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The Political Scene | The New Yorker
When Carl Icahn Tried to Control Trump
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When Carl Icahn Tried to Control Trump
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- [00:00]
A
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B
This is the Political Scene, a weekly conversation with New Yorker writers and editors about Politics. It's Thursday, August 31st. I'm Jeffrey Toobin, sitting in for Dorothy Wickenden. Two weeks ago, on August 18th, Carl Icahn announced that he was stepping down as President Trump's special adviser on regulatory reform. Icahn is one of the richest men in America and was a key figure in the Trump campaign. After announcing his candidacy in June 2015, Trump went on Morning Joe to explain his vision for the administration.
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C
I know the smartest guys on Wall Street. I know our best negotiators. I know the overrated guys, the underrated gu. The guys that nobody ever heard of that are killers, that are great.
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B
We gotta use those people, he goes on.
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C
I'll tell you what, I'd like guys like Jack Welch. I like guys like Henry Kravis. I'd love to bring my friend Carl Icahn. You know, I mean, we have people that are great. We have people that are better than any of their negotiators. We don't use them, Joe. We use people that are soft and weak and frankly, stupid and incompetent.
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B
Patrick Radden Keefe joins me to discuss what Icahn's maneuvering with the White House tells us about the administration's relationship with Wall Street. Hi, Patrick.
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D
Hi, Jeff.
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B
Okay, so let's just start. Who is Carl Icahn?
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D
So Carl Icahn was one of the original corporate raiders back in the 1980s, a guy who came to prominence originally on Wall street as somebody who did hostile takeovers of corporations. And he goes back decades with Trump. He and Trump first crossed paths in the 80s. And so this is somebody who's become extremely wealthy. He's according to forbes, worth about $17 billion. And someone who for more than three decades, Donald Trump has looked up to as a almost a slightly kind of older brother figure, an aspirational model.
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B
And let me just stop you there for a second because one of the things you do in the piece that I think is very interesting is you talk about their backgrounds, which are very similar in some ways, but also different in others.
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D
Well, they are similar cosmetically in the sense that they both grew up in Queens. They both have this kind of slightly outer borough New York aspect to them in which they I think in both cases have had a feeling of being rejected by the establishment, taking on the establishment. And they're both these kind of brash dealmaker guys with very broad, brassy personalities who in some ways feel to me like kind of artifacts of the 80s. That was when they first both became famous. But if you look a little more closely, they're actually much different. Whereas Trump grew up wealthy, Icahn actually grew up in a lower middle class family. He's really genuinely a self made man. He was an only child. He grew up in the was born at the tail end of the depression. And his parents, interestingly perhaps having gone through the experience of the depression, had real philosophical issues with the concentration of great wealth. So they were pretty regularly expressing their distrust of an economy, a kind of winner take all economy in which moguls become tremendously wealthy and everybody else is struggling to get by.
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B
He's about a decade older than the president is. As they were both becoming famous in the 80s, were they friends? Were they rivals? Were they partners? What was the relationship?
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D
Well, originally Trump was kind of a supplicant. There are all these stories about Trump inviting Icahn to events in the 80s. Trump has always had this thing. It's this aspect of his character where he likes to associate himself with more famous business people. It's almost like these Individuals are brand names that he likes to throw around. And going right Back to the 80s, Trump liked to say, you know, my great friend, my dear friend, Carl Icahn. The interesting thing is that Icahn, who was from the beginning much more successful and also had started out with a lot less, was always a little bit more leery of Trump. So when it suited Icahn, he would be friends with Trump, but when asked about it, he would often sort of hesitate to call them friends. I think he found Trump maybe a little bit distasteful as an aspiring sidekick. And they had a couple of interesting business run ins. I mean, they were fundamentally in different businesses, but in Atlantic City, they crossed paths where Trump built the Taj Mahal, which at the time was this massive casino complex which he announced was going to be the eighth wonder of the world. He'd done it all with junk bonds, and almost right away this place was underwater and was in huge debt. And what happened is Icahn came in and saved him. Icahn often comes in and picks up distressed debt. And that's what he did with Trump. And he fashioned a deal where Trump was not ousted by the bomb, where he got to keep his name on the casino, keep a place on the board. And so in a way, Trump always owed him for that.
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B
He's taken control or attempted to take control of many companies over the years. And the heart of your piece is really about a Texas based oil refiner called cvr. It's a company where Icahn is the dominant stockholder. What is CVR and what was its business with the government?
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D
So CVR is an oil refiner, which they take oil and refine it into gasoline. And under a law that passed in the administration of George W. Bush, the renewable fuel standard, there are these regulations. The whole point of these regulations is they want to incentivize the blending of ethanol and other biofuels into gasoline. And they do it in complicated ways. But the heart of it is that if you're a refiner like cbr, you either have to blend a certain amount of ethanol into the gasoline that you're producing, or you can, as an alternative, buy these credits, which you can buy from other entities which do that blending themselves. So you have a choice. You can either do the blending or buy the credits.
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B
Ethanol is a deeply political subject in Washington because it comes from corn and corn. State senators are very much interested in creating demand for ethanol. And that's part of the backdrop to this law and to the whole controversy, right?
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D
Very much so. This law comes into being. It is overseen by the epa. And there are a lot of critics of the renewable fuel standard in terms of the way in which it's it is administered. And one of them was Carl Icahn. And the reason was essentially that he felt that refiners like CVR shouldn't bear the obligation to either be purchasing these credits or be responsible for the blending. That that should happen further along the supply chain, kind of closer to the gas pump. There should be other parties in the market who should feel the pain of having to do this ethanol blending or pay for it to happen.
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B
And this decision of who pays for these credits is basically up to the epa, right? To the Environmental Protection Administration.
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D
Yes, it is. It is epa, which both oversees that system in general and also oversees the market for those renewable fuel credits.
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B
And just to make the incentive clear, CVR Icahn's company is paying $200 million a year under this regulation. So that's the sort of state of play leading into the 2016 election. Shortly after the election, here's where things get bizarre and interesting is that there's this announcement that Carl Icahn is going to be President Trump's special adviser on regulatory reform. Like, what was that job and did Icahn ever actually do it?
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D
So it was a formal announcement. This was during the transition. It was in December. The transition puts out a press release saying Donald Trump is bringing Carl Icahn in as a special advisor to help him with deregulation. And it's a very formal thing to this day. If you go to the Great again transition website, this press release is there. It's got a quote from Trump kind of singing Icahn's praises. And the idea is he's going to help Trump by eliminating what they call the strangling regulations that are hurting American business historically. You often have presidents who turn to people from the private sector for advice in an informal way. And then you have these different kind of baskets of slightly more involved activity for private sector folks where sometimes they serve on these kind of advisory boards to the president and those are actually governed by all kinds of laws about, you know, how much openness there needs to be, about the meetings that they have, whether they need to make any disclosures, whether they have to give up any of their holdings. There are also instances in which you have people who are called special government employees where you could be a private sector CEO who actually gets brought into the government on a part time basis. And there again, there are all kinds of things you need to you may have to give up some of your holdings. There are areas you may not be able to advise on. You have to make certain disclosures. With Icahn, there was this interesting thing where they said, he's coming in, he's going to have this formal title, but he's serving as a private citizen. So he doesn't need to give up any of his investments. He can keep working as an investor. There won't be any conflict of interest rules governing what he will and won't be able to do, and he doesn't need to make any disclosures. So you have this announcement in December, and then there was great uncertainty about how expansive it would be. How often would he be talking to Trump or others in the administration? What areas would he be advising on? And were there any rules of the road saying, effectively, look, you're a big investor with investments all over the place, you probably shouldn't be just talking your own book here. You shouldn't be advising the president to do things that would just benefit your own companies.
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Right now we are living through some of the most tumultuous political times our country has ever known. I'm David Remnick, and each week on the New Yorker Radio Hour, I'll try to make sense of what's happening alongside politicians and thinkers like Cory Booker, Nancy Pelosi, Liz Cheney, tv, Tim Waltz, Ketanji Brown Jackson, Newt Gingrich, Robert F. Kennedy Jr. Charlamagne, tha God, and so many more. That's all in the New Yorker Radio Hour. Wherever you listen to podcasts.
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B
Now. Did he, as this special advisor, did he do anything?
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D
Well, nobody knew for a long time. And part of what I spent a good chunk of the last six months trying to figure out is what he did. And part of what was really fascinating is that almost from the very beginning, you had about half a dozen Democratic senators asking, what's he doing? Asking about the scope of the role. I eventually got to speak to Icahn and a lawyer for Icahn and also to folks in the administration. And what I learned was that according to them, there was only one area where he ever advised, and it happened to be this issue of renewable fuel credits that so affected this refiner that he owned.
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B
And what did he do?
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D
Even before the election, he had been talking up the idea that there needed to be a change and the point of obligation needed to be shifted. And when he came in, he was doing a few things. He was talking to Trump and making that case. He was also going out and talking to folks in the ethanol industry who were fiercely opposed to this change. What he did was he kind of worked out what seemed like a deal in which one of the biggest trade groups for the ethanol industry came out in February and said, you know, we've done a total about face. We always opposed shifting the point of obligation because we thought it would be bad for the ethanol industry. But now, in consultation with Carl Icahn, we're going to. We're going to make this change. And the guy who ran the Renewable Fuels association was a guy named Bob Deneen. And he was questioned about why it is that he suddenly changed his mind. And he said, oh, well, you know, I was talking with a Trump administration official who told me that this change was going to happen whether we liked it or not. And so at that point, I sort of had to negotiate for whatever little benefits I could on the margins because the train was leaving the station. So I talked to Bob Dineen, and he told me the only Trump administration official he was talking to was Carl Icahn. So whatever Icahn said to them, they were given to understand that he was representing the Trump administration, that he was speaking to them in an official capacity as a special advisor to the President of the United States.
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B
Is that legal? Is it legal for what he did?
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D
Well, it's an interesting question. There are many who believe it is not legal. There is a federal statute, criminal statute, which says that executive branch employees, with the exception of the president and the vice president, cannot advise or work on policy issues that directly affect any of their own financial holdings. The legal question becomes, was Icahn an employee? He and his lawyer and the White House insist that he wasn't. They say this was a very informal thing. He didn't have a White House position. They like to say, notwithstanding this press release that said that he did or the fact that he had this title, that's the argument you would make if you were worried that Icahn had violated this particular law. I've spoken to other people, for instance, Richard Painter, who was the top ethics lawyer for George W. Bush, who told me, absolutely, unquestionably, on the basis of what we know, on the basis of that title and the role that was described for him in that press release. He was a White House employee, and so he is squarely in violation of that criminal statute in terms of the.
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B
Regulation he wanted changed. Did he get it changed?
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D
He didn't. So it was this fascinating moment. It was really just a matter of days. In early February, the White House was not yet fully staffed up. The Policy making apparatus wasn't really in place to the extent that it's even in place today. What Trump was doing was signing a lot of executive orders. If you remember, Bob Dineen, the ethanol industry guy, had been told by Icahn that there was an executive order coming on ethanol, and that news leaked out. And when it did, the ethanol industry got understandably alarmed. And in fact, farm state lawmakers started calling the White House and saying, hey, what's going on?
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B
Including Chuck Grassley, who is not only one of the very most senior senators, but the chairman of the Judiciary Committee and someone very important to the Trump administration.
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D
Exactly. And at that point, the press called the White House and the White House suddenly backed away and said, no, there is no executive order. So what I was able to find out in my reporting, speaking at people in the White House and others in Washington, is that there was in fact, an executive order. It never ended up getting signed, but there was a draft executive order. What I was told by somebody familiar with this in the White House was there was an executive order, but it was a slightly atypical document in the sense that it didn't come up through the White House process at all. What this person told me was that was something Carl Icahn sent to us.
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B
So he was actually sending an executive order for the President's signature that would have benefited his company enormously.
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D
And not only that, but I spoke to somebody who's seen this draft executive order who said that it was conspicuously amateurish, that it was. I mean, this person's paraphrase was it basically said, I, the President, instruct Scott Pruitt, the head of the epa, to. To shift the point of obligation. In fact, in terms of the procedure of making a change like this, it would have been much, much more complicated. It wasn't something that the President could just do with a stroke of a pen.
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B
Okay, so that's sort of the story of Icahn's company. You're reporting on this story for months. Just on the eve of publication, Icahn leaves this job or is fired or resigns. And like, how does that happen? Does your piece of or the reporting or the imminent publication of your piece lead to his departure? I mean, it seems clearly that it did.
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D
Well, the timing would seem to suggest that I had, in the final weeks before the piece was done, been speaking with the White House and been speaking with Icahn and his lawyer. And so everybody was aware that this piece was coming. Right at the end, we were fact checking the piece and I just wrote one final email to the White House saying, can you confirm for me that Icahn still has this position? And they wrote back and said he doesn't. And I said, well, God, that's strange, because, I mean, what I didn't tell them is I've been talking to Icahn and he's, you know, I don't get the impression from him that he thinks he no longer holds it. So then I said, well, how long has he. When did you let him go? And this was the really interesting thing. The White House then came back and said it wasn't a situation where we would have let him go because he never really worked here in the first place.
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B
That's what's so surreal in reading your piece is that it feels like you're talking to the wizard of Oz or something. It's like, oh, well, there was never anything to see in the first place.
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D
And it's strange for me, having reported stories about government for years and years, that I have small children and they come up with better alibis than that. The notion that you would say, oh, this impropriety that you're asking about and that we've been talking about with you, actually, it never existed. But it got more interesting. So I then heard that, really at the 11th hour from the White House, just before my piece came out, the piece was actually due to publish on a Monday. And on Friday afternoon, after the markets closed, Icahn put out a release of his own on his website, saying, I'm stepping down. He very pointedly said, this was my decision.
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B
You can't fire me, I quit.
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D
You can't fire me, I quit. But interestingly, implicit in Icahn stepping down would be that there was something to step down from, which was a premise that the White House was questioning.
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B
So he's gone from whatever it is he once did there, stepping back. Having watched this whole icon saga, what does it tell you about the relationship between the Trump administration and business people, specifically business people who have interests in what the government does?
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D
Well, this piece, in some ways, was born during a conversation I was having with somebody back right after Trump had come into office. And I was talking with somebody who knows Icahn, who said to me, icahn has this position, and it looks like he's going to go in there and be pretty unconstrained in the changes that he can make that would benefit him. The line that this person used was, they said, this is the cheapest takeover Carl's ever done. And we talked more about it, and the impression that I got in that conversation and then all throughout my subsequent reporting is that there are people around Donald Trump from the world of business who perceive his ascension to the White House as an opportunity to effectively cash in. There was someone I talked to who was familiar with the way in which that executive order, that draft executive order died at the White House, who told me that there had basically been one person on the National Economic Council who, when he saw this draft executive order, said, hey, it doesn't work that way. And paraphrasing what this guy said, he said, the government is not a vending machine for the president's friends. And what this person said was, you know, unfortunately, that's a view that not everybody in this administration holds.
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B
And just as a final question, our colleague Ryan Lizza interviews Anthony Scaramucci, and he's gone in days. Your piece is about to come out about Carl Icahn. He's gone. Like, what's gonna happen when we ask people to interview us as New Yorker writers when they see this procession of people forced out of the administration for talking to us?
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D
Well, look, I mean, I was actually. I thought the fact that both Icahn and the White House were running as fast as they could away from the arrangement that I was asking them about was, in a weird way, kind of an encouraging sign. It is certainly a signature of the president himself to double down on whatever the position is rather than admit that he's wrong. And I think the fact that when pressed, they both said, I'll tell you what, forget it. You know, let's just pretend it never happened may actually be an encouraging sign.
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B
Fair enough. Thanks, Patrick.
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D
Thank you.
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B
Patrick Keefe is a staff writer and the author of the Snakehead, an epic tale of the Chinatown underworld and the American dream. This has been the political scene from the New Yorker. You can subscribe to this and other New Yorker podcasts by searching for the New Yorker in your podcast app. And find more political analysis and commentary@new yorker.com Feel free to rate and review the political scene on Apple podcasts, preferably favorably. This podcast is produced by Alex Barron for newyorker.com with help from Hannah Wilentz. I'm Jeffrey Toobin, filling in for Dorothy Wickend.
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E
What the hell is going on right now and why is it happening like this? At Wired, we're obsessed with getting to the bottom of those questions on a daily basis, and maybe you are, too. I'm Katie Drummond, the global editorial director of Wired, and I'm hosting our new podcast series, the Big Interview. Each week I'll sit down with some of the most interesting, provocative, and influential people who are shaping our right now. Big Interview conversations are fun.
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D
I want a shark that that eats.
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E
The Internet, that turns it all off, unfiltered and unafraid.
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D
So in a lot of ways, I try to be an antidote to the unimaginable faucet of reactionary content that you see online.
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B
To the best of my ability, every.
- [23:56]
E
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From.
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PRX.