Donald Trump’s election has likely given a massive lifeline to Deutsche Bank, the German financial firm that has been rocked recently by rumors that they would have to pay a $14 billion fine to the Justice Department over crisis-related mortgage abuses.
That money is unlikely to ever be imposed, now that one of Deutsche Bank’s biggest borrowers – Trump – will soon be sitting in the White House.
That conflict of interest is one of the innumerable ones facing Trump as he leaves his life of grifting behind and becomes the nation’s chief executive. While the Justice Department is nominally independent of the White House, I had to stop writing this sentence because of constant laughing. Trump could easily move to protect his personal investments by aiding his business partner Deutsche Bank.
After going through virtually every bank in the world to finance his many projects, Trump settled on Deutsche Bank as a lender of last resort. The private bank division of the firm has lent Trump $364 million in mortgages on his Doral golf club in Miami and hotels in Chicago and Washington, D.C., in the last few years, and at least $2.5 billion to Trump’s affiliated businesses since 1998, with another $1 billion in loan guarantees. The recent loans on the three properties all come due before 2024, but they could be re-negotiated, as is common with commercial loan enterprises.
Like pretty much every financial institution that existed during the housing bubble, Deutsche Bank has been accused of fraudulent activities. The allegation drawing the Justice Department’s attention currently concerns the selling of mortgage-backed securities to investors without informing them of the poor qualities of the underlying loans. Numerous banks have paid fines over the same conduct, though virtually no individual executives have gone to jail for it.
While the Justice Department’s unusual public announcement of a $14 billion settlement request was largely a public relations maneuver — if it followed past trends, much of the fine would not be in cash but “credits” that could be satisfied through routine actions — it was so much more than Deutsche Bank reserved for legal expenses that it set off a near-collapse at the bank. The stock price plummeted, hedge funds began to pull money out, and credit default swaps, basically insurance against Deutsche Bank’s default, soared in price.
Deutsche Bank vowed to negotiate over the proposed fine, and within the past couple weeks they’ve said that they’ve made good progress. But Trump’s election throws the negotiations into confusion.
There’s simply no good reason for Deutsche Bank to agree to DOJ’s terms now, when a new administration will take over in a couple months, headed by a man who owes Deutsche Bank a lot of money. Trump’s debt with Deutsche is also negotiable in its own right, giving each side plenty of incentive to make a deal. Deutsche could get a free pass on its legal cases – of which the mortgage securities fraud is just one – while Trump could get better terms for his debts.
Deutsche Bank could threaten to cut off business with Trump — a powerful spur for the president-elect to give them favorable treatment.
Investors have taken notice. Deutsche Bank stock jumped over 5 percent as the market opened Thursday, after rising more modestly on Wednesday.
Deutsche Bank and Trump have sparred previously, with Trump reneging on a $640 million construction loan in 2008 for his Chicago condo/hotel tower. Trump blamed Deutsche Bank for making his property less profitable because of their role in the financial crisis, and decided not to pay. Deutsche Bank countersued and there was an eventual settlement.
Ethics experts have cited the Deutsche Bank case as a primary example of the financial entanglements Trump will face as president. Trump Organization officials, predictably, argued otherwise. “Under your theory, no one who has ever done anything before can be elected to the highest office,” said Trump Organization General Counsel Alan Garten to the Washington Post.
Trump has vowed to hand over his businesses to his children, a vague statement that goes much less far than a blind trust or some other segregation that other elected officials have used. After all, Trump’s family are among his closest political advisors.
Top photo: The Deutsche Bank AG logo is pictured at their headquarters in Frankfurt, Germany, on June 19, 2008.
You are an embarrassment to this website. I constantly cite the intercept as one of the bright spots in an otherwise bleak landscape for journalism. You predicted, wrongly, that Wells Fargo wouldn’t clawback any executive pay. That was based on awful logic, and you were quickly discredited, including some of your otherwise supporters like Yves Smith. This however takes the cake in terms of ridiculous garbage. It is a good reminder to me that no Paper is bigger than its authors and I still need to pick and choose who to read.
Brilliant article & I wish this info. Some of us knew could’ve gotten to the Red States!! Oh well, now we can expect a ruthless money hungry regime!! ACLU will fight back & so will the East & West Coast!! See you in court DT!!
Why wouldn’t Trump just let the bank die (or accelerate its death), instead? Then his kids can buy the bank debt for 2c on the dollar; and nobody else is going to touch Trump debt because he is the frikkin’ President, and has successfully stiffed many, many creditors when he had much less power.
Who among us truly believe that a blind trust is actually blind? Are you going to tape record his personal lawyers in privileged communication inside the White House, and be able to somehow magically prove the decisions of his kids, also informed in privileged conversations as clients of those same lawyers, did not take some direction from President Dad?
He doesn’t need to make a deal, they aren’t his “friends”, and no lawsuit can reach him, and the Congress won’t impeach him. His business, his kids, and his finances have been protected by becoming President, probably forever.
>>> Who among us truly believe that a blind trust is actually blind? <<<
Don't forget… Trump is in the Hotel/Entertainment business. He's not an manufacturer, miner, tech company, or bank.
His business depends on "leftover" money — that is, if people don't have any extra money… they don't stay in his hotels or drop tokens in his slots.
He has a vested interest in making America Great Again. He hopes you'll be able to afford a hard earned vacation at one of his hotels, someday.
>>> Why wouldn’t Trump just let the bank die (or accelerate its death), instead? <<<
Do you know how bad the Tidal Wave is going to be if D-Bank fails???
Do you want WW III?
Do you think Trump cares more about the fallout, or more about his $2 billion?
Personally I think you are exaggerating. But even if you are not, money is clearly more important to Trump than the ramifications of how he gets it, and doing nothing seems to be in his personal best interest to the tune of billions.
>>> Do you think Trump cares more about the fallout, or more about his $2 billion? <<<
Trump is 70+ years old. He's already made his fortune.
He doesn't need to line his nest. But, he does understand how hard it is to operate a business in today's environment.
Because he is in the definite downslope of his life, he decided to do something about it and he owes nothing to the establishment, de facto.
He can't be bought or blackmailed (he's actually a pretty reliable goodie-two-shoes type). That's why they continue to attempt to provoke him. That's not gonna work.
>>> money is clearly more important to Trump than the ramifications of how he gets it <<<
Two words: Clinton Foundation.
I'm not going to go into the gory details; but, know this: Clinton's have allways been hardcore dope dealers complete with the absolute degenerate low-life criminal characteristics of Tony Montana in the movie Scarface.
I've been to Mena. I split the whole scene a long long time ago… cuz I have a conscience.
ps… correction… absolute degenerate low-life criminal characteristics of THE ADVERSARIES OF Tony Montana in the movie Scarface.
I don’t think you are seeking “truth” at all. Yes, the Clintons are criminals. That does not mean Trump is not a criminal, also. He tried to stiff this very bank for $640M, he still owes them $2.6B, he stiffs banks and people all the frikkin’ time, and I see no reason to believe he would do anything different here.
This isn’t about politics and partisanship. There are sociopathic greedy corrupt bastards on all sides: Hillary, Bill, Trump, Christie, Guiliani, and hundreds of others; they are all sharks hunting together that would rip apart one of their own at the first scent of blood.
My argument is not partisan; it is simply that Trump has proven he has no “friends”, if he can profit billions from the slaughter of Deutsche Bank, he will slaughter it; especially if it is injured and easy enough to kill through inattention. I really don’t think he needs them.
>>> if he can profit billions from the slaughter of Deutsche Bank <<<
BS. He pays what he owes. And your alleged "2.6B" MORTGAGES ares spread out into monthly, quarterly, or annual payments over how many years and at what interest rate???????? The notes are due WHEN?????
You are clueless. Not me. You are spinning the spin. I'm not.
“If!?” … DB is going DOWN no matter what. There is simply not enough money on the planet to keep DB afloat. It has to unwind, only question is: By itself or by government takeover and breakup.
Knowing the EU leadership, they will pick the worst and the most stupid of all alternatives available to them.
No “WW III”, Crazy Hillary lost, remember?
This is the kind of “deep thinking” Hillary’s team is capable of, exactly like Libya in a way, but thankfully hit themselves right on the ass this time.
https://www.armstrongeconomics.com/international-news/north_america/2016-u-s-presidential-election/the-real-clinton-conspiracy-that-backfired-the-worst-candiate-in-american-history/
Wait, we’re not in WW III. How maby more ciuntries dies it take ti equate to a world war for you? There more countries at war now than there wer in the second world war. Is it because its not the countries you saw tv as a kid fighting each other…you know, the eagle and the bear? Or could it be that the world war on terror isnt the standard war scenario you had hoped to see to equate so many countries attacking less stable and militarily weaker that America, France or Russia?
Dude all banking sector stocks are up. It is more to do with doing away Dodd Frank and promise d fiscal stimulus
I have just a few questions. To start, is there actually any evidence that the fines will be eliminated, or is this just another piece of yellow journalism?
Second, I am curious as to the relative size of the fine being levied against Deutsche Bank in comparison to those paid by Goldman Sachs, JP Morgan Chase, Citibank, Wells Fargo, and Bank of America, just to list the major US players. Somehow I have the impression that the domestic banks, having been able to contribute freely to the campaigns of Obama, Romney and McCain, paid much smaller fines. Is that true? If so, then, why are you speculating about Trump when we have so much evidence of the crookedness of the DoJ under both Eric Holder and Loretta Lynch? In terms of the magnitude of their dereliction of duty John Mitchell comes out looking like a saint.
The fines for the most part are a joke. Much of it is tax deductible and much of the rest is satisfied by providing “Customer Services”.
Eric Holder REALLY undermined our judicial system with his settlements without judicial review. No wonder the head of Citi bank picked him as USAG.
WikiLeaks Bombshell: Emails Show Citigroup Had Major Role in Shaping and Staffing Obama’s First Term
http://wallstreetonparade.com/2016/10/wikileaks-bombshell-emails-show-citigroup-had-major-role-in-shaping-and-staffing-obamas-first-term/
I did just note that Deutsche Bank’s stock prices have taken a sharp rise since Nov 8.
Do you think that his voters actually know or care about this confict of interest? I think not. Although I feels that Sanders might have won because he is a white male, the more that I think about it the right would have hammered him with the Jew/Socialist/Commie connection in spite of the fact that there is sufficient evidence tying Trump and his minions to the Russians.
I guess fraudulent activities are legal, because fraud is not.
Keep digging, David Dayen, and get those tax returns.
What an embarrassment and shame Mr Holder and our current DoJ is.
This will get ugly as sin.
I am waiting – or will call – for a national reconciliation – from the Dems, from the Repubs, from the networks, cable, and the nationally recognized papers of note who shamed themselves beyond comprehension this election cycle.
Can I have a copy of YOUR tax returns???
Don’t forget that D-Bank problems and Trumps problems BOTH originated from Junk Rockefeller/AIG derivatives.
OMG!!!! What am I going to tell my kids!!!
Your terrified and so am I!!!
Wait sorry I was channeling some liberal bed-wetters who are rioting in the streets, burning cars and whining in ridiculous articles.
Seriously, thank you for an article with some substance and info we need to know. I am not sure of your worries but I will keep an eye on this one.
Thank you also for your other articles. Lots of good stuff in them.
>>> Seriously, thank you for an article with some substance and info we need to know. I am not sure of your worries but I will keep an eye on this one. <<<
He's a political propagandist. Not a journalist. Not an investigative journalist. Not a critical thinker.
I take it you were aware that Deutsche bank was the lender to Donald Trump. I for one did not know any of this information so yes I consider this a good article
>>> I take it you were aware that Deutsche bank was the lender to Donald Trump. <<<
Yes I was.
So was the US Government. The USGovt demanded restitution without a trial for FREE and impose the pecuniary penalty.
Trump had to PAY to take it to the courts… or use self-help remedies.
>He’s a political propagandist. Not a journalist. Not an investigative journalist. Not a critical thinker.<
Just a question, is that your general opinion on this guy or is that your conclusion just after reading the article? interested in how you come up with some those accusations …
>>> Just a question, is that your general opinion on this guy or is that your conclusion just after reading the article? interested in how you come up with some those accusations …<<<
General based on his STATED agendas…. He writes for Salon and New Republic.
PROGRESSIVE == Communist.
I've studied Marx, too. Communism is a dictatorship over slaves repackaged with a new marketing name — sorta like: "how to build a better toothbrush"… or maybe a Mercury Grand Marquis is also a Ford Crown Victoria with a slightly different hood and grill.
Well I was not and would be dollars to donuts that only a very small % of people in this country do.
So thank you David for reporting this. I may not agree with your conclusions but the info is very welcome.
I really hope the US Government is not relying on David to inform them about their own regulatory actions. Seriously why would you even bring that up? Thanks for the vague details though. A link to that info would be nice if you have one.
Somebody call the waaaambulance for all the poor whittle Mellennials who lost the freakin’ election. I hear some campuses are handing out hot chocolate and play dough and are cancelling tests/classes so these poor liberals can have time to emote.
Donna Brazile tried to give a rousing speech to all her DNC staffers and one of them actually stood up and denounced her cheating a@#.
Speaking of “draining the swamp”, the DNC swamp and all their Hillary gatekeepers and Super Delegates need to go.
If you could just make a statement related to this article, that would be great. If you’re just trolling, RedState is that way –>
A lot of the Millenials have moved beyond sadness. They are getting ready to fight back. One hopes they will not rely on the DNC.
Green Party?
I like The Citizens Party:
votecitizens.org
If they really want to fight back they will fight for ranked voting. If they do something like that headless monster Occupy Wall Street then nothing real will happen.
$14 billion is chump change.
Please write an article about the $10 Trillion went to in the form of national debt.
Then, write an article about David Rockefeller and AIG.
Yeah, because we’ve never had a president who did business with a *bank* before taking office!
The $14 billion wasn’t going to be paid in full anyway. I’m sure there has been plenty of pressure from the ECB and Germans to back off because of the effect of the announcement of a fine on the largest bank in Germany of 64% of its market capitalization. DB has been teetering since. Also, if your numbers are correct, they would be better off just forgiving the loans outright in exchange for even a halved fine. So, that’s where your profession comes in. Do for Trump what you didn’t do for Obama and hold him accountable.
Although Trump (and his lawyer) brought up the blind trust, it’s a stupid idea that won’t work. Giving a company you built to your children and having them manage it according to your prior instructions is a far cry from a trust in which the beneficiary has no knowledge of the assets held and no control over their management. It is political cover — the conflicts of interest will not be diminished.
Thanks, certainly something to watch. It will be good to have investigative journalists finally not in the pocket of the politicians.
Drain the swamp!