It was an enormous plum, for he would be reentering the field with access to a steady cash flow, permitting him to escape the mad scramble of the small-scale builder.”17
The Home Owners’ Loan Corporation was already up and running when Fred Trump took control of the Lehrenkrauss mortgage servicing operation the following year. But like many of the Homewreckers of our current crisis, Fred Trump had no real incentive to be lenient with struggling borrowers or refer them to the HOLC, which could have helped them stay in their homes. In fact, unlike a bank, which kept loans on its books and would therefore benefit from off-loading a delinquent mortgage onto the government, a new HOLC loan for a Lehrenkrauss borrower was the worst possible outcome for Fred Trump: he would lose both his servicing commission and the chance to buy the property if it were lost to foreclosure. In fact, the easiest way for Fred Trump to make money off Lehrenkrauss’s mortgage list was if the German immigrants who trusted the family company—which had already deceived them—and were now forced to do business with Trump, fell behind and lost their homes to him.
THE HOMEWRECKERS AREN’T sadists. They don’t particularly enjoy inflicting pain. They are businessmen who value money first and foremost and have a special gift for seeing opportunity in the misfortune of others. If they can make the most money by hoarding houses and wrecking dreams, they will do that. But if the government changes economic incentives so that the profits come more easily when they provide homeownership opportunities to middle-class families, these same Homewreckers can be enticed to change course.
Such was the case for Fred Trump, who leveraged the federal government’s support to bring the American Dream to thousands of New York families during the depths of the Great Depression. FDR signed the National Housing Act on June 27, 1934, barely three months after Fred Trump took control of Lehrenkrauss’s mortgage list and began monitoring its delinquent borrowers for potential property acquisitions. The FHA was designed to extend the American Dream of homeownership to members of the working class. Under the law, the government would back loans for properties worth $16,000 and under (approximately $300,000 in today’s money), but not tenement apartment buildings or mansions for the rich.
By this point, so many banks had failed that the government was the only game in town. Developers like Fred Trump could make money only if they put up buildings that served that mission. So, as he foreclosed on Lehrenkrauss’s mortgage holders and bought their properties for cheap, Fred also went on a building binge, constructing row upon row of sturdy row homes with redbrick facades. Their design was almost always the same: a tiny front lawn and a short stoop with an exterior wall shared with the next-door neighbor to save space and reduce costs; inside were hardwood floors and ornamental tile around the kitchen sink, as well as furnished basements. The high quality of construction was due, in part, to the requirements the FHA placed on its insurance: Since the government would be backing the home buyer with a mortgage that lasted twenty years, the purchased home had to be built to last as well. Most of them still stand today.
Trump’s biggest project was on the old Barnum & Bailey Circus grounds in the East Flatbush section of Brooklyn. On August 11, 1936, the New York Times reported, more than a hundred people turned out as the administrator of the FHA for the state of New York presented Fred Trump with a celebratory plaque. Forty-eight houses, already under construction, had been approved for government mortgage insurance. Trump eventually planned to erect four hundred houses there, the story said.18
The people who bought Trump’s homes were solidly working class: skilled laborers, mechanics, clerks, and small business owners. Many were immigrants from Europe of Jewish, Irish, and Italian extractions. There were few families on government relief, and, though there was concern about the “infiltration” of Jews, a HOLC report a year later noted positively that the neighborhood was racially segregated, including the absence of Negros. As a result, the agency’s color-coded redlining map shaded the area blue, for “still desirable.”19
So tied was the success of Trump’s business interests to the New Deal’s homeownership programs that he became a major booster himself. In May 1939 Fred announced that he was launching a movement to put the slogan “Own a Home” on New York license plates as part of a larger “Own Your Home in New York” campaign. To kick it off, Trump said he was inviting Governor Herbert Lehman and Mayor Fiorello La Guardia to attend a luncheon on June 15 at the World’s Fair grounds in Flushing. He also invited representatives of the Queens-Nassau Builders League, the Brooklyn Builders League, a variety of financial institutions, officials from the FHA and the HOLC, as well as many material manufacturers. In an interview with the New York Times, Fred Trump didn’t shy away from his personal financial stake in the matter:
“Explaining the purpose of the drive, Mr. Trump said that the building interests he represents are particularly interested in developing extensive vacant acreage in Brooklyn, Queens, and Richmond,” the Times reported. But this would be possible only if they could find buyers for the homes. “Despite widespread publicity issued by the FHA and the HOLC,” Trump told the paper, “many persons now paying rent are unaware that they can own their own homes at a cost less than their rental payments.”20
Looking back at the historical record, it’s unclear whether the governor or the mayor attended Trump’s luncheon, or if it occurred at all. Like his son Donald years later, Fred Trump was a master showman, full of bluster, often teasing major announcements in an effort to make them transpire. (His campaign to rewrite New York’s license plates failed.) In any case, Fred’s love of homeownership was fleeting. Two years later, in 1941, the government amended the National Housing Act, expanding the types of loans that the Federal Housing Administration could underwrite to include subsidies for large landlords. The incentives having changed, Fred Trump abandoned constructing single-family homes for purchase and became a builder of apartments for rent. He now “patriotically declared the nation needed more apartment buildings,” Gwenda Blair wrote in The Trumps. “His turnabout on the desirability of apartments rapidly followed his discovery that building them would let him be an owner and not just a builder. After he finished a development, he would not simply visit every now and then. He would collect rent every month, and he would have equity. Duty had called, and Fred Trump had answered with alacrity.”
ON DECEMBER 7, 1941, the Imperial Japanese Navy launched a surprise bombing air raid on the US naval base at Pearl Harbor, Hawaii, decimating the Pacific Fleet. Before the week was out, Congress had declared war against both Emperor Hirohito’s Japan and Adolf Hitler’s Nazi Germany. Millions of young men and women mobilized for the war effort, often moving across the country for economic opportunity working in shipyards and around military bases, even if they didn’t join the military itself. This mass movement created housing shortages, and on May 26, 1942, Congress added section 608 to the National Housing Act, permitting the government to back mortgages of up to $5 million (or about $80 million in today’s money) provided that the housing was “designed for rent for residential use by war workers.”21
For Fred Trump, war meant money. He decamped from New York for Norfolk, Virginia, home to Norfolk Naval Base and Naval Air Station. The Pentagon had sent thirty thousand men and women to the coastal community, creating a housing shortage so acute that landlords could rent rooms to one tenant during the day and another at night. It was a builder’s dream. Trump constructed thousands of units. First, he funded these projects privately and then continued with generous support from the FHA. When the war started to wind down, Fred returned to New York to cash in on another spigot of government largesse that was opening up: to provide housing for returning veterans. While the GI Bill provided homeownership opportunities for young couples, companion programs were designed to ameliorate the housing crisis by giving returning veterans a place to rent. An especially good bit for of news for Fred Trump came in a December 1946 message from Roosevelt’s successor, President Harry Truman. In a “Statement by the President Outlining the Housing Program for 1947,” Truman stressed the “main point of emphasis” for his administration would be “rental housing.” Returning veterans, the president told Congress, “should not be compelled to buy in order to get shelter.”22
Two of the biggest projects Fred would ever build—Shore Haven and Beach Haven—were drawn up that year. On June 17, 1947, he filed plans for Shore Haven, a massive complex of 1,344 apartments, spread across thirty-two imposing six-story buildings spanning fourteen acres in southern Brooklyn. Though owned privately by Fred Trump, it had the look and feel of the prototypical midcentury public housing project. Legally, the government was supposed to shell out a maximum of $5 million to builders, but Fred had become close friends with the FHA’s regional administrator, so the government agency divided Shore Haven into three subprojects of $3 million each and guaranteed Trump at least $9 million.23 That same year, as Shore Haven was still going up, Trump filed plans for the even larger Beach Haven apartments in Brighton Beach, near the Coney Island amusement park. Spanning 1,860 units across fifty acres, the featureless, rectangular, Beach Haven buildings looked identical to Shore Haven. Perhaps again thanks to Trump’s personal FHA connections, the federal government divided Beach Haven up into six projects for paperwork purposes and provided $25 million in taxpayer subsidies.24 To speed things along, Fred Trump also brought in a business partner on the Beach Haven project, bricklayer James Tomasello, whom the Organized Crime Task Force later linked to the Gambino and Genovese crime families.25
As the Beach Haven apartments rose, they were accompanied by a torrent of publicity that has since become the Trump family hallmark. Trump promised “a de luxe omnibus line” to transport residents to nearby Brighton Beach and a “‘baby sitting’ organization” to take care of the complex’s children.26 The following Mother’s Day, he announced that “every prospective mother in his projects, Shore Haven and Beach Haven, will be presented with a dozen roses.”27
Like Fred Trump’s earlier single-family row houses in Brooklyn, however, these projects came with a catch. Though the Supreme Court ruled in 1948 that racial covenants were unenforceable, the government continued to throw up roadblocks to developers who were open to people of different backgrounds living side by side. While Beach Haven was under construction, another developer, the Rolling Plain Cooperative, in Chicago, was repeatedly denied FHA support on the grounds that “an interracial community was a bad risk” because in an economic depression, “it would be much more difficult to find buyers . . . than it would be in an all-Caucasian project.”28
There is no evidence that Fred Trump ever fought the government’s racist policies and plenty to suggest that housing discrimination was something he embraced enthusiastically. In 2015, when his son Donald was ramping up to run for president, an old New York Times report surfaced that revealed that, at age twenty-one, Fred had been arrested at a 1927 Ku Klux Klan rally in Queens that devolved into a “free-for-all battle” between a thousand Klansmen and a hundred police.29 Though the story offered no proof that Fred took part in the rally—rather than simply being caught up in it—the article resonated. Both in those early days running Beach Haven and Shore Haven, and in the many decades since, Fred and his son Donald have been repeatedly called out for preferring white tenants to people of color, for treating the white tenants better, and charging them lower rents for better maintained accommodations.
AMONG BEACH HAVEN’S earliest residents was the legendary folk singer Woody Guthrie, the Okie troubadour who penned “This Land Is Your Land” and “Pastures of Plenty.” During World War II, Guthrie joined the merchant marine. In 1943 his ship was torpedoed on the way to Tunisia. The following year, he mobilized again for the D-day invasion of Normandy, France. This time his ship was crippled by an acoustic mine off Omaha Beach.
Like many veterans, Guthrie’s homecoming was difficult. He drank too much. Though he was married with three young children, he drifted, hitchhiking, freight hopping, and taking odd jobs such as writing songs for a venereal disease awareness campaign. In 1949 he accompanied Pete Seeger and Lee Hays of the popular folk quartet the Weavers to a Paul Robeson concert in Peekskill, New York, that was disrupted by a racist riot. Everywhere he turned, it seemed, life was a burden.30
Then, in 1950, Guthrie caught a break. His song “So Long, It’s Been Good to Know You” was recorded by the Weavers and became a hit. The $10,000 advance check allowed him to get back on his feet again. His family of four moved into 49 Murdock Court, #IJ, a $120-a-month two-bedroom apartment with a large balcony facing Coney Island Hospital.31 Their fortunes changed, he might have been happy. But Guthrie, who had joined the fight against Fascism and the racism of Hitler’s Germany—and whose pre- and post-war music often focused on issues of justice and equality—was outraged to be living in an apartment complex where his friend Paul Robeson, who was black, would not be welcome. By the early 1950s, the FHA had removed racist language from its regulations and was even giving priority to interracial developments, yet Beach Haven remained segregated. Wrote Guthrie: “My worst enemy is my landlord that tries his best to make me and my family live a life of race hate just because he so sickly chose to live his own sad life that way.” He also composed a song, which he never recorded, about his landlord. The lyrics were discovered by academic Will Kaufman in the archives of the Woody Guthrie Center in Tulsa, Oklahoma, in 2015, nearly a half century after Guthrie’s death at the age of fifty-five.
I suppose
Old Man Trump knows
Just how much
Racial Hate
he stirred up
In the bloodpot of human hearts
When he drawed
that color line
Here at his
Eighteen-hundred-family project.32
When the Guthrie family moved into Beach Haven, they signed a four-year lease, but they did not stay for even two. By 1952, Woody was sick with Huntington’s chorea, a degenerative neurological disease that robbed him of his musical talents and left him hospitalized for most of the rest of his life. Near the end of that year, his wife, Marjorie, alerted the Beach Haven management that they would have to break the lease.
“My husband after months of hospitalization and examination was declared incurable and is suffering from a fatal disease known as Huntington’s chorea,” she wrote Fred Trump’s deputy. “We have three small children, and since I now know that I alone will be responsible for them, I feel it would be impossible for me to continue living in my apartment whose rental now becomes quite a hardship. . . . I believe I should be out within a week.”33
BY 1954, FRED Trump’s actions had drawn scrutiny from Washington, but it had nothing to do with either racism or high rent. In 1952 General Dwight D. Eisenhower was elected president, and his administration prioritized eliminating corruption and waste in New Deal programs. The former supreme Allied commander, who would later warn of the “military-industrial complex,” was especially concerned with war profiteering. His commission targeted trade schools that tricked veterans out of their GI Bill education benefits, along with developers who kept for themselves money that was supposed to be used to house veterans.
On June 18, 1954, Fred Trump was called for a “special interview” before a US Senate panel investigating “large windfall profits” and “widespread frauds and irregularities” in the FHA. Throughout, Trump was combative and unapologetic. At the center of the investigation was Beach Haven. The committee found the project cost only $22 million—netting Trump and his partner, bricklayer James Tomasello, a $3 million windfall from the $25 million in federal subsidies.34
This wasn’t all: under questioning from the committee’s council, for example, Trump conceded that he’d paid only $180,000 for the land beneath Beach Haven, but he got the FHA to put an appraised value, without improvements, of $1.5 million—meaning that more than 80 percent of the money the government provided to buy the land went into his pocket. Then Fred turned the land over to a trust in the name of his children, including Donald, who was three years old at the time. Effectively, Fred Trump made his children his landlord, and the kids charged their father rent on his federally subsidized housing projects—first Beach Haven, then Shore Haven.35 (In 2018 the New York Times would report that thanks to these and other moves, “by age 3, Donald Trump was earning $200,000 a year in today’s dollars from his father’s empire” and that he “was a millionaire by age 8.”36) Under questioning from the committee in 1954, Fred Trump also conceded that he dodged gift taxes when he gave the Beach Haven property to his children—valuing the complex at the $180,000 he paid rather than the $1.5 million he got from the FHA. He also admitted to diverting $729,000 in excess proceeds from the FHA to his other companies and confessed to overcharging the government on architecture fees. The most telling moment of the hearing came when Senator Homer Capehart of Indiana asked Trump why he was not making a 10 percent capital investment as required by federal laws.
“Do you mean invest ten percent?” Trump replied. “You couldn’t do it.”
“You mean you wouldn’t have built those buildings if you had to put any of your money in them?” Capehart asked, incredulous.
“Well, I don’t say ‘any.’ All the money I can borrow,” Trump said.37
Like the other Homewreckers in this book, Fred Trump preferred to play with other people’s money.
THE TODDLER WHOSE name was on the Beach Haven trust documents was born on June 14, 1946, shortly before Fred Trump broke ground on the Beach Haven and Shore Haven developments that would define his career. The second youngest of five children, Donald lived a charmed childhood, growing up in a thirty-one-room mock Tudor mansion that his father built in the Jamaica Estates section of Queens. According to Wayne Barrett, the Trump family was one of the few in the neighborhood to have a live-in maid (always white) and a chauffeur (usually black). “Donald Trump had grown up apart,” Barrett wrote. “His neighbors knew him by his papier-mâché Halloween mask and elaborate costume; otherwise they just watched him come and go by limo on the long, green hill. The family was very out of touch with the neighbors and grew more so as the years went on.”38
Like so many of the other Homewreckers in this book, Donald Trump’s father sent him to a private all-boys school, although Donald’s was a military academy. He was an athletic achiever, batting cleanup on the school’s baseball team and lettering in soccer, but he didn’t have close friends. “He wasn’t that tight with anyone,” his roommate at the New York Military Academy, Ted Levine, told Gwenda Blair. “I think it was because he was too competitive, and with a friend, you don’t always compete.”39 From there, it was two years of college at Fordham University and then a transfer to the Wharton School at the University of Pennsylvania, where he graduated in May 1968 with a bachelor’s degree in economics. When Donald returned home after Wharton, he became the public face of his father’s business.
DONALD TRUMP TOOK the reins of his father’s company during a time of great turmoil. In April 1968, one month before he walked across the stage at Philadelphia’s Civic Center to receive his diploma, riots erupted in major American cities following the assassination of Dr. Martin Luther King Jr. Amid the violence, President Lyndon Johnson pushed the Fair Housing Act through Congress. The final major piece of legislation passed during the civil rights era, it banned “discrimination in the sale, rental, or financing of housing.”
“I do not exaggerate when I say the proudest moments of my presidency have been times such as this when I have signed into law the promises of a century,” Johnson said at the signing ceremony. “With this bill, the voice of justice speaks again. It proclaims that fair housing for all—all human beings who live in this country—is now part of the American way of life.” With the new law, the tables turned. The federal government, which had encouraged, even insisted, that developers segregate their projects, now sought to root out discrimination. Among the first targets of the Civil Rights Division of the Justice Department and the FBI would be the real estate empire of Fred—and now Donald—Trump.
On July 16, 1968, barely three months after the Fair Housing Act went into effect, an African American man saw a notice in the newspaper advertising an apartment in Sussex Hall, a six-story concrete-block apartment building Trump had constructed in the Jamaica section of Queens. When he got there, the man asked the superintendent about renting one of the advertised apartments. But according to a complaint filed with the New York Commission on Human Rights, the superintendent told him that “the apartments were not available.” A few hours later, the document said, “a white friend of the complainant went to the subject premises and inquired about an apartment.” The superintendent showed him one, accepted a $25 deposit, “and arranged for him to return to sign the lease.”40
At a hearing into the complaint, the Trumps’ representative argued that the experience of the two men did not represent discrimination—an apartment had simply become available during the intervening hours. But the human rights commission was not convinced. “The building in question has 190 units, and there are two Negro tenants,” the commission noted. Nevertheless, the punishment was modest to the point of ridiculousness. In addition to posting future apartment openings at the offices of the local affiliate of the National Urban League, a civil rights group, Trump was asked to pay just $100 in “compensation for humiliation, outrage, and mental anguish suffered by” the man who was turned away, which the commission called “the direct result of . . . unlawful discrimination.”41
The commission’s ruling would not be the end of the matter, however. Problems persisted, and New York State’s Division of Human Rights got involved, forcing Trump to sign a consent decree in 1970 that imposed ongoing government monitoring of his rental practices. “A preliminary study of Trump Village [a seven-building, 4,600-unit complex that Fred built in the mid-1960s near Coney Island] indicates a pursuit of tenant selection policies and practices which have directly or indirectly created a discriminatory restrictive pattern precluding Negros and Puerto Ricans, because of their race, color, or national origin, from obtaining apartments,” the division found that October.42 As part of the consent decree, Trump again promised to send open-apartment listings to the Urban League.
That still didn’t settle the matter. By 1972, the FBI had launched an investigation. Richard Nixon’s assistant attorney general for civil rights, J. Stanley Pottinger, ordered a federal probe. Pottinger was a thirty-four-year-old bulldog of a prosecutor who had provoked an inquiry into the 1970 massacre of four student antiwar protestors at Kent State University by the Ohio National Guard.43 Later, he would become a best-selling author of legal thrillers and make headlines by dating feminist icon Gloria Steinem. But first he would lead a federal civil rights investigation into Fred and Donald Trump’s real estate empire.
Thousands of pages of newly released FBI documents detail the extent of the probe. Agents fanned out across all of Trump’s New York properties, interviewing tenants, building superintendents, doormen, and janitors. Many of Trump’s employees told the FBI they were unaware of racist practices, but slowly a picture of systemic discrimination began to emerge. At the Briar Wyck Apartments, a massive structure with 1,200 units in Queens, a Hispanic doorman told investigators that nearly all the residents of the complex were white but that “three black girls who were renting” were “paying double rent.” A white rental agent at the Sea Island Apartments on Nostrand Avenue in Brooklyn told investigators that he was advised by Trump’s central office to “mark each application with certain symbols if the applicant was black.” On Staten Island, a man told FBI investigators that Fred Trump had hired him to make suggestions on how the seven-hundred-unit Tysens Park apartment complex could be improved. But when he “indicated that the improvements would cost money, Trump disagreed with his suggestion and fired him.”
According to the FBI documents, just 1 percent or 2 percent of the complex’s apartments were rented by African American residents. Nonetheless, Fred Trump said his strategy for improving the apartments was simple: “Don’t rent to blacks,” the FBI records quote him as saying. The FBI records say Trump mentioned that it was against the law to discriminate, but, when pressed, told his contractor to “attempt to get black families that were in Tysens Park currently, removed.”44
Fred Trump then offered a plan for getting his African American tenants out. “Trump stated that he knew of some cheap housing available, where a family could get a house for only $500 down,” the FBI records say,45 and told the employee he would “pay the $500 if a [black] family would move to one of those units. Trump also stated that families could be removed from Tysens Park by charging them late fees on their rent and then serving them with dispossession notices.”46
In October 1973 the Justice Department filed suit against Fred and Donald Trump, alleging systemic discrimination. By this point, Fred had taken a step back from the limelight, and Donald had become the public face of the Trump Organization. The younger Trump furiously contested the charges. “They are absolutely ridiculous. We have never discriminated, and we never would,” he told the New York Times, straining credulity. “There have been a number of local actions against us, and we’ve won them all,” he declared. “We were charged with discrimination, and we proved in court that we did not discriminate.”47 To fight the charges, Donald retained attorney Roy Cohn, a ruthless attack dog who made his name as chief counsel to Senator Joe McCarthy during the anti-Communist witch hunts of the 1950s. (Widely seen as a mentor to Donald, Cohn was disbarred in 1986 for “dishonesty, fraud, deceit, and misrepresentation.”48) In a tactic that would become familiar to Trump observers in later years, Cohn filed a $100 million countersuit alleging the government sought to turn Trump’s buildings into “the Welfare Department.” The judge called the gambit a “waste of time and paper” and threw out the suit.49
Donald was deposed in March 1974, his vintage performance described beautifully by Barrett:
He said he didn’t know what the Fair Housing Act was and freely admitted that his company had done nothing to implement it. Asked when the first black had moved into one of his predominantly white projects, Donald replied, “I don’t care, and I don’t know.” He claimed his company made decisions on who to rent to based only on the prospective tenant’s ability to pay, but he couldn’t resist adding a sexist comment. “We don’t usually include the wife’s income; we like to see it for the male member of the family,” he said.50
The case dragged on for a year and a half, but, despite his bluster, Trump eventually settled with the federal government. Once again, there were promises. Similar to the agreement with the city of New York seven years before, Trump agreed to place advertisements in minority-owned papers and give preference to tenants suggested by the Urban League. This time, however, the agreement would be enforced by the Justice Department. It would have teeth.
IF THE TRUMPS had to be dragged kicking and screaming to integrate the company’s New York apartments, they did provide housing to people of color elsewhere—in slum conditions so bad that they eventually led to Fred Trump’s arrest. The elder Trump was a builder first and foremost. When it came to his white tenants, he was widely considered to produce good, solid construction. But when it came to his black tenants, his preference was to buy cheap at the courthouse and provide little in return.
Such was the case with the Gregory Estates in Prince George’s County, Maryland, a sprawling 504-unit apartment complex a few blocks from the state line and Washington, DC. Seven years after he was investigated by a Senate committee for profiteering, Fred Trump was still getting great deals from the federal government. Government records show that one of Trump’s companies, Bruche Realty Corporation, bought the property from the FHA for the incredibly low price of $1 in 1961. Four days later, the FHA gave him more help: a $2.3 million loan for the property, which he wouldn’t have to pay in full for thirty-nine years.51 Years later, Donald Trump told the Washington Post it was a distress sale.52
Whatever the reasons for the government giveaway, Trump didn’t put much of the $2.3 million back into the project. Local building inspectors cited him for broken windows, rotted rain gutters, and the failure to install fire extinguishers. By 1976, county officials were so upset they denied Trump’s application to renew the project’s multifamily housing license, without which his company could not rent vacant apartments.
A flurry of telephone calls followed, the Post reported, and Fred Trump flew down from New York to meet with local officials. When he got there, the seventy-year-old real estate baron was handcuffed and thrown in jail. Unbeknownst to him, the county’s code inspector had taken out a warrant for his arrest. Trump was “a little upset, to put it mildly,” C. H. Bennett, the chief of inspection and enforcement for the county said, but the arrest was necessary because “so much money and so many inspector man-hours” were spent in an effort to have “what are everyday problems” corrected.53
In an interview, Irving Eskenazi, identified as vice president for “Trump concerns” in New York, blamed the tenants, who were overwhelmingly black. “We bought that property fifteen years ago,” he told the Post. “For the first ten years, it was extremely successful. Lately, however, there has been a very serious change to the area. Low-income people started moving in.”54 But the economic class of tenants living in Trump’s project hadn’t changed since he bought it from the federal government. Gregory Estates had always been for low-income people. The difference was racial. When Trump bought it in 1961, the residents were poor whites. By 1976, however, they were poor blacks.
FRED TRUMP’S ARREST never made it to the New York papers. He posted $1,000 bail, left immediately for New York, and later pled no contest, paying a $3,640 fine.55 Instead, the New York media, which had quickly moved on from allegations of racism in the family’s Brooklyn and Queens projects, focused their cameras and pens on Donald, who had traded the family’s mock Tudor mansion in Jamaica for a three-bedroom penthouse apartment at 160 East Sixty-Fifth Street, on the Upper East Side of Manhattan.
“He is tall, lean, and blond, with dazzling white teeth, and he looks ever so much like Robert Redford,” began a fawning New York Times profile of Donald, published on November 1, 1976, barely a month after his father’s arrest. “He rides around town in a chauffeured silver Cadillac with his initials, DJT, on the plates. He dates slinky fashion models, belongs to the most elegant clubs, and, at only 30 years of age, estimates that he is worth ‘more than $200 million.’” Every sentence of the story was written in the sort of breathless prose more typical of New York’s tabloids than its Grey Lady. Reporter Judy Klemesrud wrote that she met Donald at a quarter to eight in the morning outside his Upper East Side apartment as he was picked up by a chauffeur, a “husky, gun-toting, laid-off New York City policeman who doubles as a bodyguard.” Trump, the article proclaimed, was a man with “flair” but was also “publicity shy.” His wardrobe, it was noted approvingly, included “a white shirt with the initials DJT sewn in burgundy thread on the cuffs.”
Most importantly, however, the article carried a message—likely the one Donald sought to send by making himself available. The Trump family would be turning its back on Fred’s legacy as a provider of working-class housing in Brooklyn and Queens. Now, Donald said, the family business was all about Manhattan. “It was psychology,” Donald told the Times. “My father knew Brooklyn very well, and he knew Queens very well. But now that psychology is ended.”56 Building and renting houses or apartment blocks for the working class would be a thing of the past. These new gleaming towers would be for the rich.
Fred Trump had ripped off the federal government and grown his business through deception and prejudice. That “psychology” would remain central to the son’s life no matter the borough. In the end, it was those qualities that bonded him with Mnuchin, Ross, and the rest of the Homewreckers. And bonded they would be.