Thursday, February 16, 2017

The German Bank And the Deadbeat President

It's one of Germany's biggest and now its most controversial financial institutions, Deutsche Bank.

Now Deutsche Bank is under investigation by US federal authorities for, among other things, its shady dealings with Russia even as the bank tries to restructure its massive loans to America's freshly minted president.

The Guardian has an interesting account of the Donald and the Deutsche Bank.

Here's a teaser:

It was November 2008. Three-and-a-half years earlier the bank had loaned Trump the cash to build one of his grandest projects yet: a hotel and mega-tower in Chicago.

Trump had given his personal guarantee he would repay the $640m. As per agreement, he was now due to hand over a large chunk, $40m.

There was only one problem: the future 45th president of the United States was refusing to pay up. Deutsche initiated legal action. Trump responded with a blistering, scarcely credible writ of his own, a 10-count complaint in New York’s supreme court, in the county of Queens.

In it, Trump adopted a highly unusual defence, known as “force majeure”. He claimed that the 2008 economic crisis was a “once-in-a-century credit tsunami”, an act of God that was equivalent to an earthquake.

Since it couldn’t have been anticipated, and it wasn’t his fault, he wasn’t obliged to pay Deutsche anything. It wouldn’t get the $40m or the outstanding $330m, his writ said. 

He went further. Trump claimed Deutsche Bank had actually helped cause the crunch. Therefore it owed him. Trump demanded $3bn from Deutsche in compensation.

Its New York property division first loaned money to him in 1998 at a time when the bank was attempting to expand its commercial real estate portfolio. By that stage, other major banks were becoming cautious about Trump, in part, the Wall Street Journal has said, because of frustration with his business practices.

A decade later, Deutsche was to find out for itself quite how capricious and unpredictable he could be.


Owen Gray said...

Combined with your post from yesterday, Mound, things are becoming clearer. The president is in hock to foreign bankers. And his Russian bankers are connected to Putin. They've got him exactly where they want him. No wonder he's keeping his tax returns under lock and key.

rumleyfips said...

I imagine Trump is happt there has been no tort reform.

Lorne said...

I read the article earlier today, and all I could think of is what a fine paper The Guardian is, probably the best in the world. i doubt this kind of story will get much coverage in North America.

Pamela Mac Neil said...

I watched an interesting documentary one night Mound about Trump.In earlier days, it may have been his first round of not being able to pay his creditors. Anyway, the bankers were talking and what they said, was that Trump knows nothing about finance and business. They said it is the Trump name that sells. That was then, but I'm sure not now. They continued on saying that Trump is good at selling the Trump name. He had become a brand. The conclusion they came to was that Trunp was a salesman, not a business man and he was good at selling his name. They decided to give him the money to bail him out, but they would only let him sell and have someone who they would appoint to run the business.

Now of course I think they would not bail him out. There's alot of hype that comes from Trump.

In fact my guess is he's all hype. When he talks to someone including the American people, he is not so much talking to them, rather he is pitching them. I think pitching is his mode of communication.

Purple library guy said...

That's hilarious. Mind you, Deutsche Bank DID help cause the financial crisis, but I don't see what that has to do with Trump borrowing money. Still, if EVERYONE refused to pay what they owed to Deutsche Bank, and Goldman Sachs, and JP Morgan, and so on, the world would become a better place.