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The Failure of Trump Mortgage
This is a very telling read about the Trump we've all come to worship.
The Failure of Trump Mortgage
One of the interesting bits of cognitive dissonance in Donald Trump’s campaign is that he relies on his business career to validate his ability to run the country. In Trump’s mind, and in the mind of many of his supporters, he has a veritable Midas touch. The facts suggest just the opposite. Virtually every project Trump is involved in that doesn’t merely consist of licensing his name to someone else is a smoking lump of fail:
Trump Airlines– bankrupt
Trump Vodka– folded
Trump Casinos– bankrupt
Trump: The Game– folded
Trump Magazine– folded
Trump Steaks– folded
Trump University– fraud-o-rama
This is not to say he hasn’t had some success, but he has had more than his fair share of failure. Now we have another entrant to the list that not only demonstrates his lack of management skill but his deficiency of strategic timing: Trump Mortgage.
As some economists and Wall Street traders began to sense danger ahead of the crippling housing market collapse of 2008, Donald Trump waved away the worries and offered a concrete expression of confidence in the industry.
In the spring of 2006, the tycoon hosted a glitzy event at Trump Tower to introduce Trump Mortgage LLC, a new firm that specialized in selling residential and commercial real estate loans. He devoted a floor of the Trump Organization headquarters at 40 Wall Street to the new business. And his picture appeared atop the company website with the instruction: “Talk to My Mortgage Professionals now!”
“I think it’s a great time to start a mortgage company,” Trump told a CNBC interviewer in April 2006, adding that “the real estate market is going to be very strong for a long time to come.”
Within 18 months, as the experts’ worst fears began to pan out and home prices began to dip, Trump Mortgage closed, leaving some bills unpaid and a spotty sales record that fell short of Trump’s lofty predictions. Trump distanced himself from the firm’s demise, saying at the time that he had not been involved in the company’s management and that its executives had performed poorly.
As a presidential candidate a decade later, Trump says he would use the skills that made him successful in real estate to fix Washington. His decision to embrace the mortgage business illustrates the potential dangers of a business philosophy that has relied in part on a willingness to put aside the advice of experts and take risks.
When Trump was asked why he was getting into residential real estate and “liars loans” at the very moment that many major players were pulling back, he responded with some familiar sounding stuff:
He batted away skepticism from CNBC anchor Maria Bartiromo, who cited a 10 percent decline in new home sales in one recent month.
“I think the market is very good,” Trump responded. “We’re going to have a great company. It’s Trump Mortgage and trumpmortgage.com. And it’s going to be a terrific company,”one he predicted would quickly become an industry leader.
Trump derided economists during the broadcast, saying they were often unable to predict significant events.
“I went to the Wharton School of Finance. I was actually a very good student, believe it or not, but I’ve never been a huge believer in forecasting what’s going to happen because you really never know what happens down the road,” he said.
And, naturally, Trump has lied, massively and repeatedly, about his actions on the campaign trail:
Recently, as a candidate, Trump has presented himself as a truth teller who sounded an early alarm about the pending mortgage crisis. He told MSNBC last July that he had known the housing market “was a bubble that was waiting to explode.”
“I told a lot of people,” Trump said. “And I was right. You know, I’m pretty good at that stuff.”
Trump’s real problem is that he has little strategic sense and, as he demands to be the smartest guy in the room, this has dire consequences for his ventures. The old saying is that “A level talent hires A level talent; Bs hire Cs.” God only knows what kind of dross Trump hires. When you combine low-talent executive staffing with a decision-maker who disregards anything that doesn’t fit in with his desired course of action, you don’t need a business school case study to figure out what is going to happen.
Naturally, no tale of Trumpian incompetence would be complete without the human wreckage left in his wake:
Jennifer McGovern, who had been a mortgage seller, filed suit, saying she was fired before receiving $238,000 of promised compensation for a commercial real estate deal she negotiated.
McGovern, a mother of three, won a judgement in 2008 by a New York State Supreme Court judge, who ordered that she be paid $298,274. But the bill was not paid. “The company was set up in a way that we could never recover what we were owed,” she said.
In addition to McGovern’s unpaid claim, Trump Mortgage owed $3,555 in unpaid taxes, according to a Treasury Department tax lien filed in 2009.
The idea that the company would fail to pay her or others seemed unfathomable to McGovern in 2006, she said. She recalled her excitement after meeting with Trump for a pep talk at the Trump Mortgage headquarters on Wall Street. “He told us if we worked hard we would all do well,” she said.
Does any of this sound familiar?
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