Russ Buettner and Susanne Craig. Lucky Loser: How Donald Trump Squandered His Father’s Fortune and Created the Illusion of Success. New York: Penguin, 2024.
This is the most comprehensive and thoroughly documented account of Donald Trump’s financial history, written by two New York Times journalists. The general storyline is that Trump managed to fail as a real estate developer despite the help of his father Fred, a successful New York builder with a large portfolio of properties. But he managed to succeed in creating a public image as a great builder, with the help of a “reality television” show, a large inheritance, and other strokes of good fortune. For a time that image enabled him to make money just by licensing his name, but he eventually cheapened it by attaching it to enterprises of dubious value. The authors find “no evidence that in fifty years of labor Donald Trump added to his lucky fortunes.” They conclude that he would have done better by taking the money he received from his father and investing it in the stock market instead of in his own projects.
Although I think “lucky loser” is a fair description, it does not cover everything the book reveals about its subject. The adjective “crooked” belongs in there too, because of the part that Trump’s dishonesty has played in his financial fortunes. The authors cite the “dubious maneuver” of giving properties “a low value when dealing with tax authorities and a high value when trying to extract money from banks and buyers.” Another bad habit has been fabricating or exaggerating his accomplishments, while denying and covering up his failings. Of course, “crooked” is a word that Trump likes to use for his adversaries, but many observers have suggested that he projects some of his own weaknesses and insecurities when he chooses his epithets.
Fred Trump
The natural starting point for describing Donald Trump’s good fortune is to say that he had a wealthy businessman for a father. Fred Trump was already making money as a builder when the National Housing Act of 1934 helped turn the Great Depression into a “Golden Age for home builders.” The new FHA allowed thirty-year mortgage loans covering 80% of a home’s value, guaranteed by the government. During World War II, Title VI, Section 608 of the Act encouraged construction of apartments near factories and military bases by offering low-interest loans covering 90% of construction costs. Fred took full advantage of these opportunities, notably by building the largest private housing development in Brooklyn, Shore Haven.
By the 1950s, however, the public was learning how developers had been scamming the system. They were making quick profits by taking out loans that exceeded the cost of production and pocketing the difference. Then if renters couldn’t or wouldn’t pay the high rents needed to cover the large loan payments, the developers often defaulted on their loans, to the detriment of the tenants and taxpayers. Although Fred Trump took his own Shore Haven into default, he was able to expand his real estate empire by buying properties at auction when other builders defaulted. Despite his reliance on government-backed loans and weak regulation, Fred liked to portray himself as a self-made man. He claimed in a full-page newspaper ad, “Shore-Haven is a new monument to the American spirit of free enterprise. The project was conceived, planned, executed by Fred C. Trump, acting as a free and rugged individualist to meet the basic need for human shelter.”
The authors estimate that over the years, Donald Trump would receive “the equivalent of more than $400 million from his father” in gifts, loans—often not repaid—and bequests. To this day, Trump denies receiving more than a small fraction of that amount.
Education and exaggeration
The book describes the young Donald as a “dominant personality,” but with “a reputation for misbehaving.” His father sent him to New York Military Academy at age 13 in the hope of teaching him more discipline. His tendency to embellish his own accomplishments seems to have developed early on. To pose for his yearbook photo, he borrowed the dress jacket from another student who had earned more medals than he had. (As a military school graduate myself, I find that disgustingly dishonorable.) Later he would claim that he was at the “top of the military heap” at the academy, but five pages of awards in the commencement program do not include his name. His students did dub him the class “Ladies Man”; that much seemed to be true.
Trump went on to study business at Fordham University, where he is remembered for cutting class on nice days to play golf. From there he transferred to the Wharton School of Finance and Commerce at the University of Pennsylvania. He would later claim to have graduated at the head of his class, but the commencement program didn’t list him as even making the dean’s list.
What he did do was graduate in the late 1960s, “just as his father was prepared to begin passing along a business that would be worth a billion dollars.” The authors call this “the luckiest stroke of a life filled with big breaks.” His father favored Donald over his older brother Freddy, who disappointed his father by wanting to be an airline pilot and developing a drinking problem.
The Commodore/Grand Hyatt Hotel
The Commodore was a run-down hotel that Donald Trump acquired from the bankrupt Penn Central railroad. He proposed to renovate it, relying on his father’s close ties to New York Mayor Abraham Beame to help him get a big break on city taxes. The Wall Street Journal called this “the tax deal of the century.” The tax break attracted a partner, the Pritzker family, who owned the Hyatt Hotels.
Donald brought to the Commodore renovation what he usually would bring to his projects, a grandiose plan and an underestimate of costs. He then “cut costs in ways that created problems later.” For example, “Rather than installing the typical metal ductwork to draw air from the guests’ bathrooms up to the roof, Trump had shafts built of drywall, which leaked and made balancing the system impossible.” In the end, the renovation cost twice as much as he estimated.
The authors describe Donald’s approach to development this way:
With no real estate or financial staff at his disposal, Donald’s assessment of a potential opportunity started and stopped at the end of his nose. There would be no deliberative planning and very little in the way of an analysis of risks or potential return on investment. Every entrepreneur relies at some level on instinct, typically after running the numbers. Donald Trump went straight to instinct. The only brakes on this endless energy train would be whether he could leverage his father’s wealth to borrow tens of millions of dollars.
In this case, Donald was saved by two things. He could borrow from his father to pay excess costs. And the economic recovery in downtown New York brought back visitors and raised hotel occupancy and rates. The new Commodore—now the Grand Hyatt—did well.
Trump Tower
The first project that Donald Trump built from the ground up was Trump Tower, on the site of the old Bonwit Teller Building. He wanted a tax abatement for this project too, but that proved more difficult. The law he wanted to apply had been written to encourage apartment construction and keep residents in the city. But according to new guidelines, the tax break only applied to replacements for “functionally obsolete” buildings, and city officials ruled that Bonwit Teller did not qualify. Trump sued, eventually winning his case on the grounds that the guidelines in question had not actually been written into the law.
Once again, the project had extravagant designs, cost overruns, and attempts at cost-cutting. Residents of expensive apartments were surprised to find “cheap cabinets, Formica countertops, fake marble, parquet floor tiles, and low-end kitchen appliances.” But once again, favorable market conditions helped, and the project became one of Trump’s few profitable construction projects.
Building an image
Donald Trump’s grandiose proposals, lavish lifestyle and zealous pursuit of publicity were already giving him a reputation far beyond his actual accomplishments. Even before construction had started on any of his buildings, a New York Times reporter described him this way:
He is tall, lean and blond, with dazzling white teeth, and he looks ever so much like Robert Redford…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.”
In addition to the plan for the Commodore, the article cited two other projects, a Manhattan convention center and a huge complex in the West Side Yards of the bankrupt Penn Central, imagined to include 14,500 apartments and the tallest building in the world. Trump would never be able to build either of those projects. And as for the $200 million, that was Fred’s worth, not Donald’s. In 1982, the Forbes list of the 400 wealthiest Americans included Donald by saying that he shared the family fortune with his father. Actually, Donald’s ownership of real estate acquired by his father was limited to a few million dollars in apartments that his father had given him. Four years later, Forbes dropped Fred from the listings and mistakenly attributed full control to Donald. CBS’s 60 Minutes compounded the error by declaring Donald a billionaire. Then Lifestyles of the Rich and Famous doubled that by estimating his wealth at two billion.
By this time, Donald Trump had those two successful projects, the Grand Hyatt and Trump Tower. But his fame already far exceeded his actual accomplishments, and that would become even truer as his losing projects began to outnumber his winning ones.
Beneath the Surface 