Last year’s hedge fund issue featured our Bid & Ask interview with Skybridge Capital founder Anthony Scaramucci. Since, he has been busy serving on the Presidential Transition Team Executive Committee, being floated as President Trump’s appointee for the Director of the White House Office of Public Liaison and Intergovernmental Affairs (he was not been appointed to this post), being named one of Modern Trader’s 10 Market Makers & Shakers for 2016 and announcing the sale of Skybridge to presumably divest assets and avoid conflicts of interests in lieu of an administration appointment.
We recently caught up with Anthony for this public filing...
MODERN TRADER MAGAZINE
Chicago, IL 60605
Anthony Scaramucci Inc.
Skybridge Capital, Entreprenuer
SALT Conference, GOP Politico
1. Anthony, you remain optimistic that you will be appointed to a White House position. You have declared that you would refuse compensation if appointed. The political environment is very contentious. You are about to close on the sale of your company where reports suggest that you will net nine figures. What is compelling you toward the White House?
Anthony Scaramucci: The country is ripe for positive change. I am looking forward to helping in a small way to bring that about. The Administration is staffed with very talented people and my prediction is we will accomplish a lot of things that will make the American people very happy, including tax and trade reform.
2. With the GOP in control of Congress and the executive branch, there is a great opportunity for comprehensive fiscal, regulatory and tax reform. The conventional Washington wisdom says that changes (repeal, replace, reform) to the Affordable Care Act must be made before tax reform can be addressed. How did Rep. Paul Ryan (R-Wis.) and the GOP fail to deliver after seven years of opposition? It is the ultimate epic fail. Could it cost the GOP the House or Senate in 2018?
AS: I wouldn’t describe as an epic fail, but as a pause in the overall long-term plan for overhaul and renewal. The environment in DC has fractionalized the parties now so it requires careful surgery and precise language to build the consensus that was in place years ago. They are working hard at figuring it out and they will.
3. Even rank partisans and wingnuts agree that political discourse has reached a new low. One of our favorite examples is MSNBC’s Lawrence O’Donnell hypothesizing (the “what if”) that Putin planned the Syrian chemical attack to help Trump. Yet, watching you on all the news and cable networks (and your Twitter feed), we have observed that you manage both friendly and enemy fire with discernable grace and aplomb, respecting even the most confrontational query. What’s your secret?
AS: No secret here. Just trying to be responsible in the media. My overall goal is to provide content and information about policy without rancor or personal attacks. Our arguments stand on their own. I do notice that when people in the media have shallow arguments, they resort to ad hominem attacks.
4. Trump and Twitter?
AS: I like it. He is making history by going directly to the American people over the top of the mainstream media and it helped propel him to the presidency.
5. Since he took office, the President has reversed course on a range of topics that seemed ironclad during (and before) the campaign – bombing Syria, support of NATO and perhaps most surprising, the unwillingness to declare China a currency manipulator after pledging in numerous venues that such a declaration would come on “day one” of a Trump administration. Is the president merely accommodating political realities, or were these positions always more campaign rhetoric than policy substance?
AS: think he is experiencing some level of intellectual evolution on a lot of these ideas and issues. This is no different then John F. Kennedy suggesting there was a missile gap and then getting into the White House and recognizing that there wasn’t. My guess is that the President has a full and better understanding of these issues. Very smart people change when facts and circumstance change and I think the people know they hired a very smart, flexible business person for the job.
6. The hedge fund industry faces many challenges: ees are under unprecedented pressure as investors challenge the value proposition, low-priced index funds are providing superior returns and investments are slowing. What lies ahead?
AS: While this has been a difficult period for hedge fund managers, brighter days are ahead. The interest rate cycle has changed dramatically, even in the last year. As interest rates start to normalize, hedge fund managers will start to shine again. This has been a longer than normal period of low-interest rates, but doesn’t spell doom for the hedge fund industry. If anything, as things normalize, the star managers will shine and grow again.
7. You have been openly advocating against the Department of Labor (DOL) fiduciary rule. What are your main arguments against it, and how can regulators police fraud and abuse in the brokerage and advisory communities without it? With unprecedented numbers of investors reaching retirement age, is a fiduciary obligation a help or a hindrance?
AS: The DOL Fiduciary Rule will not help to discover fraud or prevent it. What the rule actually does is limit the range and the menu of investment choices for retirees. This is something that the government should never be involved with. The government should not make asset allocation decisions on behalf of investors or limit the range of choices. There are other rules already in place that cover the fiduciary nature of the investment community, adding another rule just limits the range of investment choices. It makes things worse not better.
8. Do you think Dodd-Frank will get watered down, replaced or left alone in the next four years? And is there a middle ground between liquidity crippling, prop-desk destroying regulation, and the freewheeling risk-taking that brought us the financial crisis?
AS: Some new version of the Glass-Steagall will be put in place, which will create more opportunity for investment banks [to] deploy capital for trading. This would actually create more liquidity and be better than the current Dodd-Frank regulations.
9. Who do you think is the person in Washington who simply “doesn’t get it” and continues to hold up any progress in policy development?
AS: a. Good question. It obviously isn’t any one person but a generic description is a person that is focused on special interests, in their own personal aggrandizement as opposed to what is best for the American people. [This] is the person that is causing the most damage to our ability to affect positive change on behalf of the American people. Do you know any people like that in Washington?
10. This past year provided you with access and insider knowledge of the dark side of presidential campaigns, politics and the challenges of governing at the federal level. What is the ugly secret that became apparent to you? What do we all need to know?
AS: No ugly secret, however, the challenges are deeper, broader and more systemic than I originally thought. This requires a monumental effort on behalf of not only good people that want to work in government but everyday citizens who right now may be apathetic toward what is going on. Citizens need to unite and engage. Call your local Congressman and tell him or her to put aside the squabble and focus on the best interests of the nation.