Carl Icahn’s Failed Raid on Washington

If you squint, Trump and Icahn look alike. Both grew up in Queens and have an outer-borough chip on their shoulders. Both first came to tabloid prominence against the gaudy backdrop of the nineteen-eighties. Both are brash, plainspoken street fighters, examples of an American archetype: the populist rich guy. But Trump comes from the wealthy enclave of Jamaica Estates, whereas Icahn grew up in a lower-middle-class family in Bayswater. His mother, Bella, was a schoolteacher; his father, Michael, was a failed opera singer who, even though he was an atheist, became the cantor in a local synagogue, because he loved the music. Carl was an only child, born toward the end of the Depression, in 1936. Throughout his youth, his father railed against the robber barons, condemning the concentration of extreme wealth. Icahn told Mark Stevens, “The social juxtaposition of a tiny group of people living in great splendor and many more living in abject poverty was anathema to him.”

As a boy, Icahn was bright and ambitious. When he was offered a scholarship to Woodmere Academy, an expensive private school on the South Shore of Long Island, his parents toured the campus and met with teachers. But they worried about the values that their son would be exposed to there, so they sent him to public high school instead. The sting of that reversal lingered. Half a century later, in the heat of a high-stakes negotiation, Icahn would occasionally digress to inform his adversaries that although he attended public school instead of Woodmere Academy, he still went on to become a billionaire. Icahn is an old man now, with an old man’s penchant for repeating stories; he frequently returns to the theme that his parents underestimated him. “My father was never able to accomplish anything,” he once said, adding, “I never respected him.”

In 1960, after studying philosophy at Princeton (where he wrote a thesis titled “The Problem of Formulating an Adequate Explication of the Empiricist Criterion of Meaning”) and a stint in medical school (he was a hypochondriac, which did not help his bedside manner), Icahn shifted to Wall Street. For a time, he worked as an arbitrageur, but he eventually established himself as a takeover artist, orchestrating high-profile raids on companies such as Texaco, RJR Nabisco, and Phillips Petroleum. His method was straightforward: he identified businesses whose assets were worth more than their stock; he acquired enough of that stock to force changes in the company which drove up the stock price; then he sold the stock. Implicit in Icahn’s approach was the conviction that he was smart enough to know more about how to make money in a given business than the executives who actually ran the business. He regarded the management at the companies he targeted with contempt. Unlike Trump, Icahn was not one to insinuate himself into the sort of club that would not accept him as a member; he preferred to storm the clubhouse with a pitchfork. One of Icahn’s oft-repeated bromides is that the average C.E.O. is like a fraternity president: a nice guy to have a beer with, but maybe not too bright.

Corporations, seeing Icahn coming, often tried to fight him off. His reputation grew so fearsome that some companies paid him to go away by buying his shares back at a premium—a practice known as “paying greenmail.” Marty Lipton, a corporate lawyer whose firm has often been hired by companies that were looking to thwart an Icahn takeover, wrote a memo four years ago in which he described raiders like Icahn as engaging in “a form of extortion.” In Lipton’s view, such investors “create short-term increases in the market price of their stock at the expense of long-term value.” In the nineties, when Icahn was fighting for control of Marvel Comics, the company’s C.E.O., a veteran of the Israeli Army, likened dealing with him to negotiating with terrorists.

Icahn prefers to describe himself in more righteous terms, as a warrior for stockholders who have been disenfranchised by inattentive corporate boards and myopic executives. He sees himself as a champion of “shareholder rights,” an advocate for the little guy. By going after lacklustre management, he argues, he has generated “billions and billions” of dollars for shareholders, while managing to make out just fine himself. “I’m like a gunfighter you hire to save the town,” he once remarked. “That gunfighter is there to do good. He knows he’s on the right side, and he’s proud of it, but he’ll only do what he does if he knows he’ll get paid for it.”

It is true that Icahn has increased the value of many companies that he has invested in, but there are also numerous instances in which, in the aftermath of a raid, he emerges as a winner and everyone else seems to lose. In 1985, he seized control of the airline T.W.A. According to the Times, Icahn celebrated by donning a T.W.A. flight jacket and strutting around his office, exclaiming, “We’ve got ourselves an airline!” He took the company private, pocketing nearly half a billion dollars, then sold off its assets. He also waged a bitter fight against the flight attendants’ union. Because most attendants were women, Icahn insisted, they were not “breadwinners,” and should not expect compensation commensurate with that of male employees. At one point in the negotiations, he reportedly suggested that if the flight attendants were having such trouble making ends meet they “should have married a rich husband.” (Icahn denied having made sexist comments.) C. E. Meyer, the company’s chief executive, described Icahn as “one of the greediest men on earth.” T.W.A. eventually went out of business.

Like Trump, Icahn adheres to a simian dominance code in which every deal—and possibly every human interaction—is a zero-sum contest. Only the alpha prevails. Yet, among Trump’s panoply of wealthy boosters, Icahn is distinctive, if not unique, because of the President’s willingness to play the beta role and genuflect before him. When they met, during the eighties, Trump was an eager supplicant, perhaps in part because Icahn really is what Trump has always pretended to be: a genuine master dealmaker, and a legitimately self-made man. Icahn started out with much less than Trump did, and ended up with vastly more. In 1988, Trump paid eleven million dollars to host a heavyweight title fight between Mike Tyson and Michael Spinks, at Boardwalk Hall, in Atlantic City. Before the fight, Trump took Icahn backstage to meet Tyson. The bout started late, and the announcer was obliged to recite an attenuated roll call of famous guests, among them Trump’s “good friend” Carl Icahn.

Two years later, Trump unveiled the Taj Mahal, a spangled confection on the boardwalk. It had been financed entirely with junk bonds, and by the time construction was complete it was already imperilled by debt. When Trump needed to make an interest payment on the loans, his father, Fred, sent a lawyer to another Trump casino, the Trump Castle, to buy $3.3 million in chips. Not long afterward, Trump was bailed out once again—this time by Icahn. One of Icahn’s specialties is investing in distressed debt, and he purchased the Taj’s outstanding bonds at a steep discount. Rather than oust Trump, Icahn negotiated with the other bondholders to allow Trump to retain equity in the casino, as well as his place on the board. Years later, when Trump named Icahn a special adviser, the Democratic National Committee released a statement that alluded to the Atlantic City episode, suggesting that the White House appointment was “a quid pro quo twenty-five years in the making.” Icahn, however, had already been handsomely remunerated for his investment: he sold the bonds, in 1993, for more than double what he had paid for them.

Icahn and Trump maintained a loose friendship during the ensuing decades, one that was hardly as intimate as Trump likes to make it sound. The very notion of a relationship that transcends mercenary self-interest may be alien to Icahn. Once, in a court proceeding, he said, “If the price is right, we are going to sell. I think that’s true of everything you have, except maybe your kids and possibly your wife.”

“Possibly?” the judge asked.

“Possibly,” Icahn said, adding, “Don’t tell my wife.” (Icahn’s first marriage ended in an acrimonious divorce. He is now married to his former assistant, Gail Golden, who manages his charitable interests.) When Oliver Stone was doing research for his 1987 film, “Wall Street,” he paid a visit to Icahn, and borrowed one of his observations for the character Gordon Gekko: “If you need a friend, get a dog.” Trump’s almost canine subservience to the older financier is such that, for years, Icahn, who is a tennis fan, has enjoyed droit-du-seigneur access to Trump’s personal box at the U.S. Open.

In 2010, Trump again found himself in trouble in Atlantic City. But this time Icahn was his antagonist. Along with a Texas banker, Icahn was trying to gain control of three Trump casinos. When a lawyer asked, during a deposition, whether Icahn intended to rebrand the casinos, he said that a consultant had deemed the Trump name a “disadvantage.” In an interview, Trump shot back, “Everybody wants the brand, including Carl. It’s the hottest brand in the country.” But in Icahn’s opinion the only real downside to shedding the Trump name was the expense that would be associated with changing all the signage. Trump expressed dismay at Icahn’s slight, telling the Times, in 2011, that he was a “loyalist” who prioritized friendship, whereas “with Carl the friendship stops where the deal begins.” (Icahn responded that he did not consider the two of them to be close, adding, pointedly, that he had not been invited to Ivanka Trump’s wedding.) In court papers, Icahn’s lawyers suggested that Trump’s name was no longer “synonymous with business acumen, high quality, and style.” Icahn told the Wall Street Journal, “I like Donald personally, but frankly I’m a little curious about the big deal about the name.” If the Trump brand carried such cachet, he asked, why did Trump properties keep going bankrupt?

Even after Icahn started supporting Trump’s Presidential run, he often seasoned his praise with a dash of disdain. “I’m not here to say Donald’s a great businessman,” he told the Washington Post. “But I will say he’s a consensus builder.” When Trump first announced his candidacy, in June, 2015, he appeared on “Morning Joe,” and said, “I would like to bring my friend Carl Icahn” into the government, suggesting that Icahn might make a good Treasury Secretary. Icahn replied, in a post on his personal Web site, “I am flattered but do not get up early enough in the morning to accept this opportunity.”

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