Trump’s enterprise prospects simply obtained dimmer as Wall Road backs away from tarnished model
More than two decades ago, Donald Trump, the New York developer, found refuge at Deutsche Bank after a consortium of lenders, including predecessor firms to JPMorgan Chase and Citigroup, severed ties with him.
Now, after supporters of President Trump besieged the U.S. Capitol in a riot that caused at least five deaths last week, even Deutsche Bank wants nothing to do with him.
The efforts of Wall Street institutions to distance themselves from Trump are making his transition into post-presidency life very difficult. Deutsche Bank has been Trump’s top lender since the 1990s and owes three loans totaling around $ 340 million, according to one knowledgeable person.
When these loans mature in 2023 and 2024, Trump will have to repay them in full or find another institution to loan him the money. He cannot refinance himself from the German who tried to cut ties with Trump before the terrible events of January 6, the person who refused to be identified said, speaking on private matters.
“The Trump brand is badly hit. From a public relations perspective, it’s toxic,” said Mark Williams, Boston University finance professor and former Federal Reserve auditor. “His elixir of life has been his ability to borrow money for leveraged transactions. Once that runs out, it will be a much more difficult financial burden for him.”
When his relationship with the Germans began, Trump was just a well-known real estate developer. The bank hadn’t expected its lynchpin in politics, and when Trump asked the Germans for a loan of at least $ 10 million during the 2016 Republican primaries, the bank turned it down.
Internally, the bank’s risk committee had weighed how to break away from Trump, Reuters reported in early November. The bank was considering outsourcing its lending to other parties, but that would likely require approval from Trump himself. The events at the Capitol were the last straw for the Germans, the person said.
Still, according to the person, the bank has never lost money on Trump, at least not yet. If Trump defaults on his loans, the German can seize the mortgage-backed golf courses and hotels, and if their value is insufficient to repay the debt, the bank can personally investigate Trump who guaranteed the loans, the person said .
Other institutions also pulled out of Trump after the siege of the Capitol: Signature Bank, an institution in the New York area, has called for Trump to step down, stating that it has closed two personal accounts in which Trump holds about 5.3 million US dollars. A spokeswoman said the bank would “not do business with members of Congress who voted to disregard the electoral college”. The New York Times first reported on the two lenders withdrawing from the president.
Trump also had deposit accounts with JPMorgan and Capital One, according to 2019 data. Both banks declined to comment.
It’s relatively easy for Trump to find a new place to deposit his money. It will be harder to find a bank willing to lend him huge amounts of cash. Almost 30 years ago, bankruptcies on several Trump properties resulted in losses for the banks, and the German was one of the few large institutions willing to work with him. A representative from the Trump Organization did not immediately return a message asking for comment.
Of course, Trump, the ex-president, will have myriad opportunities to make money from the tens of millions of Americans who voted for him. While it will be more difficult to find liquidity, there will be institutions willing to lend him loans at potentially higher interest rates than Trump is used to, Williams said.
If not, there is another playbook Trump can rely on.
“He’s likely going to do what he’s done at least five times in his career, which is strategic bankruptcy,” said William Black, associate professor of economics and law at the University of Missouri-Kansas City.