Young, first time home buyers should sleep better after the State of the Union Address. The President said he was going to reduce the cost of buying there first home and at the same time hold the current value of homes where they are for current owners living in them. He wanted to also deal with the real estate corporate firms buying up single family homes. That is all very important and quite astonishing too.
It can only mean two things:
- He is feeding you a wagon load of BS as it would take some kind of magic to accomplish both of those things at once! We live in a raw capitalist economy where the elevators rarely have a down button. When they do its usually ugly for a long time.
- He is going to build substandard homes for new home buyers. He will be the contractor and the taxpayers will foot the bill. He will have no out of pocket costs. He should know this game well. That is exactly what his father, Fred did. He was called into a hearing for fraud and he put on a Trump show. No charges were filed for the fraud but a racial discrimination lawsuit followed years later,
The Apple does not fall too far from the tree. This is so, simply because children learn what you do not so much what you say. Who do you think teaches them to be drug addicts etc.
Gemini: Tell me about Fred Trumps sub-standard housing project he had filled with renters before he paid anything and the hearing that followed.
Answer – Gemini said:
In 1954, Fred Trump (father of Donald Trump) was at the center of a major federal scandal involving the Beach Haven apartment complex in Brooklyn. The project became a textbook example of “windfall profiteering,” where developers used government-backed loans to build projects while pocketing millions in excess cash before a single brick was even laid.
The “Windfall” Scheme
Under the Federal Housing Administration’s (FHA) Section 608 program, designed to encourage veteran housing, developers could get government-insured loans for 90% of a project’s estimated cost.
Fred Trump and his partner, William Tomasello, allegedly manipulated this system through several maneuvers:
- Inflated Estimates: They overestimated the construction costs of the 1,860-unit Beach Haven complex to secure a massive $16 million mortgage.
- Pocketing the Difference: The actual cost to build was significantly lower. The investigation revealed that the duo ended up with $3.7 million in “windfall” profits (the difference between the loan amount and the actual cost).
- The Land Lease Trick: They bought the land for roughly $34,200, then leased it back to their own corporation for $76,960 per year on a 99-year lease. This guaranteed them a massive long-term profit even if the apartments failed, as the FHA would still owe them the value of the lease.
The 1954 Senate Hearing
In June 1954, the Senate Banking Committee subpoenaed Fred Trump to explain these “unconscionable” gains. The hearing was tense and highlighted the tension between government subsidies and private greed:
- The “Built by Trump” Defense: Fred Trump testified that his buildings were “marks of quality” and that any leftover money was simply the result of his “efficiency” as a builder.
- The Admission: Under questioning, he reluctantly admitted he had overestimated the costs. However, he argued that because he hadn’t “withdrawn” the money yet, he hadn’t technically pocketed it as profit.
- The Fallout: While the scheme wasn’t technically illegal at the time due to loopholes in the law, the Senate committee was appalled. Senator Homer Capehart famously stated that the program was being used to “reap fortunes at the expense of the American people.”
Impact on Renters
Because the mortgage was based on an inflated “estimated cost,” the FHA set the rent prices for the tenants based on those high numbers. This meant:
- Higher Rents: Families were paying rents that were artificially high to “service” a mortgage that was millions of dollars larger than it needed to be.
- Legal Action: Beach Haven tenants later sued for rent rollbacks, and the FHA eventually blacklisted Fred Trump for several years, refusing to back his future projects.
Note: This era also saw folk singer Woody Guthrie as a tenant in Beach Haven. He famously wrote lyrics criticizing “Old Man Trump” for the racial segregation and “color lines” he observed in the housing project during this same period.
The lyrics Woody Guthrie wrote about Fred Trump were never recorded during Guthrie’s lifetime; they were discovered by scholar Will Kaufman in the Guthrie archives years after the singer’s death.
Guthrie lived in the Beach Haven complex from 1950 to 1952. While the building was federally funded, he was disgusted by the “whites-only” policy enforced by management.
“Old Man Trump”
The most famous set of lyrics highlights Guthrie’s frustration with the racial divide in the complex:
“I suppose Old Man Trump knows Just how much Racial Hate He stirred up In the bloodpot of human hearts When he drawed That color line Here at Beach Haven”
“Beach Haven Ain’t My Home”
Guthrie also rewrote his famous song “I Ain’t Got No Home” to specifically target the landlord and the housing conditions:
“Beach Haven looks like heaven Where no black ones come to roam! No, no, no! Old Man Trump! Beach Haven is no home! I’m a-gonna tell you, Mister Trump You may think you’re rich and grand But you’re making a color line In the hearts of all the land.”
Contextual Note
Guthrie’s anger wasn’t just about the aesthetics of the building; it was about the systemic exclusion. Even though the project was built with public money (the FHA loans mentioned in the hearing), Fred Trump actively avoided renting to Black tenants. Guthrie viewed this as a betrayal of the “public good” the project was supposed to serve.
I can look into the specifics of the racial discrimination lawsuit that followed years later, or perhaps more about the “Old Man Trump” song lyrics?
