Other than a brief cameo to open the first chapter, Wilbur Ross, who served as secretary of commerce during Donald Trump’s presidency and is poised to do so again should the Republican candidate win in November, does not introduce us to Trump until 200 pages into his new book, Risks and Returns: Creating Success in Business and Life. First, we meet dozens of colorful characters, including a World War I French Army private-turned-World War II American general, a young, recently fired Salomon Brothers partner named Mike Bloomberg, and a flamboyant corporate raider named Victor Posner.
Born in Baltimore, Maryland, Posner was living and working out of the top floors of what Ross calls “a seedy hotel” in Miami Beach when he bought a controlling interest in a truck equipment manufacturer that was also a client of Ross’s institutional brokerage firm. Posner’s intention for the truck business, Peabody Galion, was the same as with every medium-sized firm he bought: strip the company of its marketable assets, which usually meant hundreds of lost jobs, while paying himself a huge fee. Ross was tasked with flying to Miami to dissuade Posner from pursuing the takeover.
Upon arrival in Miami, Ross was whisked into a stretch Cadillac and driven to the aforementioned “seedy” hotel, which also has a rooftop, Olympic-sized pool, several cabanas, and about a dozen “very young,” barely covered teenage girls. “I’m paying the college tuition for these lovely girls!” Posner boasted to Ross, at which point, one of the girls giggled and added, “Yes, Mr. P is very nice to all of us.”
Ross and Posner then began negotiating right there at the pool, with Posner, at one point, trying to assure Ross of his good intentions for the company. Asked what “synergies” Posner saw between his current holdings and Peabody Galion, Posner responded, “I will be the synergy!” Ross was not persuaded.
As the day dragged on, Posner switched gears and offered to take Ross for dinner, accompanied by two of the “cookies” from the pool. After a “really nice meal,” during which the girls were “very friendly,” Posner insisted Ross stay the night, assuring him that “Lilly” really enjoyed his company.
Ross did not take the bait, instead flying that night back to New York, where he and his CEO decided to go on the offensive against Posner. They sued Posner, seeking to block the deal and subpoenaing him and his pool girls. When that did not scare Posner off, a young lawyer in Ross’s firm suggested subpoenaing the girls’ mothers, too. It worked. Posner called just a few days later. “You bastard! You know their mothers don’t have any f***ing idea what I’m doing, but I don’t want to make this a big war. Give me a bid 20% above my cost, and I’ll go away.”
Ross accepted Posner’s offer, and their paths never crossed again.
Fast forward a couple of decades, and Ross was now working for the famed Rothschild & Co., where he headed the firm’s bankruptcy practice. It was in this capacity that the bondholders who had just underwritten $800 million in construction bonds for the Taj Mahal casino in Atlantic City called. The Taj Mahal’s owner, Donald Trump, had defaulted on the bonds without making a single payment. Ross was again tasked with negotiating a deal.
Flying to Atlantic City by helicopter, Ross was again met at the airport by a stretch Cadillac, but this one had two flags on the front bumper, one American flag and one featuring the Trump crest. As Ross and Trump made their way through the city, tourists “pressed against the car in a total frenzy,” just hoping to get a glimpse of Trump. And when they reached the casino, Trump gave Ross a personal tour of the entire building, while fans “continued to flock to him” the entire night.
Finally in his office hours later, Trump got down to business, saying bondholders would be lucky to get 25% of par. Ross countered with 100% plus interest and new management, at which point Trump noted that the bondholders didn’t have a casino license but that Trump did. An empty building would be worth nothing to them. Ross responded by noting that Trump was the managing partner of the partnership that issued the bonds, meaning the bondholders could come after his personal assets. He then thanked him for the tour and left.
The night left both men impressed with the other. Ross came away convinced that Trump was in a unique position to use his fame and persona to draw people to the casino. Trump came away impressed with Ross’s blunt style. It was the beginning of a friendship.
After weeks of very public and bitter negotiations, Trump and Ross reached a deal in which the bondholders got full value and interest, 49% of ownership, and an independent board of directors. Trump got to keep 51% of the company, maintained control of the casino, and would be paid for his management.
After the deal was announced, Ross’s phone rang. “Wilbur, this is your mother calling! Have you lost all self-respect? How could you make a deal with that man after all the mean things he said about you?”
“Mom, I’m sorry you don’t like it, but our clients got a fair deal,” he said.
And that is the secret to Ross’s success: seeing the reality around him, ignoring the compliments and insults, and still doing the best for his client.
Ross was raised a Democrat by his two parents, who were both active in the New Jersey Democratic Party. His mother was a Democratic county committeewoman for 50 years, and his father was a local elected official. Ross maintained his Democratic Party identity through the 1990s and into the 2000s. Not only did he serve as treasurer of the New Jersey Democratic Party, but he also raised money for President Bill Clinton and Sen. Chuck Schumer (D-NY). But with Sen. Elizabeth Warren’s (D-MA) Consumer Financial Protection Bureau, Ross began to worry the Democratic Party had lost its way. Ross describes how his private equity firm helped buy a troubled bank from the Federal Deposit Insurance Corporation in 2009, install new management, and then take the bank public.
But then, CFPB regulators showed up on the first day and demanded to inspect the new firm’s compliance records, even though there had been no complaints. How could there be? It was a new bank. While the CFPB regulators found nothing wrong with the bank’s policies or any fraud, they insisted the bank hire more compliance staff. Ross then notes that the CFPB’s insistence on paperwork has raised the cost of doing business for small banks but not for the big banks that can afford to throw money at regulatory compliance costs, in turn starving local small businesses of the local bank loans needed for investment. Meanwhile, CFPB’s higher regulatory burden did nothing to stop the failures of the Silicon Valley Bank and First Republic Bank. “There is little doubt that some of the big banks and big nonbank financial institutions contributed to the financial crisis,” Ross writes. “But instead of precisely punishing and reforming these entities, the Obama administration fired a blunderbuss at the whole industry.”
A longtime resident of New York, Ross says it was Mayor Bill de Blasio’s “left-wing governance” that brought “greater crime and disorder to the city” that pushed him finally to become a Republican. And by the time Trump announced his campaign in 2015, Ross was fully onboard. “I supported his run on the merits,” he writes. He would serve as commerce secretary until Trump left office in 2021. With Trump locked in a dead-heat election to become president again, Ross is poised to serve, possibly, in the top economic role he held last time, helping implement a contentious economic agenda, including a 10% tariff on all goods entering the United States and 60% on every product entering from China. Like everything Trump says, this is just the first offer in a larger negotiation. After reading this book, it is clear Ross has the track record to get a good deal.
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Conn Carroll is the commentary editor for the Washington Examiner.