With his ouster as White House communications director Monday, Anthony Scaramucci’s tenure as a character on the Donald Trump Show will, in the end, be remembered as an impactful and memorable — but brief — guest appearance.
“The Mooch” arrived on the scene with great fanfare just 10 days ago. His hiring spurred press secretary Sean Spicer to announce his resignation. His profane, bizarre interview with the New Yorker’s Ryan Lizza quickly went viral. He swore to oust his enemy Reince Priebus from the chief of staff post, and successfully did so.
But this proved to be his own undoing. Trump’s pick to replace Priebus as chief of staff, John Kelly, was distinctly unimpressed by Scaramucci, who seemed both remarkably underqualified and remarkably incompetent. So on his very first day as chief, Kelly told Scaramucci that he was done.
Scaramucci was a bizarre choice for communications director from the get-go. On the one hand, he had no experience in government and little in the way of meaningful ties to Republican Party politics. He also wasn’t a populist or in any way affiliated with the ideological movement — nativist, protectionist, flirting with white nationalism, skeptical of free market dogma — that once appeared to be coalescing around the unlikely figure of an heir to a New York real estate fortune. He’s not even related to Donald Trump. And he certainly wasn’t qualified in any conventional sense for the communications gig.
On the other hand, he very much is smug, confident, and comfortable on television. He’s also in his early 50s, reasonably handsome, and genuinely a self-made man rather than someone who got by on loans from daddy. When Trump looks in the mirror, he probably sees someone like Scaramucci — the Mooch — who even has a cool nickname and whose SALT Conference series did a better job of transmogrifying money into respectability than anything Trump ever pulled off.
For a president who often seems to prioritize cable news coverage of his administration over the administration of government, getting a man like that in front of the cameras made some sort of sense as a top priority.
But for a former general trying to restore some discipline to a chaotic White House, the Scaramucci hire made far less sense — so he was shown the door.
Where did this guy come from?
Even fairly dedicated viewers of the Trump Show were likely confused by the sudden entrance of this new character, who was given little in the way of introduction and whose backstory, as evidenced by since-deleted tweets bashing Trump and praising Hillary Clinton, seems confusing and ill-suited to his current role in the narrative. But a couple of flashbacks can help explain.
Way back in the 2012 election cycle, Scaramucci — who at the time was well-known in the business press but not in the political world — decided he wanted to get into politics and emerged as a national finance co-chair for Mitt Romney’s presidential campaign. That meant, basically, that he raised a ton of money. The 2012 cycle was boom times for GOP fundraising on Wall Street, because Barack Obama’s post-crisis financial reforms had alienated many culturally liberal banking types, while in Bain Capital’s Romney the GOP had picked someone Wall Street felt like they knew.
Romney lost, but Mooch still had the politics bug. He signed on early in the 2016 cycle with Scott Walker; when Walker dropped out, he hopped on the Jeb Bush Express; and then in May 2016, he joined Steve Mnuchin as a rare Wall Street bundler for Trump.
Most traditional GOP donor types had little interest in Trump, both because of his then-populist rhetoric on banking and, perhaps more profoundly, because he seemed like he was obviously going to lose. But then he won. As his reward for loyalty, Mnuchin got to be Treasury secretary. Scaramucci was on the executive committee of Trump’s transition team and was set to join Trump's White House staff as an adviser and public liaison to government agencies and businesses, but that offer was later retracted due to financial conflicts of interest. Instead, he had to settle for a job at the obscure Export-Import Bank.
So when he leaped from seemingly out of nowhere to central stage, he was already fairly well-known to the press due to his backstory as a bundler. And, maybe more importantly, he was well-known to the press due to the unusual business model of SkyBridge Capital.
Scaramucci was successful at running a bad business
Mooch is referred to loosely as a Wall Street guy, a hedge fund guy, or even a financier. But his company, SkyBridge Capital, is not an investment firm in a conventional sense. Instead, it markets what are known as “funds of funds” — pools of money that are then invested in various different hedge funds. No actual management of an investment fund is involved.
The way this worked, as Jessica Pressler explained in an excellent 2012 profile of Scaramucci and SkyBridge, is that Mooch sold himself as essentially the gatekeeper to an exclusive club. Most hedge fund managers only want to deal with clients who can invest a lot of money — hyperrich individuals, pension funds, university endowments, and the like. SkyBridge was the answer for the workaday rich guy:
For him, there are advantages to being visible. Hedge funds are traditionally the province of the superrich, but Scaramucci aims to make SkyBridge — a “fund of funds” that creates portfolios of hedge-fund investments — the first company of its kind to target “the mass affluent.” That is, investors who have the $200,000 annual income or $1 million in net worth the SEC requires of “accredited investors” but aren’t connected enough to get in with a Daniel Loeb or a John Paulson. “Say there’s a dentist and he’s got a million dollars and he wants to have $50,000 in hedge funds,” says Scaramucci. “Well, he can do that through SkyBridge.”
This business model, however, has a fundamental problem. Once you account for the management fees, most hedge funds offer much lower returns than simple index fund investing. That’s not to necessarily say that nobody out there is smart enough (or lucky enough) to beat the market. But it’s clearly the case that on average, hedge fund managers are not beating the market, especially when you take into account the fees they charge.
A fund of funds, almost by definition, is not getting you into the best hedge fund in the world. It’s getting you into something resembling an average of hedge funds — i.e., a bad investment — and then it’s charging fees on top of that. A rotten deal.
Yet the Mooch made it work.
Trump likes making money off bad deals
Trump, who is very fond of zero-sum thinking, one-sided deals, and sketchy business ethics, would naturally find this background appealing.
Some people make money by providing mutually beneficial win-win arrangements. Steve Jobs invented a smartphone that delights millions. LeBron James earns a living attracting fans to the Cleveland Cavaliers. Trump doesn’t really do that. His early real estate ventures in Manhattan and Atlantic City ended up being failures that went bankrupt.
But in the mid-1990s, he started the process of spinning shit into gold by launching a publicly traded company, Trump Casino Hotels & Resorts, and bilking his investors for all they were worth.
TCHR never made any money for shareholders. “A shareholder who bought $100 of DJT shares in 1995 could sell them for about $4 in 2005,” according to Drew Harwell’s analysis of the company. “The same investment in MGM Resorts would have increased in value to about $600.” But it did make lots of money for Donald Trump. It spent more than $6 million on entertaining high-end clients on Trump’s golf courses. It spent $2 million more on renting Trump’s plane. It bought $1.7 million of Trump-branded merchandise. It bought a bankrupt casino from Donald Trump for $490 million. It paid Trump millions in salary for his work as CEO. And most lucratively of all, Trump was able to offload debts he had personally guaranteed onto the publicly traded company.
From there, Trump hopped to starring in a reality television programming and then into a lucrative celebrity brand licensing business. He also launched a fake university that had to pay out $25 million to settle fraud claims.
Trump is, in short, the kind of guy who’d look up to SkyBridge’s “make money selling bad products” business model, not down on it.
Mooch bought respectability more effectively
One key difference between Trump and Mooch is that even though Mooch is more genuinely the new money impresario that Trump only pretends to be, Mooch has been much more effective over the years at turning his money into a certain kind of elite respectability.
A key marketing gimmick for SkyBridge was the annual SALT (this is a fake acronym that doesn’t really stand for anything) Conference in Las Vegas that regularly attracted a first-rate cast of speakers. The 2017 edition is paying Joe Biden, Valerie Jarrett, David Cameron, Jeb Bush, and David Bossie from the world of politics to speak. Maria Bartiromo, the longtime CNBC anchor who recently departed for Fox Business Network, will be there. When Pressler profiled the company, the odd couple of Al Gore and Sarah Palin were featured headliners.
These aren’t narrow transactional deals designed to advance a specific lobbying agenda. Having eminences from both parties and both sides of the Atlantic attend the conference is a way to lend it respectability. Would Biden, Ben Bernanke, and former CIA Director John Brennan really all come to speak at an event for what amounts to a high-end swindle?
The answer, it turns out, is yes. And over the years, many financial journalists have enjoyed the conference as well. Las Vegas is fun, the speakers are interesting, and what’s the harm? Meanwhile, Mooch further leveraged his brand into regular appearances on CNBC and Fox Business sharing his investment tips with the masses. Now that Mooch has signed up as a Trumper, his reputation in elite circles is sure to take a hit. But until recently, he was a fully credentialed member of the Davos set in a way that Trump never was.
This background is why Mooch spent most of 2015 quite publicly slagging Trump as a disaster for the country and for the Republican Party.
But note that in key ways, it’s Trump who’s changed, not Mooch. After wrapping up the nomination and especially after wrapping up the presidency, Trump has governed as a much more conventional free market Republican than he campaigned on. The strong anti-immigrant themes are still there, as are the flirtations with ethnic nationalism. But the trade protectionism is muted, and on domestic business regulation, all thought of heterodoxy has vanished. His administration is chock full of Wall Streeters and is pursuing a dogmatically business-friendly agenda. The kinds of concerns that people like Mooch had about Trump have proven to be misguided, and Mooch was simply early in recognizing that.
The rise and fall of Mooch in the White House
After months in which President Trump had been unhappy with his White House’s communications team, he finally arrived at a rather outside-the-box solution on Friday, July 21: he would put the Mooch in charge of it.
That’s despite the fact that Mooch had never actually worked in press or communications when he was named to the post. But he had appeared on television defending Trump many times, and the president apparently was impressed by those appearances. So he named him White House Communications Director and said that press secretary Sean Spicer would report to him.
Spicer, naturally, was furious, and quickly said he would resign rather than report to Scaramucci. And Trump accepted his resignation (though it technically hasn’t gone into effect yet, suggesting it’s not impossible that Spicer might even stick around now that Scaramucci is gone).
With Spicer out of his way, Scaramucci set his sights on another official he’d long had bad blood with — chief of staff Reince Priebus. (Per the Huffington Post’s Vicky Ward, Scaramucci blamed Priebus for preventing him from getting a different White House post back in January.)
On Wednesday of last week, Scaramucci called up Ryan Lizza of the New Yorker and went on an astonishing rant, without ever bothering to take himself off the record. In it, Scaramucci threatened to “fucking kill” all White House leakers, said Steve Bannon was “trying to suck [his] own cock,” and said Reince Priebus was “a fucking paranoid schizophrenic, a paranoiac.” He also falsely accused Priebus of leaking his financial disclosures and said he’d called the FBI and Department of Justice on him.
Finally, Scaramucci openly admitted, at the end of the conversation, that he was planning to “start tweeting some shit to make this guy [Priebus] crazy” — and then did so:
Lizza published a report of his conversation with Scaramucci, and it went viral, even taking precedence over the administration’s push for the Senate to repeal Obamacare on cable news at the end of last week.
Finally, late Friday afternoon, word broke that Priebus was out — seemingly suggesting that Scaramucci had won.
But there was one small problem — Trump had chosen Secretary of Homeland Security John Kelly, a no-nonsense former general, as his new chief of staff. And Kelly apparently had little respect for or use for someone as unprofessional and unqualified as Scaramucci filling the communications director post. So out the door he went.