Deutsche Bank repeatedly helped Donald Trump out of a jam. There is a dispute before the US Constitutional Court as to whether the bank must disclose documents. Is there a bomb lurking in there, which Trump’s opponents are hoping for?
At a time when no one wanted to lend money to the businessman Donald Trump, a bank from Germany jumped in. Deutsche Bank financed large projects from Chicago to Miami for the real estate entrepreneur at the time – even though he repeatedly gave false information and failed to service debts and obligations.
Deutsche Bank granted Trump over two billion dollars in loans. Today, it is still the largest creditor of the U.S. President and his company, the Trump Organization.
The deals between Trump and Deutsche Bank have for years captured the attention of investigators and Trump’s political opponents in the United States. Now, the strange business relationship ends up before the American Constitutional Court.
On Tuesday, the Supreme Court will hear about Trump’s previously withheld tax returns and his financial records. The Democrats in the House of Representatives are pressing for the documents to be made public. They are investigating Trump’s secretive finances and real estate deals and see Deutsche Bank as a crucial lever.
Three lawsuits will be summarized in the hearing on Tuesday. They concern Trump‘s tax returns and, in principle, the powers of investigators and Parliament to inspect documents of a sitting president.
Too windy for many, but not for Deutsche Bank
The case of Trump v. Deutsche Bank AG is particularly interesting. Trump had tried to prevent the issuance by his bank, but lost in the lower two instances.
Trump has been in business with Deutsche Bank since 1998, first with the real estate department and then also with private investment consulting. At that time, Trump received an initial loan of 425 million dollars for two construction projects in New York. As a businessman, Trump had his back to the wall at the time: his major hotel and casino project in Atlantic City had failed. The banks were no longer willing to give him loans. Except for one.
Business with Trump, a businessman who was too shaky for many competitors, fell into a phase in which Deutsche Bank wanted to become a major global player and, in order to do so, pushed powerfully into the American market, seeking risk and dazzling customers.
A lawsuit and then a bizarre development
Numerous loans followed, even though the bank employees were aware that Trump was artificially inflating its assets and not servicing loans and borrowings. One loan even led to a lawsuit.
In 2005, Trump received a loan of 640 million dollars (today a good 590 million euros) for the “Trump International Hotel & Tower” project in Chicago. When the financial crisis raged in 2008, Trump still owed a good half of that amount – but instead of paying, he sued Deutsche Bank. He accused the bank of being partly responsible for the financial crisis and demanded three billion dollars in damages.
The bank in turn sued for $40 million from Trump’s assets, with which he had secured the loan. In the end, there was a settlement that gave Trump two years to pay the bank the 40 million.
And then things got even weirder: For Trump’s debtor was again receiving this money from Deutsche Bank, but from a different department. While the name Trump seemed to have been burnt out in the real estate department, the real estate department now took over private asset management.
The Russia Trail
There he was also granted loans to buy the “Doral” golf club in Miami and to convert an old post office in the capital Washington into a hotel. The hotel, which opened shortly before the 2016 elections, is repeatedly at the centre of Trump’s conflicts of interest. For example, numerous diplomats and lobbyists who want something from the US president stayed there.
Their deals with Trump have long become a burden for Deutsche Bank in the USA. Investigators and Trump‘s political opponents focus on them. One suspicion is particularly sensitive: The bank was convicted of laundering money for Russian oligarchs. Democrats believe that companies owned by the president and son-in-law Jared Kushner may have been involved in this money laundering. However, there is no evidence of this.
In order to follow the Russia trail, not only the House of Representatives’ Finance Committee, but also the Intelligence Committee is suing for the release of documents.
Even beyond the Russia issue, the question of how a foreign bank should deal with a debtor who holds the most powerful office in the world is in itself a delicate one.
In the Corona crisis, the Trump Organization, which is now run by Trump’s sons, according to media reports, already asked the bank for an informal discussion on how to defer debts and liabilities. The reports prompted the Democrats to make new inquiries to the bank.
Much will depend on the judges’ verdict, both for Trump and the bank. Observers still expect a verdict before the summer break. It is therefore possible that the bank will have to provide information before the November election that will allow conclusions to be drawn about Trump’s finances and business.
But the majority in the Supreme Court is conservative and two of the nine judges have appointed Trump themselves.