- A new report from The New York Times' David Enrich highlights dubious dealmaking and questionable partnerships between President Donald Trump and Deutsche Bank.
- While numerous banks viewed Trump's past bankruptcies as a sign to steer clear of the real estate mogul, Deutsche Bank used him and his businesses to rapidly ascend the financial sector.
- The Times report details how Deutsche Bank gave Trump special treatment over several years, and how the millionaire leveraged the partnership to secure unorthodox credit lines.
- Here are the five biggest bombshells from the report, from Trump flying bankers in his private jet to the bank holding years of hidden tax returns.
- Visit the Business Insider homepage for more stories.
President Donald Trump's relationship with Deutsche Bank has fallen under public and regulatory scrutiny since his first months in office, and a new report from The New York Times offers new insights into the unorthodox partnership.
Times reporter David Enrich, who spent the last two years interviewing Deutsche Bank executives about the firm's relationship with Trump, gleaning a mix of revealing anecdotes and riveting details, revealed how some employees viewed Trump as a boon for the growing company, while others look back on their business with the real estate mogul with "a mixture of anger and regret."
For Trump, Deutsche Bank fueled numerous risky loans and allowed him to continue expanding his business empire after a number of major bankruptcies. The Times' report details how working with Trump helped establish Deutsche Bank as a maverick among financial institutions, willing to do business with people other banks wouldn't touch.
Here are the five biggest bombshells from the early February report, from Trump's cozying up with bank staff to a questionable method for obtaining new loans.
Trump's tax returns
Democrats have been on the hunt for Trump's tax returns for years, as the documents would answer numerous questions about Trump's financial situation, alleged tax fraud, and hush-money payments made during the 2016 presidential campaign. The president has swiftly fought to keep his returns hidden through litigation and charged public statements.
As a main lender for Trump's multimillion-dollar real estate projects, Deutsche Bank enjoyed special access to the president's returns as they weighed the risk of opening a line of credit. Executives at the firm told Enrich that Deutsche Bank either has or has had portions of Trump's personal tax returns going as far back as 2011, revealing where new information on the president's finances could turn up.
In 2018, House representatives subpoenaed Deutsche Bank for Trump's returns after Democrats took back the chamber. The Trump family responded by suing the bank, aiming to block the documents' release. Two federal courts have since ruled against Trump, and the Supreme Court is set to hear arguments for the case in the spring. The subsequent ruling could set a new precedent for financial privacy and lead Deutsche Bank to reveal more about its secretive dealings with Trump and his businesses.
Same bank, different teams
Trump's relationship with Deutsche Bank soured in the aftermath of the financial crisis. The business giant sued the firm to avoid paying back a $334 million loan for his Chicago skyscraper. Deutsche Bank sued back, claiming Trump still owed the $40 million 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 sum.
The spat led the bank to avoid further business with Trump, but their separation didn't last long. The real estate mogul was struggling to find a new bank to finance his projects, and in his desperation to secure new credit, Trump got away with an extremely risky deal. During a 2011 meeting with a highly successful member of Deutsche Bank's new private banking division, Trump asked for a new loan. He wanted to pay off one of his Deutsche Bank loans with new credit from a separate division, according to The Times.
Even after pushback from the bank's executives, the firm's lawyers approved the deal and Trump discovered a new door into the bank's lending services. He later used Deutsche Bank's private banking division to finance his purchase of the Doral Resort & Spa, as well as his failed bid for the Buffalo Bills football team. The partnership ended in the run-up to the 2016 election, but the conflict within Deutsche Bank reveals its appetite for risk when working with Trump.
Trump made sure to reward the bankers lending him hundreds of millions of dollars. After the German firm sold more than $400 million worth of junk bonds to fund Trump Hotels & Resorts, Trump "repaid the Deutsche Bank team with a weekend trip to his Mar-a-Lago resort."
When teams fell out of favoir with Trump over lawsuits, unpaid loans, or heightened risks, the businessman turned to a new desk at Deutsche Bank for funding. After the junk bond sale, Trump looked to the firm's commercial real estate division to finance his Chicago tower. He reportedly flew the bankers, who included the son of Supreme Court Justice Anthony Kennedy, in the same Boeing jet that he used to send the other team to Florida. Trump then invited the bankers to Trump Tower, showered them in praise, and noted that Ivanka would lead the Chicago project, according to The Times. The deal went through.
'Special purpose vehicles'
Beyond massive loans and dubious partnerships across divisions, Deutsche Bank offered Trump unique instruments for keeping his financial information hidden from regulators and placing risk of default on outside investors. The firm created several "special purpose vehicles" for the millionaire to "quietly and inexpensively acquire international properties," The Times reported. The tools allowed Trump to use other investors' capital to make deals in Eastern Europe and South America, effectively using cash from other Deutsche Bank clients to cover his side of a purchase.
The firm also sold stakes in Trump properties to other clients, giving investors the chance to profit off successful Trump ventures. The millionaire was able to make huge purchases without putting any of his own money down. While fruitful in the short term, the special instruments gave Deutsche Bank and its clients outsized exposure to Trump's businesses and their chance of falling below profit expectations.
Trump frequently used "goodwill" claims to back up his loans, promising that his sizable net worth was enough to guarantee repayment for massive credit lines. Yet, the Times' story reveals how Trump's stated net worth landed far higher than what his finances showed.
While applying for the Chicago tower loan, Trump told the bank he was worth more than $3 billion, using the lofty figure to support his claim that he'd easily repay the borrowed sum. A Deutsche Bank study of Trump's finances found he was worth about $788 million, according to The Times. While the incorrect claim would typically disqualify a loan application, Deutsche Bank pushed forward and loaned Trump $640 million for the project.
Later, when the millionaire was looking to secure his first loan through Deutsche Bank's private banking division, Trump grossly overestimated the value of several assets to pad his net worth. Bankers found Trump's financial records claimed the property he bought in Westchester County for $7 million was then worth $291 million. After the bankers' full review, Deutsche Bank lowered Trump's asset values by as much as 70%, The Times reported.
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