Trump's Hedge Fund Investments Will Drive More Corruption
Donald Trump claims that he sold all his stocks earlier this summer but, of course, we have no independent way to confirm that since Trump refuses to release his taxes or even a summary of his holdings. One theory that has been offered as a rationale for selling his stocks was his decision to forgive the approximately $50 million loan he “gave” his campaign as other donors worried he would just use their money to pay himself back. But, pointedly, Trump has made no mention of giving up his hedge fund investments, which are guessed to be about $85 million according to a disclosure in May of this year. His largest hedge fund investment is with Blackrock and Blackrock’s CEO is now on Trump’s economic advisory team.
Another significant hedge fund investment is with John Paulson who has bet heavily by purchasing the stocks of the Federal National Mortgage Agency (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), the two institutions responsible for guaranteeing a majority of the mortgages in this country. Both institutions were essentially bailed out during the financial crisis and most of their profits now flow to the US treasury. But Wall Street firms were able to pick up their stock incredibly cheaply as the financial crisis unfolded and the owners of the stock, especially hedge funds like Paulson’s that bet heavily on the stocks, have been pushing hard for the last few years to fully privatize both of them. This, of course, would mean that the profits would start flowing to the shareholders once again. Additionally, we would be right back where we were in 2007 where the government would be forced to subsidize the losses should the two institutions fail again, while the profits would be privatized.
Trump’s nominee for Treasury Secretary, Steve Mnuchin, was recently on Fox News and said, “We’ve got to get them out of government control.” The prices of both FNMA and FHLMC jumped on that statement, immediately boosting Paulson’s profits and, presumably Trump’ returns. According to a director of a watchdog group, Mnuchin has had a close connection with Paulson and they have even been business partners.
This kind of thing will just be the tip of the iceberg of the coming corruption in the Trump administration. And it will not be just Trump, but also the cronies of the Wall Street tycoons that Trump has filled his cabinet with.