These are the 5 biggest bombs from the New York Times report on Trump’s money and Deutsche Bank
- A new report from The New York Times’ David Enrich highlights dubious deals and questionable partnerships between President Donald Trump and Deutsche Bank.
- While numerous banks saw Trump’s past bankruptcies as a sign to stay away from the real estate mogul, Deutsche Bank used him and his businesses to advance quickly in the financial sector.
- The Times report describes how Deutsche Bank gave Trump special treatment over several years and how the millionaire used the partnership to secure unorthodox lines of credit.
- Here are the five biggest bombs from the report, from Trump flying bankers in his private jet to the bank that kept hidden tax returns for years.
- Visit the Business Insider home page for more stories.
President Donald Trump’s relationship with Deutsche Bank has come under public and regulatory scrutiny since his first few months in office, and a new report from The New York Times offers new insights into the unorthodox partnership.
Times finance editor David Enrich has spent the past two years interviewing Deutsche Bank executives about the company’s relationship with Trump, about their dealings with the real estate mogul with “a mixture of anger and regret.”
The Deutsche Bank fired Trump numerous risky loans and enabled him to expand his business empire even after numerous large bankruptcies. The Times report describes how working with Trump helped establish Deutsche Bank as a loner among financial institutions willing to do business with people other banks would not touch.
Here are the five biggest bombs from the early February report, from Trump’s cuddling with bank employees to a questionable method of getting new credit.
Trump’s tax returns
Evan Vucci / AP
Democrats have been hunting Trump’s tax returns for years as the documents would answer numerous questions about Trump’s financial position and previous actions, including hush money payments during the 2016 presidential campaign. The president has struggled to keep his returns secret through litigation and incriminated public statements .
As the main lender to Trump’s multi-million dollar real estate projects, Deutsche Bank enjoyed special access to the president’s returns as it weighed the risk of opening a line of credit. Company executives told Enrich that Deutsche Bank either had or had portions of Trump’s personal tax returns dating back to 2011, and revealed where new information about the president’s finances may emerge.
In 2018, the House of Representatives called Deutsche Bank for Trump’s return after the Democrats retook the Chamber. The Trump family responded by filing a lawsuit against the bank with the aim of blocking the release of the documents. Two federal courts have since ruled against Trump, and the Supreme Court is due to hear the arguments for the case in the spring. The subsequent ruling could set a precedent for financial privacy and lead Deutsche Bank to reveal more about its secret deals with Trump and his companies.
Same bank, different teams
Sean Gallup / Getty Images
Trump’s relationship with Deutsche Bank deteriorated after the financial crisis. He sued the company to avoid paying back a $ 334 million loan on his Chicago skyscraper. Deutsche Bank sued back, claiming Trump still owed $ 40 million that he promised to pay in 2005. The debacle was settled in 2010, and the bank agreed to give Trump two years to pay the $ 40 million.
The spit led the bank to avoid doing further business with Trump, but their breakup didn’t last long. The real estate mogul struggled to find a new bank to fund its projects and, desperate to secure new loans, Trump got away with an extremely risky deal. At a meeting with a very successful member of Deutsche Bank’s new private banking division in 2011, Trump asked for a new loan. According to The Times, he wanted to replace one of his Deutsche Bank loans with new loans from a separate department.
Even after opposition from the bank’s executives, the firm’s lawyers agreed to the deal and Trump discovered a new door into the bank’s lending services. He later financed his purchase of the Deutsche Bank through the private banking division of Deutsche Bank Doral Resort & Spa, as well as his failed bid for the Buffalo Bills soccer team. The partnership ended in the run-up to the 2016 election, but the conflict within Deutsche Bank reveals its willingness to take risks in working with Trump.
Mike Segar / Reuters
Trump has made sure that the bankers who lend him hundreds of millions of dollars are rewarded. After the German firm sold more than $ 400 million worth of scrap bonds to fund Trump Hotels & Resorts, Trump “repaid the Deutsche Bank team with a weekend trip to his Mar-a-Lago resort,” said Enrich.
When teams at Trump fell out of favor because of lawsuits, unpaid loans, or increased risks, the businessman turned to a new Deutsche Bank desk with funding. After the junk bond sale, Trump reached out to the company’s commercial real estate division to fund his Chicago Tower. He reportedly flew the bankers, including the son of Supreme Court Justice Anthony Kennedy (who retired in 2018), in the same Boeing jet that sent the other team to Florida. Trump then invited the bankers to Trump Tower, showered them with praise, and stated that his daughter Ivanka would lead the Chicago project, according to The Times. The deal went through.
“Vehicles with a special purpose”
In addition to massive loans and dubious partnerships across business areas, Deutsche Bank offered Trump unique tools to hide his financial information from regulators and to prove the risk of default for external investors. The firm created several “special purpose vehicles” for Trump to “quietly and cheaply acquire international real estate,” The Times reported. The tools enabled Trump to use other investors’ capital to do business in Eastern Europe and South America, and effectively use cash from Deutsche Bank’s other clients to cover his side of a purchase.
The company also sold shares in Trump real estate to other clients, giving investors the opportunity to capitalize on successful Trump projects. He could make huge purchases without spending his own money. Although the special instruments were fruitful in the short term, they gave Deutsche Bank and its customers an oversized involvement in Trump’s businesses and their chance of falling below earnings expectations.
AP Photo / Scott Heppell, file
Trump often used “goodwill” claims to secure his loans, pledging his sizable fortune to guarantee the repayment of massive lines of credit. However, the Times history shows that Trump’s reported net worth was far higher than his finances showed.
When applying for the Chicago Tower loan, Trump told the bank it was worth more than $ 3 billion, backing up his claim that he would easily repay the amount borrowed. A Deutsche Bank study of Trump’s finances found that he was worth around $ 788 million, according to The Times. While the false claim would usually preclude a loan application, Deutsche Bank pushed and loaned Trump $ 640 million for the project.
When Trump later sought to secure his first loan through Deutsche Bank’s private banking division, Trump grossly overestimated the value of several assets in an effort to bolster his fortune, The Times said. Bankers found that Trump’s financial records claimed that a property he bought in Westchester County for $ 7 million was then worth $ 291 million. After a full review of the bankers, Deutsche Bank cut Trump’s assets by up to 70%, The Times reported.
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