C M Y KID NAME: NYTx,2004-03-28,BU,001,Bs-4C,E1 YELO MAG CYAN BLK 3 7 15 25 50 75 85 93 97

By TIMOTHY L. O’BRIENand ERIC DASH

IT was another stupendous week for thatpop culture sensation, Donald J. Trump.On Thursday, his hit reality television

show, “The Apprentice,” continued to rackup huge ratings as it neared its nail-bitingconclusion. Two days earlier, immediatelyafter its release, his slight new book, “Howto Get Rich,” popped up to 10th place on thebest-seller list of Amazon.com, offering stu-dents of wealth invaluable nuggets likeBusiness Rule No. 1: “If you don’t tell peo-ple about your success, they probably won’tknow about it.”

Mr. Trump, of course, has never been shyabout discussing his own success. In an in-terview, he boasted that “in prime-time tele-vision, I’m the highest-paid person.”

More than Oprah? “Oprah’s not primetime,” he shot back.

More than Larry King? “Yeah, and LarryKing is cable.”

More than the “Friends” cast? Well, col-

lectively, no, he acknowledged. But individ-ually, yes.

Mr. Trump’s young television apprenticesspent last Thursday evening in what he de-scribed then as “the No. 1 hotel” in AtlanticCity, the Trump Taj Mahal, vying to luregamblers into the casino.

In reality, the Taj Mahal needs all thehelp it can get — as does the rest of Mr.Trump’s increasingly troubled gamblingempire. His casino holdings are mired innearly $2 billion of bond debt that they arestruggling to repay. They are aging andovershadowed by flashier competitors, andtheir revenue and profits have been slump-ing over the last year.

While the winner of “The Apprentice” willget the “dream job of a lifetime” — a year atMr. Trump’s feet, absorbing even more ofhis business expertise — the master himselfnow faces an unwieldy group of investors

Is Trump Headed for a Fall?

Daniel Adel

His Casinos FaceThe ProspectOf Bankruptcy

Continued on Page 8

Sunday, March 28, 2004

ANGRY shareholders have flexedtheir muscles in recent months atDisney, Safeway and Hewlett-

Packard. So why the radio silence lead-ing up to the annual shareholders meet-ing of Freddie Mac, the mortgage giant,this Wednesday? It is not as if thingshave gone swimmingly at Freddie Maclately.

Accounting improprieties beginningin 2000 led Freddie Mac to restate by $5billion its financial results for that year,2001 and the first three quarters of 2002.Two former chief executives at the com-pany were defenestrated during threemonths last year and two investigationsconcluded that Freddie Mac flouted ac-counting rules and disclosure standardsto smooth earnings growth. The compa-ny is still late in its financial reporting.

You would think that shareholderswould be howling for the heads of theFreddie Mac directors who were snor-ing in the boardroom. Instead, the stock-holders seem to be the dogs that do notbark.

Gregory P. Taxin, chief executive ofGlass Lewis & Company, an institution-al advisory firm in San Francisco, sayshe is puzzled by the apparent lack ofoutrage from Freddie Mac sharehold-ers. “This is another situation where thedeficiencies in the corporate democracysystem are quite evident,” he said. “Thisis a board that flubbed it horribly over

the last 12 months, and yet they will allbe re-elected, maybe with little protest.”

An investigation into Freddie Mac’spractices by the Office of Federal Hous-ing Enterprise Oversight, the federalagency that oversees it, was scathingabout the board’s performance.

Thirteen directors are on the ballot atFreddie Mac, including Richard F.Syron, the company’s new chairmanand chief executive. Glass Lewis is ad-vising Freddie Mac shareholders towithhold votes from 10 directors whoserved on the company’s board when itsoversight was lax.

FOUR of the directors standing forre-election have served recentlyon Freddie Mac’s audit commit-

tee, which can certainly be said to havefailed in its duties. These directors areMichelle Engler, a lawyer and trustee ofJNL Investor Series Trust, an invest-ment company; Shaun F. O’Malley, aformer chairman of Price Waterhouse,the accounting firm; Ronald F. Poe,president of a private real estate invest-ment firm; and William J. Turner,founder of Signature Capital Inc., a ven-ture capital firm. If re-elected, all willcontinue to serve on the audit commit-tee at Freddie Mac. None of them re-turned phone calls seeking comment.

That directors of Freddie Mac, whofailed rather spectacularly in their re-sponsibility to shareholders, would nottake themselves out of the running forre-election simply shows that shame isnot a dominant gene in corporate Amer-ica’s DNA.

Michael L. Cosgrove, a Freddie Macspokesman, confirmed that the compa-ny had received no shareholder propos-als nominating new directors. He de-fended the board, saying: “I think theboard, when it became apparent therewere problems, took assertive action.”

Major mutual fund companies areamong the biggest shareholders ofFreddie Mac. The Capital Research andManagement Company, investment ad-viser to the American Funds Group,owns 5.8 percent. Putnam InvestmentManagement owns 3.6 percent, and Fi-delity Management and Research holds2.6 percent. Investors who own shares offunds run by these companies shouldwatch how they vote on Wednesday.

“There seem to be some pockets ofchange in corporate America, but somethings haven’t even come close tochanging,” said Bill Fleckenstein, headof Fleckenstein Capital in Seattle. “Howcould you be on the board? How couldyou be sound asleep through all this?”

But, Mr. Fleckenstein blames inertshareholders, too, if they don’t kick outthe directors. “Is this a case of corpo-rate arrogance or shareholder stupid-ity?” he asked. “I could argue eitherside.” Ø

M A R K E T W A T C HGRETCHEN MORGENSON

FreddieMac:

SoundsOf Silence

Source: Bloomberg Financial Markets

The New York Times

Steady Freddie Stock The stock price of Freddie Mac has changed little from its level a year ago.

A J’03 ’04

M J J A S O N D F M0

20

40

60

$80 a share

By LOUIS UCHITELLE

THEY are a motley team, the four members of John Kerry’swar room for economic policy.

Remember Roger C. Altman, the high-ranking Treasuryofficial in the early Clinton years, forced out for being too loyal tohis boss in the Whitewater investigation? He is one of them. GeneSperling, a White House insider in all eight Clinton years, is an-other. Then there are two less-known 30-somethings: Jason Fur-man, a Harvard-trained economist, hired so recently that he is stillworking out of his Greenwich Village apartment, and Sarah Bian-chi, who was Al Gore’s policy adviser in 2000 and is now Mr. Ker-ry’s. Both got their start in the Clinton White House, as young aidesbarely out of college.

The four are rapidly developing specific proposals to flesh outMr. Kerry’s still-general thrusts into economics. They are also con-structing a galaxy of advisers — one that stretches from WallStreet to the A.F.L.-C.I.O. — who vet the proposals and often con-tribute to them.

The war room’s handiwork is evident in Mr. Kerry’s first bigeconomic plank: his pledge in a speech on Friday to no longer allowAmerican companies to defer income tax payments on profitsearned abroad. The goal is to eliminate an incentive to send jobsoverseas.

What is striking about the candidate’s economics team is thatall of its members — not to mention nearly every adviser they arereaching out to — served the Clinton administration in one way oranother. Does that mean Kerry economics will be Clinton redux?

Ask the four team members that question and they hesitate.The challenges are different, they say. Job creation is a much morecrucial issue than it was in Clinton’s day, particularly the big de-cline in manufacturing jobs during the Bush years and the growingtendency to send sophisticated work abroad.

“Differing economic circumstances rightly bring out different

A Kerry Team,A Clinton Touch

The top economic advisers for Senator John Kerry’s presidentialcampaign all come out of the Clinton administration, and theyhave drawn from that experience in fleshing out Mr. Kerry’splans. They are, clockwise from upper left, Roger C. Altman,Gene Sperling, Jason Furman and Sarah Bianchi.Continued on Page 9

I N S I D E

When it comes to illegalimmigrants, unions have a newstrategy: if you can’t stop ’em,recruit ’em. Economic View, by Eduardo Porter. 3

They may not be metrosexuals,but more men seem concernedabout appearance, andcompanies are responding. By Jim Rendon. 3

If inflation rises, which stocksare good bets? By J. AlexTarquinio. 5

The corporate bond markethas been soaring. It may beready for a fall. Portfolios, Etc.,by Jonathan Fuerbringer. 5

There are plenty of cheapP.D.A.’s around, if you don’tmind the scratches or dents. By Julie Flaherty. 6

Boomers are battling overinheritances. By Gay Jervey. 7