In 2006, Donald Trump sued me for libel, claiming that a biography I wrote, “TrumpNation,” lowballed his wealth and misrepresented his track record as a businessman. Trump lost the suit in 2011. He had sought $5 billion in damages, which was, more or less, the difference between what he claimed he was worth at the time — about $6 billion — and what my sources believed him to be worth: $150 million to $250 million. ($5 billion was also substantially more than the advance my publisher paid me to write the book.)
During the course of the litigation, my lawyers got their hands on an assessment of Trump’s wealth that German banking giant Deutsche Bank AG had pulled together in 2004. Deutsche figured Trump had a net worth of about $788 million, even though he told them he was worth $3 billion.
Have you “always been completely truthful in your public statements about your net worth,” my attorneys asked the future president during a deposition (in which he had to acknowledge nearly three dozen lies he had told over the years about his business and finances). “I try,” he replied. (Maybe not that hard; in recent congressional testimony, Trump’s former personal attorney, Michael Cohen, said Trump and his accountant, Allen Weisselberg, had routinely conspired to inflate his wealth to insurers and banks.)
When my lawyers inquired about how Trump calculated his net worth, he said his self-assessment went “up and down with markets and with attitudes and with feelings, even my own feelings.” He noted later that “even my own feelings affect my value to myself.”
I’ve written about Deutsche’s assessment of Trump’s wealth a number of times more recently, including in 2015, when Trump announced his presidential run, and last November, after German police raided Deutsche’s Frankfurt headquarters as part of a money-laundering probe connected to the Panama Papers scandal. Deutsche is back in the news this week. With the House Financial Services Committee, the House Intelligence Committee and the New York state attorney general all examining Trump’s relationship with the bank, the New York Times published a comprehensive account Monday evening of many of Deutsche and Trump’s business dealings and lending arrangements.
“Deutsche Bank officials have quietly argued to regulators, lawmakers and journalists that Mr. Trump was not a priority for the bank or its senior leaders and that the lending was the work of a single, obscure division,” wrote the Times’s David Enrich. “But interviews with more than 20 current and former Deutsche Bank executives and board members, most of them with direct knowledge of the Trump relationship, contradict the bank’s narrative.”
Large portions of this history, and the people involved in it, are familiar. When Trump nearly went personally bankrupt in the early 1990s, he left a handful of major U.S. banks on the hook for about $3.4 billion in loans he couldn’t repay (and about $900 million of which he had personally guaranteed). Hotels, casinos, real estate, an airline and other parts of his debt-ridden portfolio went into bankruptcy protection. Trump was only able to survive imploding completely because of financial support from his father, whose wealth made up a significant portion of Trump’s own fortune. (Though Trump lied to me about his lifelong reliance on his father’s money, documents he submitted in his lawsuit against me proved otherwise.)
In the wake of his financial collapse, Trump was an outcast whom major U.S. banks avoided. To line up funding for the occasional, small-bore deals he pursued in those years, he had to turn to labor unions and small, local lenders. Into that vacuum stepped Deutsche. The bank was keen in the late 1990s to gain a foothold in U.S. investment banking and commercial lending and was happy to do business with Trump. Enrich adds to all of this a carefully constructed and deeply reported account of how Deutsche’s executives, dealmakers, bond salesmen and loan officers have kept in step with Trump — despite misgivings and sometimes lackluster or disastrous results — for about two decades. Trump secured more than just bragging rights by inflating his wealth to the media and banks; he also secured loans, under circumstances that more circumspect lenders might have deemed perilous.
“Time after time, with the support of two different chief executives, the bank handed money — a total of well over $2 billion — to a man whom nearly all other banks had deemed untouchable,” Enrich wrote.
The Times’s account focuses entirely on Trump and Deutsche’s well-known domestic dealings, however, and that may not be where investigators and law enforcement authorities end up finding their most interesting material.
Deutsche has weathered a series of corporate governance and legal snafus that have helped undermine the bank’s standing and reputation overseas in recent years. German regulators appointed a monitor to oversee the bank’s money-laundering and terrorism-financing controls, and it has been forced to cough up more than $18 billion to settle lawsuits and pay fines since 2008. That amount includes a $7 billion settlement with the U.S. Justice Department in 2017 related to its trading and sales practices in the mortgage market during the financial crisis of the mid-2000s.
Deutsche’s bankers have also been discovered manipulating commodities and debt markets, rigging Libor rates, and helping about $10 billion depart from Russia under suspicious circumstances from Deutsche’s Moscow branch. U.S. and U.K. regulators fined Deutsche about $700 million in 2017 for compliance failures that a New York regulator said could have allowed for money laundering.
The Trump SoHo hotel, which stripped Trump’s name from the property in 2017, was financed in the mid-2000s in part with loans channeled through Icelandic banks that collapsed during the financial crisis. I’ve written extensively about Trump’s involvement with the firm originally behind that project, Bayrock Group LLC; one of Bayrock’s executives, Felix Sater; and about murky funds from Europe that were channeled into the project. While Deutsche was closely involved with Icelandic banks at the time of the collapse, no information has surfaced indicating the bank had a direct role in the Trump SoHo debacle.
Whether investigations of the Trump-Deutsche relationship wind up dovetailing with other federal investigations of Trump’s business, financial and political dealings, as well as his presidential campaign’s intersection with Russia, is still an open question. In the meantime, as the Times noted, plenty of other curiosities remain about the “symbiotic bond” between “a real estate mogul made toxic by polarizing rhetoric and a pattern of defaults, and a bank with intractable financial problems and a history of misconduct.”
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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