What Trump's Economic Advisers Have in Common

Donald Trump seen on a monitor speaking about his economic plans at the Detroit Economic Club on Monday. ENLARGE
Donald Trump seen on a monitor speaking about his economic plans at the Detroit Economic Club on Monday. Photo: Sean Proctor/Bloomberg

A group of high-profile investors who got rich buying up distressed assets have found their latest turnaround project: Donald Trump’s campaign.

The Republican presidential nominee last week announced his team of economic advisers, calling the 14 men a “formidable group of experienced and talented individuals.” The group, including nine drawn from real estate and finance, will help shape Mr. Trump’s policies on trade, jobs, regulation and taxes.

Those nine are united by more than their wealth. On Wall Street, they are outsiders, known for audacious bets and, sometimes, spectacular flameouts. Five of them are among Mr. Trump’s biggest donors, contributing a total of $ 1.7 million in recent months to his campaign’s joint fundraising efforts with the Republican Party.

The campaign, trailing in the polls and criticized for naming only men to the economics team, is preparing to disclose the names of as many as 10 additional economic advisers in the next couple of days, including some “very prominent” women, according to Steven Mnuchin, Mr. Trump’s national finance chairman. Mr. Mnuchin wouldn’t identify the new advisers.

“The whole intent is to have a combination of people with real-life business experience and economic experience, or specific areas of expertise in the scholarly world,” said Mr. Mnuchin, who is also one of the economic advisers.

Thomas Barrack, founder of Colony Capital, is one of Donald Trump’s economic  advisers. ENLARGE
Thomas Barrack, founder of Colony Capital, is one of Donald Trump’s economic advisers. Photo: Chris Goodney/Bloomberg News

Mr. Trump’s team includes some of the country’s wealthiest self-made men, whose collective net worth is in the tens of billions of dollars. The roster was swiftly criticized by opponents, who not only noted that it was all male but that it contained barely any prominent economists.

The team’s input helped shape Mr. Trump’s economic policy speech Monday in Detroit, which in part was meant to help refocus the struggling campaign on core policy issues. Democratic nominee Hillary Clinton mocked the speech as written by “hedge fund guys, billionaire guys” and “six guys named Steve.”

“The helpfulness of the team comes from their outside-of-the-system perspectives and positions,” said Thomas Barrack, founder and executive chairman of Colony Capital Inc., a Los Angeles-based private equity and real estate firm.

Six individuals on the Trump economics team, including Mr. Barrack, have at times pursued “distressed investing,” going after assets such as soured mortgages or the debt of struggling companies. When companies restructure their balance sheets, distressed investors can make a neat profit. But the strategy is risky, and is confined to a corner of the finance world.

Investor Wilbur Ross said Mr. Trump and Paul Manafort, the campaign’s manager, asked him to help formulate trade policy, owing to his long experience as a distressed investor in industries affected by imports and exports, from cars to textiles.

Despite some high-profile advisers, Mr. Trump’s campaign hasn’t won backing from the hundreds of hedge-fund managers, private-equity executives, investment bankers and other money managers who rallied behind Mitt Romney when he was the 2012 GOP nominee. This election, hedge-fund managers and others have given millions to pro-Clinton groups.

Mr. Trump has made inroads since hiring Mr. Mnuchin, a former Goldman Sachs Group Inc. GS -0.76 % banker, as finance chairman in May. A fundraising agreement with the Republican National Committee has opened some Wall Street wallets.

Activist investor Nelson Peltz of Trian Fund Management LP recently gave $ 50,000 to the joint fund, for example, federal records show. After Mr. Trump’s public spat with the parents of a Muslim U.S. Army captain killed in Iraq, Mr. Peltz also gave $ 50,000 to the Democratic National Committee, said a person familiar with the matter.

One sign of the overlapping interests of his advisers: a number of them have done business with each other. In 2009, Mr. Mnuchin and John Paulson, founder of $ 13 billion hedge fund Paulson & Co., were part of an investment group that bought the assets of IndyMac, a failed lender. The group sold the firm, renamed OneWest Bank, to CIT Group Inc. CIT -1.63 % for $ 3.4 billion, making a more-than-threefold return on their initial investment.

Mr. Paulson declined to comment through a spokesman.

Perhaps the most surprising member of Mr. Trump’s team is Stephen Feinberg, the reclusive co-founder of private-equity firm Cerberus Capital Management LP, who hasn’t been an active participant in politics.

Cerberus became well known for buying Chrysler in 2007, only to have its equity wiped out in the auto maker’s subsequent bankruptcy. Cerberus later recouped some of its investment through the sale of Chrysler’s lending unit—thanks in part to the Obama administration’s bailout of the auto industry that prevented the vehicle maker from going under.

Mr. Feinberg, who knows one of Mr. Trump’s sons through their shared fondness for hunting, signed on because he believes the nominee’s plans will help the U.S. economy, said a person familiar with the matter. The Trump campaign reached out to Mr. Feinberg about six weeks ago about joining the economic team, after much of the group already had been assembled, this person said.

Write to Anupreeta Das at [email protected]

WSJ.com: US Business

About The Author