About as classy as a $1 hooker in Detroit...

Anthony Scaramucci, explained

He’s not here to “suck his own cock.”

By Matthew Yglesias

Anthony Scaramucci, the newly installed White House communications director and, more importantly, the newest prominent featured player in the Donald Trump Show, is in some respects the most improbable but in other ways most inevitable addition to the cast of characters.

He’s already become famous for his interview with the New Yorker’s Ryan Lizza, in which he said a lot of profane things, including, “What I want to do is I want to fucking kill all the leakers.”

On the one hand, he has no experience in government and little in the way of meaningful ties to Republican Party politics. He’s also not 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’s certainly not qualified in any conventional sense for the communications gig.

On the other hand, he’s smug, confident, and comfortable on television. 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 makes sense as a top priority.

At the same time, Mooch is a very Trumpy figure — and not just in his bridge-and-tunnel mannerisms. He’s a “hedge fund guy” but not a guy like George Soros, who made money with smart investments. He built his fortune on what amounts to a high-end swindle, successfully marketing a high-fee, low-performance investment vehicle. And he now stands to make even more money by selling the company while simultaneously serving at a high level in the American government — the kind of blatant, obvious conflict of interest that no other president would even consider tolerating in a senior White House official.

And he’s not here to make friends.

Where did this guy come from?

Even fairly dedicated viewers of the Trump Show may have been 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 News, 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.

The Moochification of the White House

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.

But his rising star has come at the expense of other White House power centers.

In its original setup, the Trump administration was polarized between establishment Republicans like Chief of Staff Reince Priebus and populists like senior adviser Steve Bannon. Mooch — like Gary Cohn and Jared Kushner before him — represents a third force in the administration: rich guys with more or less conventional GOP views who also have no ties to the party and don’t really know what they’re doing.

Mooch has little regard for the two other factions, phoning up the New Yorker’s Lizza this week to say, “I’m not Steve Bannon, I’m not trying to suck my own cock; I’m not trying to build my own brand off the fucking strength of the President,” while also openly blaming Priebus for White House leaks and insisting the chief of staff would soon resign. There’s even word that Mooch is being groomed to take over for Priebus as chief of staff, and certainly, his early work in leak hunting and firing midlevel staffers seems to suggest playing a role broader than that of communications director.

On its face, this does not make a great deal of sense. But on its face, it did not make sense for the GOP to nominate a totally unqualified businessman who owes his political prominence to the promulgation of a racist conspiracy theory. And yet he won, and proceeded to make his wildly unqualified son-in-law the country’s top diplomat.

So in a sense, why not?