The Trumps: Three Generations of Builders and a President

The Trumps: Three Generations of Builders and a President

by Gwenda Blair


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The definitive family biography of President Donald Trump.

The revealing story of the Trumps mirrors America’s transformation from a land of striving immigrants to a world in which the aura of wealth alone can guarantee a fortune. The Trumps begins with a portrait of President Trump’s immigrant grandfather, who as a young man built hotels for miners in Alaska during the Klondike gold rush. His son, Fred, took advantage of the New Deal, using government subsidies and loopholes to construct hugely successful housing developments in the 1940s and 1950s. The profits from Fred’s enterprises paved the way for President Trump’s roller-coaster ride through the 1980s and 1990s into the new century.

With his talent for extravagant exaggeration—he calls it “truthful hyperbole”—President Trump turned the deal-making know-how of his forebears into an art form. By placing this much-publicized life within the context of family, Gwenda Blair adds a new dimension to the larger-than-life figure who ascended to the American Presidency.

Product Details

ISBN-13: 9780743210799
Publisher: Simon & Schuster
Publication date: 12/04/2001
Edition description: Reprint
Pages: 592
Sales rank: 247,640
Product dimensions: 5.50(w) x 8.44(h) x 1.70(d)

About the Author

Gwenda Blair is the author of the bestselling Almost Golden: Jessica Savitch And The Selling of TV News, and she has written for Politico, The New York Times, New York, Newsweek, the New York Daily News, Esquire, Smart Money, The Village Voice, Chicago Magazine, and other newspapers and magazines. She lives in Chicago and teaches at Columbia University’s Graduate School of Journalism. Follow her @GwendaLBlair.

Read an Excerpt

Chapter Twenty: Spinning out of Control

The night of his book party, Donald Trump received the homage of New York City's glitterati and literati, people who showed up in bold-faced type in gossip columns as well as people who disdained the columns. But the only person he seemed to show any genuine interest in seeing was a twenty-four-year-old aspiring actress from Dalton, Georgia. Her name was Marla Ann Maples, and her idol since childhood had been Marilyn Monroe. Blonde, blue-eyed, and stunningly beautiful, she had a soft southern voice and a warm, friendly manner. She also had a spectacular body: five feet eight inches tall, 125 pounds, long legs, and full breasts. When she was only sixteen her looks had brought her an offer to pose nude for Playboy. She refused but did accept first place in a swimsuit pageant, modeled in print ads for airlines and ceramic tile adhesive, and had a bit part in a Stephen King horror movie called Maximum Overdrive, in which she was crushed to death by a truckload of watermelons.

Now these same looks brought her Trump's complete and, for once, undivided attention. Over lunch and, soon, late-night dinners, she shared with him her earnest belief that everyone, including him, is on this earth for a higher purpose; he courted her with press clips and reviews of his book. Soon he installed her nearby, at the St. Moritz, a hotel on Central Park South that he had bought with the idea of someday turning it into condominiums. When he was in Atlantic City, she stayed at Trump Plaza. He relished showing off her photograph and boasting of her 37-25-37 measurements, and sneaked away from work whenever possible for a midafternoon rendezvous. He paid her expenses, bought her lavish gifts, gave her cash, and flew her and her family in his jet. When she called his office she used a special code name, and his staff had standing orders to attend to her every need.

Trump's life was already impossibly crowded. Every day he barely made his way through the phone calls, the documents, the employees urgently needing his attention, and all the schemes and dreams that were constantly running through his mind. He gave few people more than a moment or two of his time, slept only three or four hours a night, and, reportedly, for an extra boost took diet pills. The prescription, supposedly written by a doctor who had once been investigated by 60 Minutes, was for an amphetaminelike substance that suppressed a patient's appetite and produced a sense of euphoria and boundless energy — precisely the sort of manic behavior that staffers often saw their boss exhibit.

Now he was embarking on a second, secret life, with all the claims, conflicts, and confusions that inevitably accompany such a situation. When possible, he dodged his wife; when this was not possible, he became furious at her, setting off hurt feelings, recriminations, self-justifications, and more dodging. Flitting from one illicit love nest to another, he struggled to keep straight the half-truths, careful shadings, and often outright lies he had to tell to keep the two lives going. He began making deals for their own sake, or deals that had no purpose other than self-aggrandizement, or, most worrisome of all, deals that simply made no sense on any level. And as the deals piled up, Donald Trump lost track of what he was all about — a fatal error.

To blame the disaster that would eventually unfold on the curvaceous blonde from Dalton would be a mistake and also a misconception. For all his adeptness at deal-making and his astuteness at reading other people's minds, Donald Trump seemed remarkably unaware of what was going on in his own head. The man who had made being a winner the most important thing in his life would not acknowledge even to himself that he was in the throes of the one thing that, sooner or later, overcomes all creation — aging. Reportedly he had nips and tucks to eliminate wrinkles and sagging jowls and, eventually, liposuction to take away the extra pounds his taste for pizza and chocolate cake from Cakemasters had put on. Acutely aware of his thinning hair, he took to arranging what was left in careful comb-overs and, by one account, hiding the pink skin of his exposed scalp by tattooing it a darker hue. Equally concerned with graying, he followed his father's example and colored his hair, occasionally turning up with an odd orangish shade.

In classic male midlife-crisis fashion, he looked outside his marriage for affirmation that he was still attractive, vital, and potent. Even before Ivana began commuting to New Jersey to run the Castle, he had pursued other women. Because he was a notorious germ phobe, it seemed doubtful that many of these liaisons involved sexual intimacy. Nonetheless, gossip columnists linked his name with those of actresses, models, and other glamorous celebrities, and he fanned such rumors with selective leaks and innuendos. In turn, as happens with many powerful public figures, other women pursued him — a fact he lost no opportunity to brag about.

On one occasion he gave broker Jack Shaffer a ride to a party and boasted that when he got there every woman in the room would come over to him. "You want to throw up when you hear that," Shaffer said later, "but when he walked in, they did all run over. I felt like I was carrying his briefcase." Such attention was thrilling, but it was also wreaking havoc in the developer's head and his life. "Donald hadn't figured out that he was a powerful man and women would jump all over him," said another colleague. "He would walk one block and twenty-two women would hit on him. He got constant solicitation letters. This availability of other women can be unbearable if you don't have things in balance, and the other women were making him crazy."

Eight months before Marla Maples entered the developer's life, while he was in the midst of trying to bring off Television City, by far his biggest deal in New York, and unload the unsold condominiums at Trump Plaza of the Palm Beaches, he made another, unrelated deal in Atlantic City. It would bring him the largest casino in the nation at the time and eventually lead to his downfall. Named the Taj Mahal, this asset became available in April 1986, after James Crosby, international playboy and owner of Atlantic City's first legal casino, died of acute emphysema. Facing a messy squabble over his estate, his heirs opted to sell off his casino properties. In March 1987 Donald Trump arranged to buy a controlling interest in Resorts International, Inc.; the eventual price would be $96.2 million. For this sum he received Resorts' $600 million in junk bond debt and two gambling facilities: the tired and by then money-losing casino that had opened back in 1978, and the half-finished Taj, which would cost an estimated $525 million to complete.

Already the Taj was overbudget and behind schedule. When it was finished, the three-casino rule would require Trump to sell one of his Atlantic City properties or convert one into a nongambling hotel. The Taj was also likely to steal business from the developer's other casinos, and it would tie him even more closely to a town that sometimes seemed worse off than before the 1976 referendum. Since the arrival of the casinos, the town had lost 20 percent of its population, 15 percent of its already inadequate housing stock, and much of its hope that there was any possibility its fortunes could somehow be restored. At this point Atlantic City had thirty-five thousand residents, eighteen thousand slot machines, and the highest crime rate in the state. Half the city received public assistance, the ex-mayor was in jail for misconduct, and other public officials had set new records for personal greediness. Most of the forty thousand casino jobs had gone to outsiders who commuted from elsewhere, and gambling taxes intended to revive the town had little effect so far. Instead the shimmering casinos had become almost entirely white enclaves strung out along the Boardwalk and on the marina, and most of the black-majority city remained a bleak wasteland of squalid storefront businesses, deteriorating homes, and weedy vacant lots.

Those were the negatives connected with buying the Taj. The positives were a casino in the Bahamas, vast amounts of prime Atlantic City real estate, and, especially, the fact that the Taj would have a casino the size of Trump Plaza and Trump Castle combined. The tallest building in the entire state, the Taj would inevitably dominate the market. "Everything is much bigger than it should be," Trump told one reporter. "It's built as a dream." Evidently this staggering size, plus the fear that if he didn't buy Resorts someone else would, seemed to him reason enough to act. Against the advice of two of his most trusted associates, Harvey Freeman and Jerry Schrager, he went ahead.

Two months later Mayor Koch turned down Trump's proposal to obtain city subsidies for Television City. To salvage his reputation, the developer quickly produced The Art of the Deal. But the same month it came out, he made a deal that was as dubious as his purchase of the Taj: he bought the world's third largest yacht. Built by arms dealer and financier Adnan Khashoggi in the late 1970s and named after his daughter Nabila, it had cost $30 million to build and another $55 million for superluxury appointments. A decade later Khashoggi was broke, the yacht went to pay off a loan from the sultan of Brunei, and it became clear that, as with Mar-a-Lago, an extraordinary creation had become a gigantic white elephant. In the fall of 1987 Donald Trump bought the boat for $30 million, minus a $1 million discount he wangled to remove the name of Khashoggi's daughter from the hull.

It was a typical Donald Trump transaction. Edward S. Gordon, a major New York real estate broker, recalled receiving a call from him during the negotiations for the yacht. Gordon counseled him to go with the sultan's final offer, which the developer did. "Donald calls me four days later and says, 'It was worth the $40 million I paid,'" Gordon said. "I said, 'What are you — you can't do this to me.' But that's the Donald." By then, though, Gordon was used to the developer's numbers games. "Half the time he's so full of shit," Gordon said. "He'll double the numbers on me, and it's a deal I did for him. I'll say, 'What are you doing, I did the fucking deal' — and he'll say, 'Oh, oh, yes.' But he believes it, he's doubled it and believes it. That's his strength and his weakness."

Renamed Trump Princess, the yacht had all the usual rich-and-famous touches: eleven guest suites with bird's-eye maple and gold-plated doorknobs, two waterfalls, a sun deck surrounded by bullet-proof glass, a discotheque, and sleeping quarters for a staff of fifty-two. In addition, there were more than two hundred phones, used by Khashoggi and guests for arms deals and commodities trades on the high seas, as well as secret passageways and pushbutton-controlled ceiling panels, windows, and doors. The one thing the ship lacked was any sense of comfort, and it was so large that few marinas could accommodate it. Although its new owner spoke of it often, he never spent a night there and visited infrequently. When he did venture aboard, he led guests on tours and pointed out the numerous "quality" items, including the hull's steel plating, the medical equipment in the three-room hospital, the hand-carved onyx bathroom fixtures, and the solid gold sink in the master suite. Calling his new prize "a masterpiece," he declared it "beyond a ship or a boat or a yacht. That's what I love."

What he did not love were boats themselves. "I'm not exactly into them," he said. "I've been on friends' boats before and couldn't get off fast enough." Nonetheless, an hour after he took possession of the yacht, he was making plans to sell it and build a new 420-foot Princess, and he would later briefly own the Dutch shipyard he commissioned to construct it. Like Mar-a-Lago, the current Princess would be a place for paybacks and piling up credits, and it would also spawn a line of Princess souvenirs. Although the developer delegated most details about the boat, he took a direct hand in designing the ship's logo, a voluptuous mermaid who would appear on T-shirts and towels as well as crew uniforms. "My marching orders were to make everything else look the same, just brand new," said longtime deputy Jeff Walker. "But on the mermaid, we tried contemporary, traditional, big breasts, small breasts, nipples, no nipples, for hours and hours."

The Princess, it turned out, was only a warm-up for the next purchase. The new prize was the Plaza Hotel, the elegant Edwardian-era landmark at the corner of 59th Street and Fifth Avenue. Built to resemble a French château, it had a mansard roof faced with green-tinged copper, and its lavish interior was filled with crystal chandeliers, European tapestries, and Oriental carpets. Since its opening day in 1907 the Plaza had been a favorite of the rich and the famous, but in recent years its appearance had slipped, as had its occupancy rate. Nonetheless, the developer was smitten. In March 1988 Donald Trump bought his heart's desire for $407.5 million — the highest price ever paid for a single hotel — even though he had not done a careful inspection of the property.

"Trump wasn't Trump in this deal," said one of his lawyers for the transaction, Norman Bernstein. "Normally we'd tear a property like this apart." Donald was himself in one detail: his $425 million loan from a Citibank-led consortium, almost $20 million over the purchase price. "He was like an international superstar who says, 'I want to do a movie, who wants to pay for it,'" said Blanche Sprague. "Jerry Schrager would have this fabulous way of presenting it to the bankers, Donald would walk in and shake a few hands and smile, and then boom, there was the money."

This time, though, the money came with a condition: $125 million required a personal guarantee from Trump. It was a decisive moment. Within the real estate industry, famous for operating on other people's money, risking your own was seen as folly on such a scale as to be almost a sin. A personal guarantee was something Fred Trump would never have considered, and his son had done it only once before, on Trump Plaza in Atlantic City, and then only for ten days. Worse, he was taking this momentous step on a deal where the property's annual cash flow, less than $20 million, would not come close to covering interest payments.

"I haven't purchased a building, I have purchased a masterpiece — the Mona Lisa," he declared in another full-page open letter in The New York Times. "For the first time in my life, I have knowingly made a deal that was not economic — for I can never justify the price I paid, no matter how successful the Plaza becomes."

Actually, the justification had already begun via this faux confession, intended to underscore the hotel's cachet. And, in fact, the status and distinction the Plaza Hotel conferred were enormous — so much so that even Donald Trump made no effort to put his name on the outside. Even though the hotel would never earn out, buying it was arguably the right move because it gave prestige and power and was worth more than the cash flow would ever justify. The problem was that the developer did not stop there.

It could not have helped that he was constantly distracted. For one thing, he was still carrying three as yet unprofitable projects: the rail yards, the Taj, and the West Palm Beach condominiums; also, there was the unresolved problem of Ivana. Commuting by helicopter, she spent three days each week at the Castle, where she had honed herself into an executive machine and copied her husband's hands-on style wherever possible. She signed every check, reviewed in minute detail everything the Castle's managers did, and issued an endless stream of orders that, whatever their ostensible purpose, kept the staff on permanent high alert. She had special high-roller parties and, on one memorable occasion, led a congo line through the casino. Despite her lack of casino experience, she managed to surpass Trump Plaza in monthly revenues, enraging the casino veterans who were her counterparts there.

But with every success she had, her husband grew more alienated. He did not want to be reconnected to her; he wanted out. He had dispatched her to run the Castle because he did not want to be around her in New York, but now it was inconvenient to have her in Atlantic City. Because of his involvement with the Taj, he had to be in Atlantic City himself, and he wanted his mistress with him. Accordingly, and abruptly, he yanked his wife back to run the Plaza Hotel. The gesture might have passed as a reward, but he publicly belittled her by saying that he was paying her $1 a year and all the dresses she could buy. Once again there were hurt feelings, recriminations, and self-justifications; inevitably there was even more dodging.

Ivana kept trying. After her husband complained that she looked old and haggard, she had extensive plastic surgery and emerged looking at least a decade younger, but he seemed unmoved. He had refused to have sex with her for more than two years and complained that she was flat chested; after she made her entire body over, he recoiled from the sight of her implanted breasts. Nothing she could do, or say, or not do, or not say, was right.

The reason he had to pay more attention to Atlantic City was that the Resorts deal had hit a snag. To complete what would be his first takeover of a public company, he had needed Resorts' other outstanding shares. But at a share price of 62, that would cost a lot. So Donald Trump had gotten to work. He had demanded a $1 billion management contract and settled for a still-huge $200 million to $300 million. He had declared that the construction of the Taj would cost hundreds of millions more than current estimates. He had spoken of the whole Resorts situation with uncharacteristic glumness. The share price went to 49 and then, after October 19, the stock market's Black Monday, to 33. Somehow word leaked that he was thinking about putting Resorts into bankruptcy. The share price sank to 22. At state hearings on his new management contract, the developer again painted a bleak picture of Resorts' prospects. The share price hit 13.

Disgruntled shareholders threatened to file suit, and by March 1988 the developer had agreed to settle at 22. As he sat in his Trump Tower office and glanced down at the St. Patrick's Day parade marching up Fifth Avenue, he got some bad news: The Resorts share price, which had been sinking for more than eight months, had turned around.

"What's going on?" he yelled.

The answer was talk-show host Merv Griffin. Flush from selling Wheel of Fortune and Jeopardy to Coca-Cola for $250 million in cash, the white-haired, ever affable entertainer had made a tender offer of 36 for all of Resorts' outstanding shares. In mid-April he flew to New York in his private plane and met with the developer at Trump Tower. Griffin knocked off a few jokes, then nodded in his best ego-stroking host style as Donald machine-gunned his ideas in rapid, impatient bursts. "I have all the cards," he declared repeatedly, then interrupted himself with his trademark, "You know what I mean?"

For the next month negotiators hammered away at deal points while trying to talk their respective principals out of what Griffin lawyer Tom Gallegher labeled "the deal from hell." Undaunted and unruffled, Griffin listened and smiled; the developer, alternately engaging and aggressive, raced ahead, jumping back and forth between general points and seemingly random details. "There was the good twin and the bad twin," Gallegher said. "In many ways [Donald was] a Jekyll and Hyde guy. He could be enormously charming and you'd almost think, gee, this is a nice, decent, warm guy, and then the bad twin would come out."

Finally the developer and the entertainer cut a deal. Donald Trump would buy the unfinished Taj for $273 million, less than half of what had already been spent on it, and he would also receive $63.7 million in "severance" for his management contract. Merv Griffin would get the original Resorts casino hotel, the Bahama resort, and the Atlantic City real estate. Essentially each party got what he wanted, although Griffin also wound up with what he didn't want, Resorts' existing $600 million debt.

For months the press speculated about who came out ahead and by how much. It was hard to make a strong case for Griffin. He had immediately piled on another $325 million in junk bonds — a landmark of sorts, for it was Drexel Burnham Lambert's last Atlantic City deal before a securities fraud indictment caused the firm's expulsion from the New Jersey casino industry. In the months to come, he would take Resorts in and out of bankruptcy twice.

Then again, Trump also miscalculated. He had assumed that he could obtain another junk bond issue from Bear, Stearns, which had stopped writing high-risk paper for Resorts only when, as the investment bank's famously aggressive head Ace Greenberg put it, Jim Crosby "had the audacity to die on me." It had also provided the financing for Donald Trump's first two casino purchases and acted as his broker during what many considered his greenmail forays. But the developer wanted to make the property more highly leveraged than even Bear, Stearns could handle. When he told Greenberg that Merrill Lynch would peddle $675 million in bonds, almost twice Bear, Stearns's top offer of $320 million, Greenberg told him to go ahead. "The world was offering him deals we could not and would not compete with," Greenberg said afterward.

The developer's second misjudgment was what it would take to get the Taj Mahal up and running. Under Crosby, its construction had eaten cash and lurched along uncertainly for years. "We didn't even have a plan," said Crosby's top aide. "You just [pointed and] said, 'Keep building that way.'" After Crosby died, the estate left the site exposed to rain, wind, and salt air. In effect, Trump was taking on Wollman Rink all over again, on a vastly larger scale; this time, though, instead of paring the job down to the bare minimum, he expanded it. Carrara marble replaced less expensive materials, $250,000 crystal chandeliers from Austria bumped more pedestrian light fixtures, and areas that Resorts planned to leave undone became sumptuous hotel suites.

With Marla, Ivana, the Taj, the yacht, the rail yards project, the still unsold Trump Plaza of the Palm Beaches, and the Plaza Hotel to deal with, a mere mortal might have paused. Instead Trump jumped into yet another folly. It was, in effect, a flying building — or, rather, a fleet of flying buildings: twenty-one Boeing 727s, plus leases on facilities and landing slots at Washington's National Airport, New York's LaGuardia Airport, and Boston's Logan Airport. These assets, previously owned by the Eastern Shuttle, would now be the basis for a new Trump Shuttle — and for extending the Trump franchise even further.

Indeed, airlines are a superb publicity vehicle. "Everybody is fascinated by planes and travel," said Goldman Sachs airline analyst Glen Ingalls. "There were no profits in the airline industry [then], but there was a glamour to it. You didn't know who ran Procter & Gamble, but you knew that Bob Crandall ran American Airlines." The problem was that airlines are also a poor business proposition for someone whose field is not aviation.

Ignoring Harry Freeman and Jerry Schrager's advice to pass on the deal, Trump set up a meeting with Bruce Nobles, the president-designate of the independent shuttle operation Eastern Airlines had been trying to spin off. Nobles, whose father starting working at American Airlines six months before he was born, had gone into the industry after college. He'd worked his way up to the presidency of the other northeast corridor shuttle, Pan Am, when he was hired to head up Eastern's new operation. But financial and labor pressure had put Eastern's plans on hold for so long that the airline was instead selling its shuttle-related assets to the developer for $365 million. At four o'clock on the afternoon of Wednesday, October 5, 1988, Trump, Freeman, and Nobles sat down together at Trump Tower.

"He asked me a lot of questions," said Nobles, "but he was most interested in how much cash flow the shuttle would throw off. I didn't know why at the time." Evidently his answers were satisfactory. "At five o'clock Donald offered me the presidency of the Trump Shuttle," Nobles said. "At six o'clock he said, 'You can't leave until you agree,' and at seven I said, 'All right.'" One week later the two appeared at a Plaza Hotel press conference to announce the developer's newest venture.

In the meantime, what at first looked like a tremendous stroke of good fortune would have an ultimately bad effect. That same month Donald Trump came across someone who outdid him for reckless behavior: Australian beer baron Alan Bond, who paid him $180 million for the St. Moritz. To hear Trump tell the story, he had paid $31 million for the hotel in 1985 with the thought of turning it into condominiums at some point and thus made a profit of almost $150 million; in fact the property had cost $73.7 million, which meant a still hefty profit of $106.3 million. More important, the developer took the deal as proof that he had not lost his business touch and thus could continue with the string of deals that Freeman and Schrager kept vetoing.

Several court suits and one crippling labor strike later, the Trump Shuttle finally took off the following June. The developer launched an ad campaign and a $1 million-per-plane makeover to make the airline "a diamond, an absolute diamond." To Trump's chagrin, weight problems ruled out marble, and the need to push refreshment carts down the aisles deep-sixed the plush carpeting he preferred. Nonetheless he managed an elegant look, with bird's-eye maple veneer on the cabin walls, chrome seat belt latches instead of polished aluminum, and, in the lavatories, gold-plated fixtures and pink faux marble. "Donald was convinced that people would choose the Trump Shuttle because it was Trump and it was beautiful," Nobles said. "But the product was the product. People flew for pragmatic reasons."

Soon the new airline was close to splitting the market with the rival Pan Am Shuttle. A 50 percent share was all that the developer could reasonably expect; unfortunately he was counting on 60 percent to cover the stiff interest payments on the $380 million in loans he had used to buy and refurbish the planes. As with the Plaza Hotel, Citibank had provided the lion's share, $245 million, and Trump had to make a personal guarantee to cover the balance of $135 million. Nobles, who had never seen such high leveraging in airlines, mentioned his concern. "Don't worry," he was told. "We know what we're doing." Some Citibank lending officers also seemed uneasy, particularly those who handled airlines, but they weren't running the show. Instead the real estate side, where the developer was a big customer, had taken charge. They were used to high-risk clients who routinely put the highest possible leverage on their projects. The critical factor was having enough cash flow to cover interest payments, which is why Trump, Freeman, and, later, the banks, had grilled Nobles closely on this very point.

In November 1989, five months after the Trump Shuttle started flying, a recession hit the Northeast, and business travel contracted immediately. The shuttle market, which had been growing for thirty years, shrank. The next month it shrank again, just as fuel costs went up. Ordinarily the different entities within the Trump Organization upstreamed and downstreamed funds, transferring surplus cash back and forth to cover expenses. But with the recession there was no surplus. Because shuttle costs were fixed, Nobles had to ask the Trump Organization for funds to cover interest payments.

The request made Donald Trump most unhappy. "He wanted each operation to be independent, to live or die by itself," Nobles said. "He wanted everybody competing against each other and beating their brains out. He thought that was the best way to increase profits." Nobles had suggested possible economies of scale and synergies, such as combining information and reservations systems, but the man who had relied on creative competition in every aspect of his business was not interested. The closest the developer would come to letting different operations work together was to have the shuttle give passengers casino vouchers. But shuttle passengers were not casino customers, and of the tens of thousands of coupons that were distributed, few were redeemed. Meanwhile the airline's overhead remained untouched.

Belt-tightening and pulling back did not fit into the developer's strategy. He had come into the world an entrepreneur, and so he remained, always pushing to see if he could get more, thinking of what lay beyond not just the next corner but the one after that. Every deal had to be not just good, or even great, but unbelievable. Because of a labor strike before the deal with Eastern closed, the developer could have dropped the whole thing and taken home a $5 million breakup fee, but he refused. At another point the developer had a solid offer of $107 million for the Alexander's shares that had cost him $50 million. He said yes, then called Robert Campeau, the largest retailer in the United States and owner of Bloomingdale's, who was way over his head in debt but offered to pay $120 million. Instead Campeau filed the biggest retail bankruptcy in the nation's history, and Trump, who had let the first offer go, continued to pay interest on a money-losing investment.

By definition, entrepreneurs are deal makers. They look for markets, decide where there is money to be made, and make their move. Donald Trump had an elegant way of describing his relationship to deal-making; deals, he proclaimed, were his "art form." Others were more blunt: One former Trump executive called Trump "a deal junkie." Part classic entrepreneur, part artist, and part addict, Trump was constantly on the lookout for opportunities to expand. Thus, while still hashing out the shuttle purchase in the spring of 1989, he paid $1 million to get in on a third baseball league; bought stock in American Airlines, Universal Pictures, and MCA, and again talked takeover; put more than $1 million into a pilot for The Trump Card, a television quiz show to be produced at Trump Castle; and pledged $750,000 to the Tour de Trump, an eight-hundred-mile bicycle race scheduled to end in front of the Trump Plaza in Atlantic City.

Even in the field he presumably knew best — real estate development — he could not seem to say no. Thus, in Manhattan, where the real estate market was visibly tightening, he plunged ahead on Trump Palace, a large East Side condominium project, and rejected potential Japanese partners for the project. Reportedly, chief saleswoman Blanche Sprague initially came up with a sellout figure of $180 million, $40 million short of the $220 million estimated for construction costs. Supposedly Donald kept after her until she came up with a better-sounding $265 million, but she then refused to endorse the figures and wrote a letter to that effect to attorney Jerry Schrager.

By now Donald had Marla, Ivana, the Taj, the yacht, the rail yards project, the Plaza Hotel, the Trump Shuttle, Trump Plaza of the Palm Beaches, and Trump Palace on his mind. Then, in the fall of 1989, three of his top casino executives died in a helicopter crash on their way back to Atlantic City after meeting with him in New York. Such a loss would have been tragic in the best of circumstances; in the Trump Organization, already stretched paper thin on the management side, it was a disaster from which the business would not recover for a long time.

It also seemed to have left the developer even more unhinged. For nearly two years he had been living a double life. Although there were near leaks, and the occasional not very veiled references in gossip columns, Marla's existence remained more or less secret from the outside world. But the arrangement was taking its toll, and the person who was most affected was the one who was ostensibly in charge: Donald himself. From the Trump Princess to the Trump Shuttle, each new purchase and every new venture seemed another, more large-scale version of a little boy asking to be caught. With each grandiose episode he seemed to be risking not just his own fortune but fate itself. He seemed almost begging to be found out and to be stopped, to have the whole huge edifice, built of thousands of lies, massive debts, adulterous behavior, and overcommitted resources, come tumbling down.

But it didn't. Instead he went on and on, finally topping every other outlandish deal so far by opening a casino that was unable to pay what it cost him to build it and would inevitably cause severe and possibly fatal damage to his other casinos.

Donald Trump was able to pull off a remarkable series of moves, but there was one thing he was unable to do: tell his wife it was over. "I have to confess, the way I handled the situation was a cop-out," he later wrote. "I never sat down calmly with Ivana to 'talk it out' as I probably should have." Nor was his wife able to face squarely the disintegrating situation in which she was living. Meanwhile Marla Maples was growing tired of being sequestered, of hiding in the back of the limo, of bringing her own escort to public events and standing across the room from her lover, of having a vacation with him mean traveling separately and staying at a different hotel.

During the Christmas holidays in 1989, Donald's jet brought his family out to a luxury Aspen hotel, Little Nell's, then on a separate trip fetched Marla, who bunked with a girlfriend at more modest quarters a few blocks away. On New Year's Eve Ivana confronted her rival out on the ski slopes and told her to leave Donald alone, giving her a slight shove for emphasis. "Are you happy?" Marla asked as the paparazzi immortalized what was arguably the most well-documented marital confrontation in human history. Soon rumors were flying, and a remarkable number of people in New York and Atlantic City were claiming to have known of the illicit relationship for some time.

But Ivana had not, and the revelation was devastating.

Every unhappy marriage is unhappy in its own way. For Ivana Trump the problem was that although from the outside she appeared to have the perfect life, filled with material possessions and near regal splendor, within her own home she was not free to be a winner and a champion. For Donald Trump it was that he had made the mistake of marrying the wrong parent. Instead of choosing a mate like his mother, eager to play quiet backup to a towering success, he had selected someone more like his father, someone who was a born contender, who could not hold back and go second even if she tried. Worse, Ivana did not seem to grasp that the enormous opulence with which he had surrounded himself and his family was a marketing tool, larger than life and thus, as he saw it, not real life. The Trump Tower triplex, Mar-a-Lago, and the Trump Princess were stage sets, backdrops, places to be photographed in and used to create impressions and win points; they were not environments that anyone should consider normal.

Although Donald had long arranged his worldly affairs precisely so that he could live and work in this atmosphere of extraordinary and ultimate luxury, his own personality was all agenda, and his sole aim in most interactions was getting himself where he had to go. Frequently he needed people to help him, and in order to get that help he could be, literally, unbelievably charming; when he did not need anything, though, he often had little warmth to spare. He went to charity events because his name would sell tickets and being at the event sold him, but he did not seem to care much about either the charities or the social acceptance attached to them. What mattered to him was being accepted as a serious businessman, and he already knew that he could have lunch with Saul Steinberg or Henry Kravis or any of the other businessmen present whenever he wanted to. He insisted on leaving early, and he made it clear to Ivana and anyone else within hearing distance that he would much prefer being at home watching television, eating SpaghettiOs or a hamburger and French fries from the New York Delicatessen and drinking yet another diet soda.

But Ivana believed in that lavish, glitzy, gilded image he had created. She loved being at Mar-a-Lago, enjoyed taking long cruises on the Trump Princess, relished being part of high society in New York. For Ivana the kingdom of Trump was real, a thing of flesh and blood. And in a way, she was right. As any reader of American newspapers and magazines could attest, although it may have begun as a marketing tool, by now there was, indeed, a Trump kingdom. Unfortunately, though, Ivana was not its queen. "Ivana was a very smart woman," said Blanche Sprague. "But we were working in a kingdom where there was really only room for a king. He would walk into a room of people all in black tie, and suddenly there would be nobody there but Donald."

The developer did not want a queen; he wanted a concubine. He wanted to come home at night and relax. If there was talk about business, it should be talk about his most recent triumph, not questions about how something had been handled or discussions of problems. "Marla was subdued, not forceful like Donald," said Mai Hallingby, then wife of Bear, Stearns banker Paul Hallingby and a member of the same social set as the Trumps. "Donald would be the star of the group, and she would be a listener. She seemed very willing to take a backseat." Evidently she was also willing to continue a volatile relationship filled with spats, breakups, reconciliations, talk of marriage, and then more spats, many of them in full view of the public eye.

A month after the incident in Aspen, Playboy published an interview with the developer in which he refused to say whether or not his marriage was monogamous. Two weeks later Ivana made her move. She consulted a divorce lawyer, hired her own publicist, and, taking yet another leaf from her husband's book, called gossip columnist Liz Smith. More than a dozen years earlier, Jay Pritzker, off on a long-planned trip to Nepal, had been unavailable when Donald Trump had pushed through the noncompete clause for the Grand Hyatt; this time it was Donald who was unavailable for comment at a critical moment. When Ivana phoned the columnist, her husband was twenty thousand feet in the air, flying home from a trip he'd taken to Japan, supposedly to see Mike Tyson fight but which was in fact a desperate attempt to unload the Plaza Hotel. His own wife had scooped him. She had gotten a whole news spin cycle ahead, and he would never catch up. In the world's eyes she would be the victim, he would be the cad, and the man whose access to the press was the stuff of legend would be unable to do anything about it.

For months the nation's press roiled with he said/she said tales. Ivana demanded a larger share of the fortune her husband had once insisted was over $3 billion; the developer refused to pay any more than $10 million, the comparatively modest sum named in their most recent nuptial agreement, which had been renegotiated upward three times. Intent on capturing public sympathy and getting in the last word, husband and wife threw selective tidbits to a voracious press; meanwhile the mistress donned a red wig, assumed a false name, and secreted herself in a series of hideouts that included, at one point, a Peace Corps encampment deep inside Guatemala. Journalists dug into her life, and the National Enquirer paid a reported $11,000 to her high school and college sweethearts for the mostly banal details of her earlier romances. Hundreds of reporters and photographers followed the bread crumbs, producing forgettable prose but unforgettable headlines, including the memorable BEST SEX I EVER HAD, supposedly a remark made by Marla to a friend.

Donald was thrilled, his parents were distressed, and his executives were appalled. "Businesswomen won't fly your shuttle with you on the front page of the paper every day [talking] about your sex life," Bruce Nobles told the developer. He replied, "Yeah, but the guys love it." Perhaps, but that admiration did not translate into ticket sales. The airline's market share continued to decline, possibly because passengers worried, like one respondent in a focus group, that someone distracted in his personal life might not be paying enough attention to airplane safety. The banks, too, were unhappy about the headlines. They had been attracted by the image of a brilliant dealmaker, and they were troubled by the idea of doing business with someone whose personal life was in such visible disarray.

Marla's public debut as the developer's mistress was scheduled to occur on the same day as the opening of the Taj, April 5, 1990. For weeks beforehand, stories about her planned appearance and, especially, the different outfits she might wear filled the tabloid press. On the big day, though, Donald's family prevailed, and he appeared alone. The delay was brief; two weeks later Marla was on Prime Time Live and spoke to interviewer Diane Sawyer about her relationship with Donald Trump. The interview gave the show the best ratings it had ever received.

In the end the Taj cost more than $1.1 billion, and Trump personally guaranteed a loan for $75 million. To meet interest payments, he would need daily revenues of $1.3 million. It was more than any Atlantic City casino had made on a regular basis, and impossible unless he could figure out how to bring in stunning numbers of slots players and high rollers — that is, both mass and moneyed customers. His solution: a gaudy, glitzy, grandiose seaside palace carefully engineered to have the drawing power of Trump Tower. A surreal contrast to the original Taj Mahal, a serene and elegant Indian mausoleum, the New Jersey Taj would not be beautiful, peaceful, or even comfortable. But it would be, in its own way, a design triumph, a unique and unforgettable building that performed exactly as intended, attracting paying customers by the hundreds of thousands from around the country and the world.

At Trump Tower the owner's name shone over the entrance in out-of-scale block letters made of brass; at the Taj it blazed from the roof in giant block letters fashioned from bright red neon. In New York Trump had built a glass-sheathed tower precisely because it would contrast with its limestone neighbors; here he covered his new casino with candy-striped onion domes and miniature gold-topped minarets and put big stone elephants next to the entrances, creating a building that looked nothing like the big, boxy casinos next to it.

Inside the Taj he used the same floor-numbering magic as at the Grand Hyatt and Trump Tower, turning what was the forty-second and highest floor into the more dramatic-sounding fifty-first floor. In addition, he also offered a spectacle comparable to Trump Tower's waterfall: the noise and lights of 3,010 constantly clanging slot machines. Similarly, in much the way that Der Scutt had used rosy peach to set a tone of rich abundance for the Trump Tower atrium, the developer coated the Taj interior in bubble-gum pink, using it for overhead acoustic tiles, Oriental-style carpeting, hallways, even slot machines, to create a giddy, carnival-like atmosphere.

The record number of slot machines would pull in low-stakes players; to draw the high-stakes crowd, the Taj offered 160 table games, also a record number, plus special high-roller amenities. Overlooking the baccarat pit, a particular favorite for many wealthy customers, a lavish, pink-chandeliered restaurant called Scheherazade eschewed menus, instead keeping records of guests' preferences and serving them with gold-plated tableware. Upstairs were luxury guest suites, Lucullan penthouse accommodations named after Cleopatra, Napoleon, and other historical figures. The most opulent was the 4,500-square-foot Alexander the Great Suite, listed at $10,000 per night and boasting its own steamroom, sauna, weight room, and white baby grand piano. There was one problem: Guests lolling in the marble Jacuzzi would look out on a particularly squalid neighborhood. Architect Francis Xavier Dumont apologized profusely during one tour. "Unfortunately," he said, "we overlook Atlantic City."

The developer called the Taj the Eighth Wonder of the World; it had to be if he was to recoup his investment and, somehow, avoid cannibalizing his other casinos. But to Philadelphia casino analyst Marvin B. Roffman, the Eighth Wonder of the World was compound interest, not a mammoth facility opening in a shrinking market. An investment analyst for nearly thirty years, Roffman, then fifty, was well respected. Before he and Donald Trump had ever met, the developer called and said, "I just want to let you know I read your reports and I think you're right on the money and one of the best guys on the street."

Unlike many in his field, Roffman was a guy who did his homework not once but twice. "I almost have a curse," he said. "It's this terrible thing where before I do or say anything I have to do my research, almost to the point of nuttiness." When the balding, gregarious Roffman, a faithful reader of Consumer Reports, wanted to buy a car, he would test-drive dozens; when he needed a new coat, he went to ten stores and tried on every style; and when he wrote up a casino, he scrutinized the numbers. After Roffman issued a negative report on the Taj in an industry publication, the developer invited him to come and see for himself. "I'll have my brother take you on a personal tour," he said, "and you'll be so excited that at the end, I want you to pick up any phone in the lobby and tell me how thrilled you are."

Roffman made an appointment with Robert Trump for March 20, 1990. The same day a Wall Street Journal article quoted him as saying that although the Taj would do well in summer months, "once the cold winds blow from October to February, it won't make it. The market just isn't there." When Roffman showed up at the Taj, Robert Trump met him at the door and ordered him off the property. "You're no fucking good," Robert yelled, and then accused him of having stabbed Taj bondholders in the back. After Donald Trump threatened to sue and the analyst refused to apologize, the brokerage house where he had worked for sixteen unblemished years fired him. "Marv Roffman is a man of little talent who disagrees with other people," Donald told a reporter.

Two weeks later, on April 5, the Taj had its opening night. The weather was chilly, and despite claims that there would be celebrities by the yard, only a handful of lesser lights showed up. After a brief walk-through earlier in the day, Governor Jim Florio had departed. The highest-ranking public official to mount the small outdoor stage set up for the evening festivities was the current mayor, then under indictment on corruption charges. He drew a solid round of boos. Then a cheerful Merv Griffin congratulated the developer and joked that he had once owned the Taj for twenty-four hours. Finally Donald Trump, wearing a wide, bright red tie, touched a large Aladdin-style magic lamp, and an enormous televised genie appeared, followed by green lasers and pink-and-purple fireworks.

As Roffman had predicted, the crowds were huge — too huge for the Taj's slot operation, which was unable to keep track of its cash and had to shut down. The same thing had happened at the opening of the developer's first casino, and he had the same reaction, which was to launch a vicious attack on everyone in sight. When he turned on his brother, Robert quit and went home to manage the real estate their father had built. Soon the slots were up and running, but the developer kept the heat on his executives, demoting, reassigning, and in some cases firing them summarily.

But rage, redeploy, and retrench as he might, he could not prevent the coming disaster. Contractors who worked on the Taj filed complaints for nonpayment, and tales of cash flow shortages began to circulate. Workmen removed the Trump name from Castle slot machines, a sign that a sale might be impending. In late April an enterprising young Wall Street Journal reporter named Neil Barsky came to Trump Tower for an interview. Barsky, who had written the earlier Journal piece quoting Roffman, found the developer sitting at his desk with the reporter's clips spread out before him. Trump greeted him by turning on a tape recorder and saying that he had three sworn affidavits from sources stating that Barsky was spreading rumors of a cash flow problem.

"He also said he'd retained [prominent libel lawyer] Martin Garbus and he'd sue my ass if I mentioned a negative cash flow," Barsky recalled later. "Then the interview began." Barsky had a lot of information, but he did not know that the developer was considering selling, refinancing, or securitizing every asset. In particular, the reporter did not know that the shuttle was on the block. But the developer thought he did, and when Barsky bluffed, asking for confirmation of the potential sale, Trump provided it.

"I really just played poker with him," the reporter said. "I won."

It was a major scoop for Barsky, whose subsequent Journal story quoted Trump as saying that he wanted to be "king of cash" so that he could scoop up bargains later. To the financial community, the article was a red-light alert, and the market for Trump casino bonds took a nosedive. A year earlier Forbes had ranked the developer's wealth at $1.7 billion, making him one of the country's twenty richest people; now the magazine ran a cover story that estimated his net worth at $500 million. When the numbers from the Taj's first month came in, there was more bad news: although the casino had taken in huge revenues, they had been less than break-even. Worse, the Taj had cut into revenues at Trump Castle and Trump Plaza. The Taj and the shuttle started laying off workers, shuttle passengers found themselves paying for coffee and newspapers, and Trump shut down the small development office he had in Las Vegas. The board game named for him showed up on the remainder shelf in toy departments, and Turner Broadcasting tabled the biographical film it had planned.

On Monday, June 4, 1990, Neil Barsky had another scoop. It was entitled "Shaky Empire," and it was the lead story on the Journal's front page. Less than two months after the Taj had opened, Barsky reported, Trump was desperately struggling for his financial life. His attempts to sell or refinance the pieces of his empire had failed, and he was now holding secret meetings with representatives of Citicorp, Bankers Trust, Chase Manhattan, and Manufacturers Hanover in the conference room at Trump Tower. Dozens of bankers and lawyers pored over numbers that included a staggering $2 billion in bank debt. Perhaps even more stunning, the developer had personal liability on guarantees and unsecured loans amounting to $800 million, as well as more than $1 billion in junk bonds on his casinos.

In less than a decade Donald Trump had become the Brazil of Manhattan. His annual interest payments, said to be around $350 million or almost $1 million a day, exceeded his cash flow. Worse, only two of his assets, his half of the Grand Hyatt and the retail component of Trump Tower, stood a prayer of making a net profit. "He will have to trim the fat," said one banker, and spoke darkly of selling off the yacht and the mansions and requiring the developer to operate in a more conservative fashion.

It was not, of course, the first time that the Trump family had encountered the shadow of bankruptcy. Back in 1934 the fall of the house of Lehrenkrauss had been the catalyst for the rise of Fred Trump. Forty years later the bankruptcy of the Penn Central Railroad had created the conditions for Donald Trump's entrance into Manhattan real estate. Each time enormous sums of money were involved; each time there were long and intricate negotiations over which creditor would get how much and what would happen with the carcass. Now, though, there was no Trump outsider trying to elbow his way to the table; instead a Trump owned the table, the room, and the debt. Just as Lehrenkrauss had been caught short, and then Penn Central, now the party who could not meet his obligations was a Trump. The debt under discussion was Trump debt, and the assets being picked at by others were Trump assets. The family that had made its fortune taking the offensive was, for the first time, on the defensive, and Donald Trump was fighting to save his own financial skin.

He had gotten into this situation by convincing major banks and other financial institutions that his name made any asset worth more and that they could therefore ignore their usual lending guidelines and demands for collateral. In the late 1980s, when the real estate market was so hot that it seemed to be almost smoking, he could have sold or refinanced assets with relative ease and kept his own financial house in order; now, though, the market was contracting, and banks that until recently had been riding high were now having to scramble to keep their own operations going. Government bank examiners reportedly visited Chase Manhattan, and there was talk of mergers between banks that were beginning to choke on bad real estate loans.

The events unfolding now were the many times removed consequences of events long past. Back when Fred Trump was building with the help of government programs, the division of spoils between banks and savings and loans was a relatively simple matter. Both charged the same interest rates, in the low to middle single digits; however, banks took the most profitable area, real estate and commercial lending, whereas what were known as S&Ls, then a backwater within the financial industry, handled home mortgages and passbook savings accounts. Financial wags joked that the S&L industry ran on the 3-6-3 rule: pay 3 percent on savings, charge 6 percent on loans, and close up shop every day at 3 in the afternoon so as to get in a round of golf before dark. During the 1970s interest rates crept up little by little, but by the end of the decade, in part because of the cost of the Vietnam War, rates started going up more rapidly. Banks, free to charge whatever interest rates the market would bear, were able to get more for their loans; S&Ls, saddled by law with fixed interest rates, were not and found themselves squeezed almost out of the running.

But not quite. During the early years of the Reagan era, large-scale deregulation of the financial industry allowed S&Ls to raise rates and invade traditional bank turf. Stripped of their customary prerogatives, banks then had to cast about for new sources of revenue. They needed to make their money work harder and began to increase their loans and, in turn, their percentage-based fees. Rather than waiting for borrowers to come to them, they went out looking. Competition among banks heated up, and leveraging that would have been unthinkable in the past now became doable. Major banks loaned out not just what was required for a project, but more — in the case of Donald Trump, much more. Then they skimmed off their fees and syndicated — that is, sold off — pieces of loans to other institutions even more hungry for loans and willing to accept a smaller profit.

Such fee-driven practices had allowed real estate departments to report impressive earnings and become dominant forces within their respective institutions — and nowhere more so than in the four banks whose top real estate lending officers were now huddled on the twenty-sixth floor of Trump Tower. They had lined up to lend the developer huge sums, taken most of the fees, and then syndicated the loans to scores of domestic and foreign banks so eager to get in on the action that they accepted deals on which they made far less. In fact, the readiness of other banks, particularly in Japan, to buy Trump loans was the very proof that the name did indeed bestow value on a deal, and in turn led Citibank, among other financial institutions, to "adjust their own risk/reward ratio," as one official described the bank's willingness to take on a level of exposure it would otherwise have shunned.

In the process, the New York banks had put their own assets at what afterward seemed unconscionable risk. But they did something more: in their rush to loan to Trump, they had created what might be called a faux moral hazard. In classical economics the term moral hazard refers to a situation in which a third party is encouraged to undertake risky behavior and is guaranteed against any loss. In the case of Trump, however, the banks merely encouraged the dangerous activity; they did not insure him against loss. What they did not realize was that, in a sense, he insured himself by making himself such a big part of the deals that the financing institutions would have to keep him going simply to cut their own losses.

Although the big four had taken the lead on most of the developer's bank debt and were initiating efforts to figure out a settlement, nearly ninety financial institutions would be party to the bailout, and about one thousand bankers, lawyers, and accountants would participate in the marathon negotiations. Bankers from New York, Florida, New Jersey, Illinois, and California would have to sign off; so would their colleagues from Japan, Ireland, Brazil, Italy, South Korea, and France. It was a daunting challenge, for the sums at stake, the amounts of collateral behind loans, and individual lending practices all varied widely. But without each party's approval, Donald Trump stood to lose everything.

As the weeks went by, Trump missed a $43 million interest payment on Trump Castle bonds and a $30 million loan payment to Manufacturers Hanover. The Ohio-based maker of the Taj's onion domes and elephants threatened to remove them unless he received payment. Also citing unpaid bills, Honeywell pulled its computer engineers off the job, leaving the casino's air-conditioning system limping. Bank negotiations, now being held at the separate offices of the lead institutions, went round the clock, and exasperated loan officers tried to coax, then coerce, recalcitrant minority lenders to go along with the plan gradually taking shape. That plan arose from the fact that despite certain similarities between the present set of circumstances and those facing Lehrenkrauss and the Penn Central, there was one overwhelming difference. In those cases the debtor was done for, and the only real issue was how to handle the bankruptcy. This time, though, the debtor was far from finished.

Elsewhere Trump had exhibited a certain strain. He had hovered anxiously when a Japanese high roller who had already won at one of his casinos showed up again; he had been so abusive to employees that, according to one casino regulator, "People are hiding under their desks"; and he was gobbling up the candy and popcorn of his youth at an alarming rate. At the bank workout sessions, though, he was positive thinking personified, upbeat and clear-eyed. When he strode into the room, he radiated that indefinable but palpable glow that sets the famous apart from the crowd. Heads swiveled and eyes opened wide to take in his passage across the room, the nod here and the hello there. The only reason anyone was there was that this man was over his head by an amount that would keep any of a handful of small countries humming for a year, yet everyone in the room still seemed to be a fan.

They had loaned him more than they should have because he was a star; now, when he was on the ropes, he was still a star. It was true outside the meeting room, where reporters and television crews were on perpetual stakeout; when one banker called home to tell his wife that the day's meeting was extended and he wouldn't be home to dinner, she said she'd heard it on the news and then told him what had happened in the supposedly closed-door session that had just finished. And it was also true inside the room, where the developer, coming face-to-face with dozens of people to whom he owed hundreds of millions of dollars, seemed, of all things, to be enjoying himself.

Bizarrely, this may have been the best thing that could have happened to Trump. With a gun at his head, he finally started paying attention. The skillful Donald of old crawled out from under all the wreckage he had made of his life and his business and, once again, found the critical leverage points. His debts were so big that everyone in the room was afraid to see him fall; in addition, they didn't want to admit they had been suckers. He had debtor's leverage, and he played it to the hilt.

When he said the usual pleasantries, the good-to-see-yous and the glad-to-be-heres, he meant them; when he sat down with the bankers and lawyers, he was a model of decorum. He did not slink in late or slouch in his chair or seem distracted; instead, displaying the same courteousness and straightforward manner he had shown at every regulatory hearing in New Jersey, he was respectful, attentive, and visibly professional. He had always been the most important asset, the factor that gave the properties their value by imbuing them with "quality"; now, to their great relief, these financial institutions could see for themselves that he gave every appearance of still being at the top of his game. "He didn't go around ranting and raving and picking the wrong fights with the wrong people," said the head of one Japanese bank's real estate department. "He acted as a businessman."

No one had wished to resuscitate Julius Lehrenkrauss or the Penn Central's Stuart Saunders, but everyone in these negotiations wanted Donald Trump to keep going. In a period in which the real estate market was turning soft, they had little desire to take over major properties and even less desire to become involved in casinos, which being in a regulated industry would require bank personnel to go through the onerous licensing process. Perhaps most of all, though, they did not want to admit that they had been seduced by parties on the Princess and lavish receptions at the Plaza Hotel and that the special "quality" that had attracted them was not the same thing as solid, bricks-and-mortar collateral.

Instead they hung on to their belief that eventually the real estate market would recover, and with it the value of things named after the developer. During the negotiations, banks occasionally used the threat of a bankruptcy filing against one another, and the developer himself raised the specter to win a point. But even the most balky parties had no real interest in seeing the problem put in bankruptcy court, which would cost them a fortune in legal fees, expose them to further embarrassment, and severely limit their control over the outcome. Worse, because such a process would take years, it would almost certainly devalue the Trump name and the market price of his properties.

More than a month after they first sat down, the banks finally came to an agreement. Donald Trump would receive an immediate loan of $20 million and a five-year, $65 million bailout. They would lower interest rates, and they would suspend interest on nearly half of his bank debt, although he would have to keep paying the interest on his mortgages and his junk bonds. In addition, he would have to appoint a chief financial officer (CFO), and he would have to live on a budget. Although CFOs were a standard feature in most corporations of any size, and his monthly allowance of $450,000 hardly qualified as draconian, these measures represented a fundamental change for the developer. It was the first time in his adult life that anyone had imposed even the appearance of limitations on how he handled his business and his life.

More important, although Donald Trump remained more than $3 billion in debt, had lost certain freedom, and had suffered significant damage to his superman reputation, he did not have to surrender ownership of any assets. If the market turned around, he could end up paying less for them than if he were not in a financial crisis and still benefit from any increase in value. As he saw the situation, he had emerged "greatly enhanced" by the agreement. "There was a media stampede," he said somewhat dismissively, seemingly ignoring the fact that he had survived precisely because of his remarkable ability to make whatever he did the center of public attention and instead focusing on another, more upbeat message: "When you come through adversity, I think people respect that."

Copyright © 2000 by Gwenda Blair

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