
Carl Icahn’s Failed Raid on Washington - GabrielF00
http://www.newyorker.com/magazine/2017/08/28/carl-icahns-failed-raid-on-washington
======
kelukelugames
>Icahn’s role was novel. He would be an adviser with a formal title, but he
would not receive a salary, and he would not be required to divest himself of
any of his holdings, or to make any disclosures about potential conflicts of
interest. “Carl Icahn will be advising the President in his individual
capacity,” Trump’s transition team asserted. In the months after the election,
the stock price of CVR, Icahn’s refiner, nearly doubled—a surge that is
difficult to explain without acknowledging the appointment of the company’s
lead shareholder to a White House position. The rally meant a personal benefit
for Icahn, at least on paper, of half a billion dollars. There was an
expectation in the market—an expectation created, in part, by Icahn’s own
remarks—that, with Trump in the White House and Icahn playing consigliere, the
rules were about to change, and not just at the E.P.A. Icahn’s empire ranges
across many economic sectors, from energy to pharmaceuticals to auto supplies
to mining, and all of them are governed by the types of regulations about
which he would now potentially be advising Trump.

How is this shit legal?

~~~
valuearb
How did Al Gore's pals get a billion federal dollars to fund their dumb
Solyndra idea? This kind of stuff is as old as the federal government itself.

~~~
PhantomGremlin
You're being voted down. That's because oh so many here weren't around when
the Chicoms were funneling cash to the Democratic Party for the 1996
election.[1]

Al Gore explained himself thusly: _" The vice president also observed that he
drank a lot of iced tea during meetings, which could have necessitated a
restroom break," the FBI summary stated. "It was not uncommon for him, and for
that matter the president, to excuse themselves from meetings to use the
restroom."_[2]

And, boys and girls, unlike the current special prosecutor to investigate
Russia's influence in the most recent election, the Democrats brazenly
stonewalled and the media let them get away with it.

 _This kind of stuff is as old as the federal government itself._

Yup. Anyone who doesn't realize this either had a crappy US History teacher or
daydreamed instead of paying attention.

[1]
[https://en.wikipedia.org/wiki/1996_United_States_campaign_fi...](https://en.wikipedia.org/wiki/1996_United_States_campaign_finance_controversy)
[2]
[http://community.seattletimes.nwsource.com/archive/?date=200...](http://community.seattletimes.nwsource.com/archive/?date=20000212&slug=4004391)

~~~
contrast
This is absolutely true.

The other thing to realise is that throughout human history there has always
been some degree of grift. In a money driven system like US politics,
especially so.

Therefore, it has always been the case that the degree and brazennesss of
grift is a part of how it is judged in practice.

So if you want to be honest with yourself, respectful of the history - you've
got to ask yourself whether you honestly believe whether Trump is doing a bit
of grift for election funds, maybe fund a lifestyle, but otherwise seeks to be
a great president. Or like his entire life, is he defined by fraudulent
pitches, self-dealing, financial and moral bankruptcy, law-breaking, and
stiffing his people every chance he gets?

This is why you get down voted. Not because people think the Democrats have
been pure as driven snow, but because they (and past Republicans) have passed
that test. Hell, Nixon resigned despite arguably passing that test end it was
clear he was getting close. Trump is failing it, big time.

"There are faults on both sides" has always been a cop-out for the worst human
behaviour.

------
valuearb
Great article, I love Carl Icahn stories. He's an unrepentant SOB, and
massively OCD. He's a smart guy who is right a lot, usually thinks clearly
about the long term, and that makes this story so compelling he's put his own
nuts in a vise over such a trivial benefit, while relying on an idiot
"friend". I mean Icahn should not be this dumb, ever.

Great quotes in the article as well.

"But, in reality, many New York financiers considered him a buffoon. In 2015,
Lloyd Blankfein, the C.E.O. of Goldman Sachs, greeted the suggestion that
Trump might run for President by remarking that the notion of the former star
of “The Apprentice” having his “finger on the button blows my mind.”

"In 2010, Trump again found himself in trouble in Atlantic City. But this time
Icahn was his antagonist. Along with a Texas banker, Icahn was trying to gain
control of three Trump casinos. When a lawyer asked, during a deposition,
whether Icahn intended to rebrand the casinos, he said that a consultant had
deemed the Trump name a “disadvantage.” In an interview, Trump shot back,
“Everybody wants the brand, including Carl. It’s the hottest brand in the
country.” But in Icahn’s opinion the only real downside to shedding the Trump
name was the expense that would be associated with changing all the signage"

"In court papers, Icahn’s lawyers suggested that Trump’s name was no longer
“synonymous with business acumen, high quality, and style.” Icahn told the
Wall Street Journal, “I like Donald personally, but frankly I’m a little
curious about the big deal about the name.” If the Trump brand carried such
cachet, he asked, why did Trump properties keep going bankrupt?"

~~~
metaobject
I'm not sure I'd call ~$500 million a trivial benefit.

~~~
valuearb
It's a $200m a year benefit based on what the refinery paid last year for the
credits . The article used a jump in the stock price to say Icahn made $500M,
but that's not really true because

1) Stock prices go up for many reasons 2) Icahn didn't sell to monetize in
that gain and hasn't sold yet. And likely wasn't going to sell even if RIN
reform passed. 3) Now that he's resigned and the odds of passing any RIN
reform is virtually zero, the refinery's stock has zero RIN value in it.

I say it's trivial because $200m a year on a $17B portfolio is barely 0.1% a
year. His deal-making efforts are worth many times that, at least 10% a year.
So why get tied up in a mud fight with a pig over a scrap of a morsel?

~~~
cldellow
200m on 17b is 1.1%, not 0.1%.

Why do it? Because the penalty for getting caught is both tolerable and much
smaller than the reward if you are successful.

~~~
valuearb
Math is hard, man.

------
AVTizzle
Seems like this piece made an impact before going live:

"Trump advisor Carl Icahn resigned ahead of negative magazine article"

[http://www.latimes.com/nation/nationnow/la-na-icahn-
resignat...](http://www.latimes.com/nation/nationnow/la-na-icahn-
resignation-20170819-story.html)

~~~
__derek__
And the departure caused the article to be published early[1]:

> I've been reporting on Carl Icahn's role as an adviser to Trump. Monday, in
> an email to me, the White House fired him. Today, he resigned.

[1]
[https://twitter.com/praddenkeefe/status/898674961161662464](https://twitter.com/praddenkeefe/status/898674961161662464)

------
csours
> Because most attendants were women, Icahn insisted, they were not
> “breadwinners,” and should not expect compensation commensurate with that of
> male employees. At one point in the negotiations, he reportedly suggested
> that if the flight attendants were having such trouble making ends meet they
> “should have married a rich husband.” (Icahn denied having made sexist
> comments.) C. E. Meyer, the company’s chief executive, described Icahn as
> “one of the greediest men on earth.” T.W.A. eventually went out of business.

What a nice fellow.

------
timefractions
Isn't he one of Lyft's biggest investors?

------
rayiner
Corn lobby beats oil lobby this round. Yawn.

~~~
Animats
Meanwhile, Icahn makes money on the deal, by anticipating market reaction to
his lobbying. Even though it doesn't succeed, the market drops, his short
selling profits, and he's up about $200M.

~~~
klipt
Does that not violate insider trading laws?

~~~
coliveira
Insider trading laws were written for small fish. Large players are protected
because, apparently, the trading they do is "public". So, the thinking goes,
it is just fine if they use inside information for their deals. A guy who uses
inside information in every deal is, of course, Warren Buffet. But since he is
big and a long term investor, they see no problem.

~~~
atomical
I don't agree with your statement about Buffett. I am curious about one thing
though. Buffett prefers to buy businesses during a recession when the books
aren't looking so hot and Berkshire Hathaway can get a good deal. What sort of
insider information could be useful in that scenario?

~~~
matt4077
I believe OP was referring to a few stories that recently showed how Buffett
profits from the reaction to the news of his investments, and companies also
offering him sweet deals (i. e. buying new stock at a discount) because they
see an investment by him as excellent PR.

That's not so much insider trading, and "market manipulation" also doesn't
completely fit. I guess Buffett has just become a self-fulfilling investment
prophet.

~~~
valuearb
Buffett's returns today, while still very good, are a pale shadow of the
returns he put up in his first decade, or even his first 30 years. Somehow all
these "sweet deals" haven't moved the needle for Berkshire.

The real reason current returns are lower is that the constraints on Buffett
have grown over time and now are the heaviest they've ever been. Investing a
$400B portfolio offers him far fewer opportunities than a $50M or even $10B
portfolio did.

And announcements of his purchases are very damaging to his returns. Typically
only has a month or two before he's required to file with the SEC disclosing
significant new purchases. So accumulating billions of dollars of stock in
most companies in those months without driving up the price is either
impossible or really difficult. Once he files his SEC report, the prices
almost always increase substantially from 'free riders' trying to piggyback on
his trades.

The stock price popping up quickly not good for Buffett, in fact it's
terrible. It forces him to stop buying what he regarded as a bargain. He never
flips his positions, he's going to hold them for many years, usually many
decades. The free rider problem means he has to invest less, and make less on
each investment, hurting his returns.

And the "sweet deal" allegation is pretty ludicrous. Berkshire is a very
special financial source, a CEO can call Buffett directly and get a hard price
almost immediately. The price he gives is never very good, but for businesses
that need money badly they know he will always close the transaction quickly
without trying to renegotiate or bailing out.

Goldman Sachs during the 2008 crisis was a good example. Goldman is owned/run
by hard eyed partners, but during the crisis their backs were against the
wall. They had to add more capital, and were being forced to sell shares at
really horrible prices to raise it. They got $5B from Warren in an emergency
phone call, and in preferred shares were less dilutive than selling common
shares.

No one else on earth was willing to step up during that immense crisis and
give Goldman a better deal, more likely any deal at all (Lehman had just filed
bankruptcy). If someone else gave them a slightly better offer, the sharks at
Goldman would have taken it.

And Buffett is always laughed at when making these deals because wall street
execs claim he overpaid. Its not till years later when the results come in
that revisionists says they were obvious sweetheart deals. Yet somehow the
revisionists never picked up the phone to get in on them.

~~~
atomical
Buffett and Munger both say that there are less opportunities because they
have so much cash to invest.

[https://www.youtube.com/watch?v=RpzrHPYWojY](https://www.youtube.com/watch?v=RpzrHPYWojY)

